International Patent Litigation in China

The patentee or a materially interested party is allowed to bring proceedings for patent infringement. A materially interested party includes the licensees and the successors of the patentee. Exclusive licensees have the right to bring proceedings for patent infringement without the consent of the patentee. However, sole licensees may initiate infringement proceedings only after the patentee has expressly confirmed that it will not do so.

If the patent is owned by two or more parties, any one of those parties may initiate infringement proceedings without the consent of the other co-owners. Courts will join the other co-owners to court proceedings unless they expressly waive their claims.

It is possible to join more than one party as a defendant in China. The court has discretion to add a party as a defendant, if the court holds that the party must participate in the action as a joint defendant. A party to the lawsuit may also request the court to join a third party as a defendant.

Yes, it is possible to join suppliers and other third parties to the patent litigation if they conduct the patent infringement or assist in doing so. The People’s Court has sole discretion to decide whether to join suppliers and other third parties. Whether to join the third parties depends on collected evidence and litigation strategies.

The limitation period for patent infringement is three years from the date on which the claimant knows or should have known of the patent infringement.

It is not a requirement to invoke all potentially infringed patents at once, but it is advisable to do so in order to raise strong claims and make sufficient allegations. If the claimant wants to add any claims, it must be raised before the conclusion of the court debate.

Infringement and the validity of a patent are not decided in the same proceedings in China:

• the first instance courts for patent infringement cases are the specific intellectual property courts, the intermediate courts located at the capital cities of the provinces, and other intermediate courts which have been specially designated by the Supreme People’s Court. In exceptional cases the first instance proceedings may take place at a high court. The decision of a first instance court is appealable. The appellate court’s decision is final. In exceptional cases the final decision may be reviewed by the Supreme People’s Court;
• invalidity proceedings must be initiated before the China National Intellectual Property Administration (“CNIPA”). If a party is not satisfied with the decision of the CNIPA, the party may institute an administrative lawsuit against CNIPA before the Beijing Intellectual Property People’s Court. The administrative decision of the Beijing Intellectual Property People’s Court may be appealed to the Beijing High People’s Court. Under some circumstances, the administrative decision of the first instance can be appealed to the Intellectual Property Tribunal established by the Supreme People’s Court. Again, the appellate court’s decision is final. In exceptional cases the final decision may be reviewed by the Supreme People’s Court.

No.

A party may apply to the court for a binding declaration of non-infringement in China if the following preconditions are met:

• a right holder issues a patent infringement warning to the party;
• the party that is warned or a materially interested party urges the right holder to exercise its right to sue by giving a written notice; and
• the right holder neither withdraws its warning nor institutes a civil lawsuit within one month from the date of receipt of the written notice or within two months of the date of issuance of the written notice.

On average, cases in the Chinese courts take approximately six months to reach trial. There are no statutory requirements on this procedural issue. In practice, the first hearing may be postponed due to different factors.

Following ordinary civil procedures, the patent cases shall be decided within six months from when the litigation is admitted. The above time period may be extended by the approval of the president of the relevant court. Any further extension shall be reported to the People’s Court of higher level for approval. However, if any of the parties is a foreign company or individual, no specific time limit for conclusion of the case is stipulated by law. On average, it might take more than one year.

In addition, patent invalidation / revocation litigations shall be subject to administrative procedures. Generally, such cases shall also be decided within six months from when the litigation is admitted. However, if extension of such period is required due to special circumstances, such extension shall be approved by a superior People’s Court. On average, it will also take more than one year for the competent People’s Court to render the first instance decision.

Patent judges in China usually do not have any scientific background. If the case involves complex technical issues, the judges may, at their discretion, appoint a qualified forensic analyst to issue a forensic opinion in order to ascertain relevant technical issues.

Not applicable.

It is possible to file a nullification application for a patent before the CNIPA simply to clear the way for using a particular technology. However, in most cases, filing a nullification application for a patent is a counter measure taken by defendants in patent infringement proceedings.

There is no specific definition of a FRAND license under PRC law. A claim for a FRAND license is usually raised in a specific patent infringement case.

Under PRC law, there are different circumstances of compulsory license. Generally, the CNIPA may grant a compulsory license to any eligible entity or individual upon application:

• where a patentee, without any legitimate reason, fails to have the patent exploited or fully exploited within three years as of the date on which the patent right is granted and within four years as of the date of patent application; or
• where a patentee’s exercise of the patent right is considered to be monopolistic and its negative impact on competition needs to be eliminated or reduced.

In addition, the CNIPA has discretion to issue compulsory licenses for public health purposes or in national emergency cases. When it involves an invention pertaining to semiconductors, a compulsory license can only be issued for public interest and will be limited to the monopolistic circumstance as stated above.

Yes, there are some typical cases where the FRAND defence is reviewed and decided by the People’s Court. If the FRAND defence is successful, the People’s Court may determine the FRAND license fees or order an antisuit injunction to prevent the patent owner from initiating patent infringement lawsuits in other jurisdictions. In recent cases, the People’s Court has held that competent courts in China have jurisdiction to determine a global FRAND license rate.

