Recently, the Intellectual Property Tribunal of the Supreme People's Court (SPC) concluded an appeal case involving a dispute over infringement on a utility model patent against which an invalidation procedure had also been initiated, and for the first time, under the circumstance that an administrative procedure for confirming the right of the involved patent had been initiated, the SPC actively guided the parties concerned to voluntarily make a commitment on compensation for future benefits, and ruled to dismiss the appeal case in view of the stability of the involved patent.

Through this case, the SPC hopes to show that where the stability of a patent involved in a patent infringement lawsuit is in doubt or in dispute, based on the consideration of fairness and good faith, the parties concerned can voluntarily make a promise or statement of compensation for relevant future benefits, and no matter whether people’s court finally continues the trial and makes a judgment, rules to suspend the litigation, or rules to dismiss the lawsuit, the interests of both parties can be effectively balanced.

The SPC hopes that the court of first instance, when hearing a patent infringement case, can also take the initiative to make relevant explanations to the parties and actively try similar practice.

In this case, the patentee, i.e. the plaintiff, owned another related utility model patent, in addition to the utility model patent involved in this case. The two utility model patents have basically identical technical features, except that one of the patents adopts a "USB plug connector" and the other adopts an "AC plug connector and a power adapter used with it". Before the first-instance trial of this case, the other patent had been declared invalid (the invalidation decision had taken effect). For the patent involved in this case, the patentee requested the court of first instance court to order the alleged infringer to stop the infringement, destroy the infringing products and molds in inventory, and compensate for the patentee’s economic losses and reasonable expenses incurred in safeguarding its rights. The alleged infringer argued that the related another patent had been declared invalid, and the patent involved in this case also did not meet the conditions for allowance, and thus its conduct did not constitute infringement. The court of first instance held that the alleged infringer’s patent invalidation defense was tenable and thus rejected all the litigation claims of the patentee. Unsatisfied with the ruling of the first-instance court, the patentee appealed to the SPC.

During the second-instance trial, the alleged infringer submitted a request before the CNIPA for invalidation of the patent involved. The SPC held that in a patent infringement case, with respect to a specific challenge or defense raised by an alleged infringer against the stability of the patent, the people's court may conduct a limited examination on whether the patentee has the basis for properly and reasonably exercising the right of action, but cannot make a determination or judgment on the validity of the patent per se. The first-instance court’s analysis and judgement on the stability of the patent involved was not obviously inappropriate, but there was no legal basis for the first-instance court to directly determine that the defendant's patent invalidation defense was tenable and reject the patentee's litigation claims based on such determination.

As mentioned above, the patent involved in this case and the related patent are both utility model patents that were granted without substantive examination, and the difference in the technical features between the two patents only lies in that one adopted a USB plug and the other adopted an AC plug and the power adapter used with it. Further, the two patents were filed on the same day under the dual-filing strategy, and under the circumstance that the related patent had been declared invalid by the CNIPA and the alleged infringer had also submitted a request for invalidation against the patent involved in this case before the CNIPA, there is a high possibility that the patent involved in this case may also be declared invalid, and thus the patent involved in this case is obviously not stable enough.

After the collegial panel of the second instance explained the possible handling manners for the stability of the patent involved in this case in accordance with the law, the parties voluntarily made a commitment to compensate for corresponding future benefits. The core of the patentee's commitment is that when the patent is declared invalid, the patentee will return all the actual earnings about the infringement to the alleged infringer and pay corresponding interests; the core of the alleged infringer's commitment is that when the patent is maintained, the alleged infringer will pay the patentee all the compensation payable for the infringement, along with corresponding interests. In view of the above circumstances, the SPC ruled to reject the patentee's appeal by making reference to the provisions of paragraphs 1 and 2 of Article 2 of the Interpretation of the SPC on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases (II). The patentee may  file a separate lawsuit and claim its rights in accordance with the alleged infringer’s commitment on compensation for benefits after an examination decision to maintain the patent involved has been issued by the CNIPA and has taken legal effect.

Handling the case in this way not only protects the litigation rights of the parties, but also fully considers fairness and good faith, and saves litigation resources and costs.

Please see the following link for the details of the case: