Among the top 10 cases of patent reexamination and invalidation in 2021 released by the China National Intellectual Property Administration (CNIPA) on April 26, 2022, two are patent invalidation cases relating to the electrical field, where one involves withdrawal of an integrated circuit layout. Those cases were selected as the top 10 cases because of their great social impact and high social attention. The decisions on those specific cases made by the Reexamination and Invalidation Department of the CNIPA have a greater impact on future patent examination as to substance and invalidation, which are enlightening and informative in similar cases. We briefly describe the two cases and their focuses.

I. Invalidation case in connection with “Data transmission method and system characterized by gaining network connection through image acquisition” (Invalidation Decision No.33159)

Patentee: K Company

Petitioner: Z Company

Patent No.: ZL201010523284.4

Conclusion: invalidated totally

This case relates to the QR code scanning technology widely used in our daily life. The Invalidation Decision in connection with the case involves an ex officio examination after withdrawal of the Invalidation Request, interpretations on claims and the like.

I) Overview of the case

The subject patent relates to an image recognition field, in particular to an automatic symbol image reading method and device, i.e., the subject patent relates to a solution about the QR technology commonly used in the daily life. In the technical solution of the subject patent, at least three sets of verification codes are set in the two-dimensional code image to verify the network identification information contained in the two-dimensional image, and only when the verification is passed, the network identifier can be used for data transmission. As compared with the prior art, the subject patent can achieve the purpose of quickly completing the reading task and improving the reading efficiency.

The petitioner Z Company filed an invalidation request against the subject patent in May of 2017. The Patent Reexamination and Invalidation Department held an oral hearing on July 18, 2017 and received the Response from the Patentee on August 21, 2017, where it is indicated that the patentee had reached a settlement with the petitioner. A copy of the license contract was provided along therewith.

The outsider ZK Company and the patentee submitted a request for suspension of the procedure on September 1, 2017 and September 5, 2017 respectively on the grounds that the patentee had been changed. On September 18, 2017 and November 28, 2017, the CNIPA issued a Notification that Request Deemed Not to Have Been Made, respectively.

On September 22, 2017, the petitioner Z Company filed a request for withdrawing invalidation request. The patentee K Company K filed a response respectively on December 8 and December 25, 2017, stating that it and the outsider ZK Company had reached an agreement not to change the patentee, without the need for suspending the procedure, and the patentee applied for revocation of the suspension procedure.

On January 30, 2018, the CNIPA issued the Invalidation Decision No.33159 to declare claims 1-58 of the subject patent totally invalid on the grounds that claims 1-58 do not possess inventiveness.

Being unsatisfied with the Invalidation Decision No.33159 issued by the CNIPA, K Company filed an administrative lawsuit with the Beijing Intellectual Property Court ((2018) Jing-73-Xing-Chu No. 3582). The Beijing Intellectual Property Court held a hearing on July 9, 2020, and made a decision at the end of July 2020. In the first instance, the invalidation decision was upheld. Subsequently, K Company appealed to the Supreme People’s Court, and the Supreme People’s Court made a second-instance judgment, upholding the original judgment of the first-instance

II) On the focus of dispute of the case

  • On the ex officio examination after withdrawal of the invalidation request

In the invalidation procedure of the typical case, the panel held the oral hearing on July 18, 2017. The petitioner Z Company filed a request for withdrawing the invalidation request on September 22, 2017. On January 30, 2018, the panel made an invalidation decision and thus declared claims 1-58 of the subject patent totally invalid on the grounds that claims 1-58 do not possess inventiveness.

In the invalidation request procedure, there may be situations in which the invalidation request needs to be withdrawn. For example, in the circumstance where a settlement is reached between the petitioner and the patentee, the petitioner may withdraw the invalidation request in accordance with the provisions of the Implementing Regulations of the Patent Law. However, in practice, if a petitioner submits an application for withdrawal of an invalidation request, the CNIPA may not terminate the examination based on the application and issue a Notification of Termination of Examination.

