Several Provisions of the Supreme People's Court on Issues Relating to Application of Law to the Adjudication of Cases of Patent Disputes

With a view to duly adjudicating cases of patent disputes, the Provisions are hereby set forth as the following in accordance with the provisions of the General Principles of the Civil Law of the People's Republic of China (hereinafter referred to as the General Principles of the Civil Law), the Patent Law of the People's Republic of China, (hereinafter referred to as the Patent Law), the Civil Procedure Law of the People's Republic of China and the Administrative Procedure Law of the People's Republic of China:
Article 1 The people's court accepts following cases of patent disputes:

1. Disputes over the ownership of the right to apply for patent;
2. Disputes over the ownership of the patent right;
3. Disputes over contracts for assignment of the patent right or the right to apply for patent;
4. Disputes arising as a result of patent infringement;
5. Disputes arising as a result of counterfeiting other persons' patents;
6. Disputes over the exploitation fee after the publication of the applications for patent for invention and before the grant of the patent right;
7. Disputes over the reward and remuneration for the inventors or creators of service inventions;
8. Cases of pre-trial requests for ceasing infringement or for preserving property;
9. Disputes over the qualification of inventors or creators;
10. Cases of dissatisfaction with the reexamination decisions made by the Patent Reexamination Board to uphold rejections of applications;
11. Cases of dissatisfaction with the reexamination decisions made by the Patent Reexamination Board on requests for invalidation of the patent right;
12. Cases of dissatisfaction with the reexamination decisions made by the Patent Administrative Department under the State Council on execution of compulsory licenses;
13. Cases of dissatisfaction with the adjudication by the Patent Administrative Department under the State Council on the royalties for execution of compulsory licenses;
14. Cases of dissatisfaction with the administrative reexamination decisions made by the Patent Administrative Department under the State Council;
15. Cases of dissatisfaction with the administrative decisions made by the administrative authorities for patent affairs; and
16. Any other cases of patent disputes.

Article 2 Any first-instance cases of patent dispute shall be under the jurisdiction of the intermediate people' courts of the seats of the People's Government of the Provinces, the Autonomous Regions and the Municipalities under the Central Government and of any intermediate people' courts designated by the Supreme People's Court.

Article 3 Where any interested party, dissatisfied with the reexamination decision by the Patent Reexamination Board after 1 July 2001 on the request for revocation of a patent for utility model or design, institutes legal proceedings in the people's court, the people's court does not accept the case.

Article 4 Where any interested party, dissatisfied with the reexamination decision by the Patent Reexamination Board after 1 July 2001 to uphold the rejection of the application for a patent for utility model or design or with the decision on the request for invalidation of the patent right for utility model or design, institutes legal proceedings in the people's court, the people's court shall accept the case.

Article 5 Any lawsuit instituted against acts of infringement of the patent right shall be under the jurisdiction of the people's court of the place where the defendant has its or his domicile or of the place where the infringing act takes place.

Places where infringements take place include: places where acts take place of manufacturing, using, offering for sale, selling or importing the allegedly infringing products of the patents for invention or utility model; places where the acts of using a patented process take place and where acts take place of using, offering for sale, selling or importing products acquired by directly using the patented process; places where acts of manufacturing, selling or importing products of patented designs; places where acts of counterfeiting patents of other persons take place; and places where consequences of the preceding infringing acts arise.

Article 6 Where a plaintiff takes action against the manufacturer of an infringing product, but not against the seller as well and where the places in which the infringing products is manufactured and sold are not the same place, the people's court of the place where the product is manufactured has the jurisdiction thereover; where the action is taken with both the manufacturer and seller accused as the co-defendants, the people's court of the place where the infringing product is sold has the jurisdiction.

Where the seller is a subsidiary of the manufacturer and where the plaintiff takes action against the act of the infringing product manufacturer to manufacture and sell the product, the people's court of the place where the product is sold has the jurisdiction.