Parties may apply to the court for a forensic analysis on specific technical issues. The parties may jointly select a qualified forensic analyst between themselves. If the parties cannot reach an agreement, the court will appoint a qualified forensic analyst on behalf of the Parties. If none of the parties applies for forensic analysis, the court may appoint a qualified forensic analyst when it considers it necessary. If a party objects to the forensic opinions or if the People’s Court deems it necessary, the forensic analyst shall testify in court.

Any party may apply to the court to nominate an expert to participate in the oral hearing and to give its expert opinion on the forensic opinion rendered by a forensic analyst or on a specific issue.

China does not have a discovery procedure. The parties are required to provide evidence in support of their allegations. However, in any of the following circumstances, the court may investigate and collect evidence on its own:

• a party and its lawyer are not able to collect evidence on their own for reasons beyond their control and make request to the courts; and / or
• the court deems it necessary for the trial of the case.

It is possible to make an application to court for preservation of evidence before proceedings have commenced. The order is at the discretion of the  judge and is only available where:

• evidence could be destroyed or lost; or
• evidence could be difficult to secure in the future.

In patent litigations cases, the seizure of evidence is a measure often adopted.

For the appeal routes available see response to the question on the forum for patent litigation proceedings above.

If a party is not satisfied with the judgment of the first instance court, the party has the right to lodge an appeal with an appeals court within the designated period (“Appealing Period”). If the party is domiciled in China, the Appealing Period is 15 days from the date on which the judgment was served. If the party is not domiciled in China, the Appealing Period is 30 days from the date on which the judgment was served. A party wishing to appeal must submit the appeal petition to the first instance court that originally tried the case. The first instance court will hand over the appeal petition and other litigation documents to the appellate court.

An appeal may be brought if the judgment of the lower court was wrong or if there was a procedural irregularity. The appellate courts may at their discretion determine whether an oral hearing is necessary. Both factual issues and the application of law will be reviewed by the appellate court during the second instance proceedings.

If the parties are Chinese individuals or legal entities, the appellate court is required to decide the case within three months from when the appeal petition is admitted. The above time period can be extended by the approval of the president of the appellate court. However, if any of the parties is a foreign company or individual, no specific time limit for conclusion of the case is stipulated by law. On average, it might take six to 12 months.

The judgment of the appellate court is final and no second appeal is allowed in China. However, if a party is of the opinion that the final judgment is incorrect, the party may apply for a retrial, usually with the court at the next higher level. As for the case where one party comprises of a large number of individuals or both parties are citizens, the party may apply for a retrial with the current People’s Court. In such case, enforcement of the final judgment will not be suspended.

The first instance decision will be suspended during an appeal. If the appeal maintains the first instance decision, the first instance decision will take effect. If the appeal court orders to amend, cancel, change the first instance decision or retry the case, the first instance decision will not take effect.

The main forms of ADR in China are negotiation, mediation and arbitration:

• In patent infringement cases, the concerned parties may solve the dispute by negotiation. If a party refuses to negotiate or the negotiation is not successful, the claimant may either file a complaint against the infringer with a local patent administrative department or institute a civil lawsuit against the infringer before a competent court.

During the court proceedings, the parties are allowed to continue negotiations. If the parties reach a settlement agreement through negotiation, the parties may request the court to issue a mediation statement instead of a civil judgment. The mediation statement is legally binding once it has been signed by the parties.

The Chinese Courts encourage the parties to settle the case amicably. If the parties would like to settle the case through mediation, the judge will organise mediation during the court proceedings (including at evidence exchange phase or earlier). If either party does not want to use mediation to settle the case, the court will not organise mediation. The court cannot compel the parties to take part in mediation and either party may refuse to settle the case through mediation. If the parties reach an agreement in mediation, the parties may request the court to issue a mediation statement instead of a civil judgment. The mediation statement is legally binding once it has been signed by the parties and cannot be appealed.

If instead of court proceedings the claimant files a complaint against the infringer with the local patent administrative department, the patent administrative department is entitled to determine whether a patent infringement is established. If the patent administrative department believes that the infringement is established, it may order the infringer to cease the infringement with immediate effect. The infringer is entitled to appeal the ruling to the competent courts within 15 days of receipt of the patent administrative department’s order. If the infringer neither files an appeal nor ceases the infringement, the patent administrative department may request the People’s Court for a compulsory execution of the aforesaid order. The patent administrative department may, upon the request from both or either of the parties, conduct mediation in respect of the amount of compensation for the damage caused by the patent infringement. If the mediation fails, the parties may initiate a lawsuit before the competent courts accordingly; However, such administrative measures are not often adopted in practice for patent cases, because patent administrative departments do not have sufficient technical staff to judge the technical issues of the patent infringement, unless it is related to industrial design patent. They need to organise a panel of experts in order to determine whether a patent infringement exists or not, whereas such panel of experts are often elected from the persons they know locally, which may lead to unfavourable judgments for patent holders due to local protectionism.