Rule 72 of the Implementing Regulations of the Chinese Patent Law provides:

“the person requesting invalidation may withdraw his request before the Patent Reexamination and Invalidation Department makes a division on it. Where, based on the termination work it has done, the Patent Reexamination and Invalidation Department finds that it is able to make a decision of invalidation or invalidation in part of the patent right, the examination procedure shall not be terminated.”

In addition, Section 2.3 of Chapter 1 of Part IV of the Chinese Guidelines for Examination (the latest version) provides:

“2.3 Principle of Examination upon Request

The reexamination procedure and the invalidation procedure shall be initiated at the request of the party concerned.

If the petitioner withdraws his request for reexamination or for invalidation before the Patent Reexamination and Invalidation Department makes a decision concerning the request, the corresponding examination procedure shall be terminated; except for invalidation cases, the Patent Reexamination and Invalidation Department has done, it finds that a decision of invalidating the whole patent or invalidating the patent in part can be made.

If the petitioner withdraws the request after the examination decision has been announced or the decision has been sent out in written form, the effectiveness of the examination decision shall not be affected.”

Therefore, according to the pertinent provisions of the Chinese Patent Law, the Implementing Regulations of the Chinese Patent Law and the Chinese Guidelines for Examination, when the petitioner withdraws the invalidation request voluntarily, the petitioner must apply for withdrawal before the examination decision in connection with the invalidation request has been made, and it is possible to terminate the examination procedure having been initiated already. If the invalidation decision has been made when the petitioner applies for withdrawal but the invalidation decision has not been issued, the examination procedure will not be terminated regardless of whether the patent right is valid or invalid at this time. Moreover, if the invalidation decision has not been made when the petitioner requests for withdrawal but the patent right can be invalidated in whole or in part according to the examination that has been carried out, the examination procedure that has already been started will not be terminated. This means that the examination procedure will be terminated only if the examination that has been carried out is not sufficient to make an invalidation decision, or the invalidation decision is to maintain the validity of the patent right.

During the invalidation process of this typical case, the petitioner Z Company filed an application to withdraw the request for invalidation on September 22, 2017, and the invalidation decision had not been made when the petitioner filed the withdrawal request (the invalidation decision was made on January 30, 2008). Therefore, the timing of withdrawing the request complies with the provisions of Rule 72.2 of the Implementing Regulations of the Chinese Patent Law. However, as the panel was able to make a decision to declare all the patent rights in question invalid based on the examination in the oral hearing, the panel did not terminate the examination procedure that had been started but continued the examination and finally issued an examination decision that the patent rights were all invalid.

We believe, “principle of disposal by the party concerned” is a basic principle in the invalidation examination. According to the principle, a petitioner may waive all or part of the scope, reasons and evidence of the invalidation request. At the same time, it should be noted that the panel may conduct the “ex officio examination” under certain circumstances, which not only involves voluntary alternations to invalidation grounds and introduction of evidence during a hearing of a case, but also concerns “termination of the invalidation procedure” if the petitioner applies for withdrawal and the request for withdrawing the invalidation request is deemed to have been withdrawn. This is to maintain the social justice and protect the legitimate rights and interests of the public.

Accordingly, with respect to a case for which both parties are in the progression of negotiation and probably make substantial progress, it is necessary to effectively push forward the negotiation and the invalidation procedure, and choose an appropriate moment to apply for withdrawing the request. If necessary, the two parties can communicate with the panel in advance to apply for a delay in the oral hearing; they can also apply to the panel for a certain period of time for reconciling, delaying the invalidation decision, and communicating with the panel on the progression of the negotiation in a timely manner.

  • On interpretation and technical teaching of the claims

In the oral hearing, the patentee claimed that: 1) the verification code in the subject patent has the function of verification and determination of clarity of an image, and the finder pattern in the QR code in Evidence 2 is not equivalent to the verification code of the subject patent; 2) the finder pattern in Evidence 2 is only used to determine a position and thus obviously distinct from the verification code of the subject patent in terms of function; therefore, Evidence 2 does not give a technical teaching.