Article 7 Where a plaintiff institutes a lawsuit with respect to any patent application filed before 1 January 1993 and on the basis of any patent for invention of process granted to the application, the lawsuit is under the jurisdiction as determined in the light of the provisions of Articles 5 and 6 of these Provisions.

The people's court, in its substantive court hearing of the preceding cases, applies the provision that a patent for invention of process is not extended to the product.

Article 8 Any plaintiff takes action against an infringement of any patent right for utility model shall furnish the search report made by the Patent Administrative Department under the State Council when instituting the lawsuit.

Any defendant involved in the case of dispute arising as a result of the infringement of the patent right for utility model or design shall, when making its or his defence, file a request for invalidation of the plaintiff's patent right.

Article 9 Where the defendant files a request for invalidation of the patent right when making its or his defence in the case received by the people's court of dispute as arising as a result of the infringement of the patent right for utility model or design, the people's court shall suspend the legal proceedings. However, under any one of the following circumstances, the legal proceedings may not be suspended:

(1) Where no technical documentation is found in the search report furnished by the plaintiff that results in the loss of novelty or inventiveness of the patent for utility model;

(2) Where the defendant's evidence sufficiently proves that its or his used technology has been known to the public;

(3) Where the proof or basis the defendant has furnished to base its or his request on for the invalidation of the patent right in question is obviously insufficient; or

(4) Any other circumstances where the people's court finds that the legal proceedings should not be suspended.

Article 10 Where the defendant files a request for invalidation of the patent right in question after the expiration of the time fixed for making defence in a case received by the people's court of any dispute arising as result of the infringement of the patent right for utility model or design, the people's court shall not suspend the legal proceedings, except that it is otherwise found necessary to do so upon consideration.

Article 11 Where the defendant files a request for invalidation of the patent right in question within the period of defence in a case received by the people's court of any dispute arising as a result of an infringement of patent right for invention or one as a result of an infringement of the patent right for utility model or design in which the Patent Reexamination Board uphold, upon examination, the patent right, the people's court may not suspend the legal proceedings.

Article 12 Where the people's court decides to suspend the legal proceedings, the patentee or the interested party requests for ordering the defendant to cease the relevant act or for taking other measures to stop the spread of the damages caused by the infringement and provides guaranty, and the people's court, upon consideration, finds it in compliance with the provisions of the relevant laws, the people's court may simultaneously make the relevant ruling when deciding to suspend the legal proceedings.

Article 13 Where the people's court preserves the property of the patent right, it shall send the Patent Administrative Department under the State Council a notification for assistance in execution of the property preservation, indicating the matters for which assistance is sought and the duration of the patent right preservation, together with the people's court ruling paper.

As for the patent right preservation that shall not last more than six months, the term is counted from the date the Patent Administrative Department under the State Council receives the notification of assistance for execution. If it is still necessary to continue to take the measure to preserve the patent right, the people's court shall send, to the Patent Administrative Department under the State Council, the notification of assistance for executing the continued preservation before the expiration of the time limit fixed for the preservation. Where such notification is not sent before the expiration of the time limit fixed for the preservation, the property preservation of the patent right is deemed to have been automatically released.

The people's court may take the property preservation measures for the pledged patent right, the pledgee's priority of compensation is not affected by the preservation measures; the exclusive licensing contract concluded between the patentee and the licensee does not affect the people's court's adoption of the property preservation of the patent right.

The people's court shall not re-preserve the patent right that has been preserved.

Article 14 Where in respect of any invention-creation completed before 1 July 2001 by making use of the material and/or technical condition of the entity to which the inventor or creator belongs, the entity and the inventor or creator has concluded a contract, agreeing on the ownership of the right to apply for the patent and that of the patent right, the agreement shall be honored.

Article 15 Where any case received by the people's court of dispute arising as a result of patent right infringement relates to conflict of rights, the legitimate rights and interests of the interested party that enjoys the prior right according to law shall be protected.

Article 16 The prior legitimate rights referred to in Article 23 of the Patent Law include the trademark right, copyright, right of enterprise name, portrait right and the right to use the package or trade dress peculiar to any known goods, etc.