• Arbitration is not often used to solve disputes in respect of patent infringement in China. Parties will usually use arbitration if required by contract. Only institutional arbitration is allowed in China.

Chinese courts will seek to encourage parties to settle disputes by negotiation or mediation at any stage of the proceedings. However, the courts cannot compel the parties to reach a settlement agreement. If the parties cannot solve the dispute by negotiation or mediation, the court is obliged to make a civil judgment in a timely manner.

The remedies that may be claimed in patent infringement cases are:

• a cease and desist order;
• removal of bad effects; and
• damages

The so-called “removal of bad effects” is where the court orders the patent infringer to eliminate the negative effects caused by the patent infringement and restore the reputation of the patented products or processes.

There are no automatic injunctions in case of patent infringement in China. In respect of a preliminary injunction, please refer to our comments below.

Claimants may seek damages on the basis of one of the following alternative options:

• to compensate them for the actual losses incurred by the claimant as a result of the infringement. The actual losses can be calculated based on the amount by which sales of the claimant’s patented products had decreased, multiplied by a reasonable profit of a patented product. If it is difficult to verify the amount by which sales have decreased, the actual losses may be calculated on the basis of the total number of the infringing products on the market multiplied by reasonable profit of a patented product;
• to compensate them for the benefits derived by the infringer from the infringement. Such benefits can be calculated on the basis of the total number of the infringing products on the market multiplied by the reasonable profit of an infringing product.

If  both the actual losses of the claimant and the benefits derived by the infringer from the infringement are difficult to determine, the court may award damages in the amount of reasonable multiples of the patent royalty. It is at the sole discretion of the court to determine the scope of “reasonable multiples”. Normally, when the courts are assessing reasonable multiples, the courts consider the type of infringed patent, the nature and circumstances of the infringement and the nature, scope and duration of the patent license, etc.

In the case of an intentional infringement of patent rights, if the circumstances are serious, punitive damages may apply. The amount of punitive damages may be determined as between one time and five times the amount determined under the aforesaid method.

The above damages may also include the reasonable expenses which have been paid by the claimant to stop the infringement.

If it is difficult to determine the above damages, the claimant may request the court to award statutory damages of up to five million renminbi (RMB 5,000,000). The exact amount of damages is at the sole discretion of the court.

No.

According to the PRC Patent Law revised in 2020 and effective as of 1 June 2021, punitive damages are available for deliberate patent infringement. If the claimant proves that the patent infringement is intentional and the circumstances are serious, the People’s Court may award punitive damages up to five times the amount determined under the basic compensation calculation method. The punitive damages are at the sole discretion of the court.

There is no specific regulation concerning the recall of infringing products under PRC laws. It is also not a common practice in China that a claimant will ask the infringer to recall the infringing products. The claimant should initiate alternative administrative claims to the administrative departments for such recall if any of the infringing products fail to reach the quality standards  of the products in China.

It is possible to obtain a preliminary injunction in China. The patentee or a materially interested party is allowed to apply where they have evidence proving that there is either actual patent infringement or a threat of patent infringement. The materially interested party includes the licensees and the successors of the patentee. Exclusive licensees have the right to apply for the preliminary injunction without the consent of the patentee. However, sole licensees may apply only after the patentee has expressly confirmed that he will not do so.

A preliminary injunction can be granted if the court is satisfied that:

• the applicant has evidence proving that a third party is currently infringing or is about to infringe upon the patent; and
• failure to stop the infringement in a timely manner would cause irreparable harm to the lawful interests of the applicant.

Without notice injunctions are available in China. However, it is at the sole discretion of the court.

It is possible to obtain a preliminary injunction within  48 hours after the court has admitted the application.

A party is permitted to apply to the court for a review of the decision to grant a preliminary injunction within 10 days of receipt of the decision. The review does not suspend the enforcement of the injunction.

Yes, the applicant will need to pay security in advance at the time of application. Without the security the application for the preliminary injunction will be dismissed by the court.

Yes, the applicant must institute a civil lawsuit against the infringing party within 30 days of the preliminary injunction being granted. If the applicant fails to do so, the preliminary injunction will be cancelled. After the applicant has commenced the civil proceedings within the above time limit, the preliminary injunction will remain in effect until the final decision is issued in the main trial.

Cross-border injunctions are not available in China.

Anti-suit injunction belongs to the preliminary injunction as stated above. Therefore, an anti-suit injunction will  be available if it meets the requirements for general injunctions, but it shall be determined in combination with substantial facts in independent cases.

The People’s Court has ordered the anti-suit injunction in the context of standard essential patent (“SEP”) and FRAND license litigations, which orders the SEP owner not to initiate new patent litigations or request for new injunctions in other jurisdictions. In that case, the People’s Court considered the following four factors:

• whether it is necessary to issue the anti-suit injunction;
• balance of both parties’ interests;
• whether the anti-suit injunction harms public interest;
• international judicial comity.