In the regard, the panel opines that, according to paragraph 0030 of the description of the subject patent, the verification code is provided to determine whether positioning is precise to make the image clear. Accordingly, it plays exactly the same role as the finder pattern of the QR code does in D2. In the meantime, the feature disclosed in D2 plays the same role as the counterpart does in the subject patent, in both cases being to achieve correct positioning and identify data information in an image by means of the finder pattern or the verification code in the image. Therefore, for the problem of how to correctly identify an internet identifier in an image, D2 gives a corresponding technical teaching.

In our opinion, correct interpretation on technical features of claims is of great importance to determine a protection scope of a claim and evaluate creativeness. Interpretation of technical features of a claim should be based on literal recitation of the claim in view of a related embodiment described in the description. If technical means disclosed in a reference document plays the same role as the feature does in the claim, the reference document should be considered as giving a corresponding technical teaching.

II. Revocation procedure of the invalidation case in connection with an integrated circuit layout design exclusive right entitled “Image sensor CS3825C” (Invalidation Decision No.6)

Exclusive owner: X Company

Revocation petitioner: R Company

Registration No.: BS.175539928

Conclusion: Maintaining the exclusive right valid

The typical case relates to an integrated circuit layout design entitled “Image sensor CS3825C”, covering hot issues concerning a protection object of the integrated circuit layout design, scope of examination on creativeness, criteria of examination on creativeness, an evaluation method, criteria of determination after registration within 2 years since the date of first commercial use, and the like.

I) Overview of the case

The typical case relates to an integrated circuit layout design exclusive right entitled “Image sensor CS3825C”, registered as BS.175539928 and possessed by the Patentee X Company.

On May 19, 2020, in connection with the integrated circuit layout design exclusive right, R Company (hereinafter referred to as revocation petitioner) filed a request for revoking the exclusive right with the CNIPA.

The layout design does not comply with Article 17 of the Regulations for the registration application thereof was filed with the CNIPA more than 2 years after the date of its first commercial use; for the three creative parts provided by the exclusive owner, Part I and Part II are common designs, failing to comply with Article 4 of the Regulations, and Part III does not recite sensor function signal output, causing failure in performing an electronic function, and thus do not meet the definition of an integrated circuit.

The panel held an oral hearing on April 26, 2021 to hear the case. After the oral hearing, R Company claimed that it could not be accepted that the exclusive owner had supplemented and changed the novel, inventive parts at any time during application for registration of the exclusive right of the layout design, the infringement lawsuit, and the response submitted in this revocation procedure.

Through examination, the panel held that:

1) the layout design relates to the integrated circuit provided in the Regulations and thus complies with Article 2(1) of the Regulations on Protection of Integrated Circuit Layout Design;

2) since the exclusive owner made no obvious change to the novel, inventive parts in the infringement litigation procedure and the revocation procedure of the integrated circuit layout design, the newly added Part III submitted by the Patentee should be accepted;

3) since the layout design corresponding to Part II is identical to the existing design disclosed by Evidence 14, it is possible that the designer has knowledge about the PAW3305 layout design, and this part does not involve the creator’s intellectual work, thereby lacking novelty or inventiveness; in addition, the current evidence are not sufficient to prove that the Part I and Part II are common designs, and Part I and Part II thus involve creativeness, complying with the provisions of the Regulations on Protection of Integrated Circuit Layout Design; and

4) as there lacks evidence proving that the date of first commercial use of the layout design is after more than 2 years since application for registration of the exclusive right, the petitioner’s claim that the layout design does not comply with Article 17 of the Regulations on Protection of Integrated Circuit Layout Design is not tenable.