Article 17 The first paragraph "the extent of protection of the right for invention or utility model shall be determined by the terms of the claims. The description and the appended drawings may be used to interpret the claims" of Article 56 of the Patent Law means that the extent of protection of patent right should be determined by the necessary technical features expressly stated in the claims, including the extent as determined by the features equivalent to the necessary technical features.

The equivalent features refer to the features which perform a function and bring about an effect basically identical with the stated technical features by basically identical means and which can be contemplated by an ordinarily skilled artisan in the art without inventive labor.

Article 18 Where any act of patent infringement takes place before 1 July 2001, the civil liability under the Patent Law before this revision shall apply; where such act takes place after 1 July 2001, the provisions of the revised Patent Law shall apply to impose the civil liability.

Article 19 Where any one counterfeits another person's patent, the people's court may impose, on it or him, the civil liability according to the provision of Article 58 of the Patent Law. Where the administrative authority for patent work does not impose any administrative penalty, the people's court may impose civil penalty pursuant to the provision of Article 134, paragraph three, of the General Principles of the Civil Law, and the amount of the applicable fine in civil terms may be determined in the light of the provision of Article 58 of the Patent Law.

Article 20 Where the people's court imposes liability for compensation on the infringer according to the provision of Article 57, paragraph one, of the Patent Law, it may, on the request of the rightholder, determine the amount of compensation according to the losses suffered by the rightholder due to the infringement or the interests sought by the infringer from the infringement.

The losses suffered by the rightholder due to the infringement may be calculated by the total reduction in the volume of sales by the rightholder of the patented products times the reasonable profit of each patented product. Where it is difficult to determine the total reduction in the volume of sales by the rightholder, the total number of the infringing products sold in the market times the reasonable profit of each patented product may be deemed to be the losses suffered by the rightholder due to the infringement.

The interest of the infringer from the infringement may be calculated according to the total number of infringing products sold in the market times the reasonable profit of each infringing product. The income of the infringer from the infringement is generally counted according to the business profit of the infringer. As for the infringer who solely engages in infringement as its or his entire business, the income may be calculated according to its or his sales profit.

Article 21 Where the losses of the infringee or the income of the infringer is difficult to be determined, the people's court may, where the patent licensing fee may be referred to, determine the reasonable amount of compensation according to the kind of patent right involved, the nature and facts of the infringement by the infringer, the amount of the patent licensing fee, the nature, extent and time of the patent license with reference to one to three times the patent licensing fee; where there is no patent licensing fee to be referred to or the license fee is obviously unreasonable, the people's court may, according to the factors, such as the kind of the patent right, the nature and facts of the infringement, determine the amount of compensation of more than RMB 5,000 yuan and less than RMB 300,000 yuan, but not exceeding RMB 500,000 yuan at most.

Article 22 The people's court may, on the request of the rightholder and according to the specific facts of a case, include the reasonable expenses paid for investigation or for ceasing the infringement within the amount of compensation.

Article 23 The limitation for action against patent right infringement is two years, counted from the date when the patentee or the interested party knows or has reasonable grounds to know about the infringing act. Where the rightholder does not take any action until two years later and if the infringing act continues when the action is taken, the people's court shall, within the term of validity of the patent right in question, rule that the defendant cease the infringing act, and the amount of compensation for the infringement shall be counted from the two years before the date when the rightholder institutes legal proceedings in the people's court.

Article 24 The offering for sale referred to in Articles 11 and 63 of the Patent Law means the expression of will for sale by virtue of advertisement, shop window display or exhibition.

Article 25 Where the people's court receives a case of dispute arising as a result of patent infringement in which the administrative authority for patent affairs has determined as to the infringement or non-infringement, the people's court may, on the request of the interested party to the case, carry on a comprehensive examination.

Article 26 Where any discrepancy arises between the former relevant judicial interpretations and these Provisions, these Provisions shall prevail.

(This judicial Interpretation has been in force since July 1, 2001)