II) On the dispute focus of the case

  • Protection object of the integrated circuit layout design

Article 2 of the Regulations on Protection of Integrated Circuit Layout Design provides:

“The meanings of the following terms used in these Regulations are:

(I) integrated circuit refers to semiconductor integrated circuit, namely semi-finished products or final products that use semiconductor material as the substrate, and integrate two or more components, at least one of which shall be the active component, and part or all of interconnected circuits between or on the substrate to perform some kind of electronic function;

(II) integrated circuit layout design (hereinafter referred to as layout design) means the three-dimensional disposition of integrated circuit that has two or more components, at least one of which shall be the active component, and has part or all of interconnected circuits, or the three-dimensional disposition mentioned above that is prepared for the manufacturing of integrated circuit; …”

In the revocation procedure, R Company claimed that: since the peripheral pixels in the SENSOR module involved in Part III of the layout design have no sensor information output and no electronic function is fulfilled, the Part III does not meet the definition of the integrated circuit.

The panel opines that, in the Regulations on Protection of Integrated Circuit Layout Design, the integrated circuit and integrated circuit layout design are defined, where the definition of the integrated circuit is directed to a chip as a whole, rather than some elements or modules included therein. If a certain product includes at least one active element and interconnections formed on a semiconductor substrate and is capable of performing an electronic function, the product is an integrated circuit as defined in the Regulations. As for this case, the layout design relates to an image sensor including a SENSOR module, a PGA module, an ADC module and the like formed on the semiconductor substrate, where the SENSOR module includes a plurality of CMOS active elements, the above-mentioned modules are interconnected to each other via wires. Such image sensor can perform functions of collecting signals and processing acquired image information, and thus is an integrated circuit defined in the Regulations.

In view of the above, we believe that the integrated circuit and the integrated circuit layout design, in particular the integrated circuit, are explicitly defined in the Regulations on Protection of Integrated Circuit Layout Design. In the Regulations, the definition is provided from the perspectives of materials, types of components and connections therebetween, functions, and the like, of the integrated circuit. Such definition is directed to an integrated circuit, as the object of protection, rather than components therein or a creative part. As long as an integrated circuit as a whole meets the above-mentioned definition, the corresponding layout design can be considered as a legal object of protection conforming to t the integrated circuit layout design as required.

  • Scope of examination on creative parts

In the typical case, the exclusive owner claimed 3 creative parts, where Part I and Part II are parts declared upon applying for registration, and Part III was not declared at that time, which was added in the infringement litigation procedure and the revocation procedure of the exclusive right. Therefore, whether the newly added part should be accepted or fall into the scope of the examination in the revocation procedure of the exclusive right is a focus of dispute in the examination on the case.

Article 16 of Regulations on Protection of Integrated Circuit Layout Design provides:

“The following shall be submitted to apply for the registration of layout design:

1) Application form for the registration of layout design;

2) Copies or drawings of the layout design;

3) Integrated circuit samples which contain the layout design if it has already been put into commercial utilization; and

4) Other material prescribed by the administrative departments of intellectual property of the State Council.”

Rule 14 of Implementing Rules of Regulations on Protection of Integrated Circuit Layout Design (hereinafter referred to as Implementing Rules) provides:

“Reproductions or Drawings

The reproduction or drawing of the Layout Design submitted in accordance with Article 16 of the Regulations shall satisfy the following requirements:

(I) the paper version of the reproduction or drawing shall be enlarged at least 20 times the size of the integrated circuit produced using the Layout Design; the applicant may additionally provide an electronic version of the reproduction or drawing; a reproduction or drawing submitted in electronic form shall include all the information on the Layout Design and indicate the document’s data format;

(II) if the paper version of the reproduction or drawing is multi-page, the pages shall be numbered sequentially and a table of contents attached thereto;

(III) the paper version of the reproduction or drawing shall be on A4-size paper; if the paper version is larger than A4-size, it shall be folded into A4-size; and

(IV) the reproduction or drawing may carry a brief textual description, describing the integrated circuit Layout Design’s structure, technology, function and other particulars requiring explanation.”

According to the current Regulations on Protection of Integrated Circuit Layout Design and Implementing Rules of Regulations on Protection of Integrated Circuit Layout Design, it is not required that, when the applicant applies for a layout design of an integrated circuit, declaration of creativeness is a must of the application, i.e., the applicant is not required to make a declaration of creativeness in order to apply for registration. In other words, it is allowed that the applicant declares the creativeness in a subsequent procedure if he/it does not declare upon applying for registration. However, in practice, there may be a situation where an applicant made a declaration of creativeness when applying for registration but the declaration of creativeness was changed in the subsequent procedure of confirming the exclusive right or in the procedure of infringement litigation. In the situation, it is not clear how to determine it.

In the regard, the panel opines that, in addition to declaring creativeness when applying for registration, in the confirmation or infringement procedure of the exclusive right of a layout design, the exclusive owner usually declares and claims creative parts included in the layout design; the creative parts of the layout design should be determined in the registration procedure, the first right confirmation procedure, and the first infringement procedure, which could be reduced but not increased. In addition, the panel believes that the creativeness claimed by the exclusive owner should be objective, not subjective, which should not be changed repeatedly; if the creativeness claimed by the exclusive owner in each procedure is obviously changed repeatedly, exceeds the reasonable expectations of the public, and damages the legitimate interests of the public, such claim should not be accepted.

In the typical case, the applicant claimed two creative points upon applying for registration and increased a further creative point in the patent confirmation procedure and the patent infringement procedure, but made no alternation thereto in the subsequence. The panel opines that, after the application for registration of the exclusive right of the layout design, the exclusive owner’s claim on the creativeness of the layout design has not changed until the first infringement procedure, which does not exceed the reasonable expectations of the public or harm the legitimate interests of the public, and should be accepted.

As for the exclusive owner’s claim on creativeness, we believe that, according to the current Regulations on Protection of Integrated Circuit Layout Design and Implementing Rules of Regulations on Protection of Integrated Circuit Layout Design, it is not required that declaration of creativeness is a must when the exclusive owner applies for a layout design of an integrated circuit, which gives the exclusive owner a certain degree of flexibility and freedom in claiming creativeness. However, the flexibility and freedom are not arbitrary but are limited and constrained. The exclusive owner shall define the creativeness no later than the first right confirmation procedure or the first infringement procedure, and cannot be arbitrarily added or changed in the future. Therefore, in the first right confirmation procedure and the first infringement procedure, the exclusive owner should comprehensively consider the actual condition in each procedure, analyze the registered layout design, and try to objectively claim the creativeness of the layout design. The core design part can be included along with some basic design parts or auxiliary design parts, and no substantial changes should be made in the subsequent procedures, such that the exclusive owner can gain better protection for their exclusive rights without harming the interests of the public.

  • Criteria and method for determining creative parts

Article 4 of Regulations on Protection of Integrated Circuit Layout Design provides,

“the layout design under protection shall have creativeness, namely, the layout design shall be the achievements of the creator’s intellectual work, and when it is created, that layout design shall not be generally recognized as a routine design by the creators of layout design and the producers of integrated circuit.

With regard to layout design composed of routine designs, the combination as a whole shall meet the requirements prescribed in the previous clause.”

The revocation petitioner indicates that: Part I and Part II of the layout design claimed by the exclusive owner are common designs in the art and thus do not have creativeness, failing to comply with Article 4 of Regulations on Protection of Integrated Circuit Layout Design.

The panel opines that: if a layout design is obviously different than the existing layout design, it is the achievements of the creator’s intellectual work (i.e., it is not conventional design to the layout design creator and the integrated circuit manufacturer), and the layout design therefore involved creativeness. If a layout design is identical to the existing layout design and the creator may have a chance to access the layout design, the layout design is not the achievements of the creator’s intellectual work and thus lacks creativeness.

More specifically, regarding Part I and Part III, the panel holds that: for different designs of integrated circuits, creators or manufacturers will adopt some general design principles, but different creators or manufacturers can still make completely different layout designs when considering the same design principles; the layout design disclosed in Evidence 14 is apparently different from Parts I and III of the subject layout design. Therefore, the layout designs corresponding to Parts I and III of the subject layout design are achievements of the creator’s intellectual work, as compared with the current evidence.

Regarding Part II, the existing layout design disclosed in Evidence 14 is identical to Part II of the subject layout design, and the creator may have a chance to access the PAW3305 layout design; therefore, the layout design corresponding to Part II is a common design and thus not achievements of the creator’s intellectual work.

We believe that, according to the Regulations on Protection of Integrated Circuit Layout Design, creativeness of a layout design are mainly embodied in following two aspects: 1) the layout design is independently created, which is achievements of the creator’s intellectual work; and 2) the layout design is innovative, i.e., it is not a common design. Creativeness of a layout design should be determined from the above-mentioned two aspects. In other words, a layout design that satisfies the protection requirements must satisfy the requirements as mentioned above; in the event that either of them is not satisfied, the layout design should not be protected.

More specifically, when determining whether a layout design is “achievements of creator’s intellectual work”, it should be determined whether the alleged creative part is identical or substantially identical to the prior design of others accessible to the creator. If there is no chance of access or the two layout designs are different, the alleged creative part is achievements of the creator’s intellectual work; and if the two layout designs are identical or substantially identical and there is a chance of access, the alleged creative part cannot be considered as achievements of the creator’s intellectual work. If it is determined that the alleged creative work is indeed achievements of the creator’s intellectual work, it is required to further determine whether the layout design is the common design, i.e., whether the alleged creative work can be obtained from textbooks, technical dictionaries, technical manuals, etc. in the field of layout design, and whether the design is conceivable based on basic design principles, for example, whether it is a unique choice. In addition, similar to copyright, an integrated circuit layout design protects a specific expression and does not extend to ideas, processing procedures, operating methods or mathematical concepts, etc. Accordingly, when determining the creative part, it should also focus on the similarity of specific designs, rather than similarity of principles or ideas on which the design is based.

  • Criteria for determining application for registration within 2 years since the date of first commercial use

Article 17 of Regulations on Protection of Integrated Circuit Layout Design provides,

“the administrative departments of intellectual property of the State Council shall not register any layout design that has not applied for registration in 2 years since it was put into commercial utilization for the first time at any place of the world.”

In the typical case, the revocation petitioner claimed that: the CS3815 wafer layout design substantially identical to the subject patent design had been used for the first time in July of 2014, but the exclusive owner applied for registration to the CNIPA on December 8, 2017; therefore, the application date exceeds the date of the first commercial use by 2 years, and the layout design does not comply with Article 17 of the Regulations.

The panel opines that, to determine whether an exclusive right of a layout design has been registered within 2 years from the date of its first commercial use, the revocation examination should be conducted in the following two aspects:

1) whether the layout design in commercial use is the same or substantially the same as the layout design for which the exclusive right has been obtained through registration, and

2) whether the date of applying for registration of the exclusive right of a layout design exceeds the date of first commercial use of the layout design by more than 2 years.

The panel further holds that the layout design is obviously distinguished form the CS3815 wafer layout design, i.e., the subject layout design is neither identical nor substantially identical to the CS3815 wafer layout design. As such, there is no evidence proving that the date of applying for registration of the exclusive right of the subject layout design exceeds the date of its first commercial use by more than 2 years.

We believe that, according to the Regulations on Protection of Integrated Circuit Layout Design, a layout design should be registered within 2 years from the date of its first commercial use, which is applied in practice anywhere in the world, and if the application for registration exceeds this time limit, registration is not allowed. Therefore, after completing the layout design of the integrated circuit, the right holder should reasonably arrange the time of applying for registration in light of its commercial plan and the actual situation. In addition, the exclusive owner should also safely keep the relevant materials and information about the commercial use of each layout design so as to provide corresponding counter-evidence every time when the registered layout design is challenged in a revocation procedure.