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Often considered a fast-track to resolution of a dispute over patent ownership, Chinas administrative adjudication mechanism has proved to be an efficient and efficacious way to resolve patent infringement issues. Chengda Li explains how it works and why more and more patentees are using it.

With the newly amended China Patent Law that became effective on June 1, 2021, the objective is to, more effectively, protect the legitimate rights and interest of patentees.

In China, there is a so-called dual-track scheme to enforce a patent, namely the administrative route and the judicial route. In case of a patent infringement dispute, the patentee or interested party may file a lawsuit in the Peoples Court or request a local intellectual property (IP) administrative office handle the dispute under Article 65 of the Patent Law. As stipulated in Article 70.1 of the Patent Law, for a patent infringement dispute that has a major impact nationwide, the patentee or the interested party can even directly request the China National Intellectual Property Administration (CNIPA) handle it. The dual-track scheme is also applicable to patent linkage disputes in China. To proceed with a drug patent dispute case arising from patent linkage, there are two routes to go. The first one is to take civil action before the courts and the second one is to file an administrative adjudication request before CNIPA.

The administrative adjudicative route

The basic legislation for using the administrative adjudication mechanism for patent dispute resolution, in addition to the Patent Law, is the Measures for Patent Administrative Enforcement, which were originally enacted in 2001 and were later amended in 2010 and again in 2015. The Measures prescribe fundamental rules of administrative adjudication for patent infringement disputes and patent administrative enforcement. The Measures also set out the primary procedures and standards for handling administrative adjudication cases. Now the Measures are still in effect.

According to the Measures, the local IP administrative offices of each province, as well as the CNIPA (which was previously known as the State Intellectual Property Office, or SIPO) are responsible for both administrative adjudication for patent infringement disputes and patent administrative enforcement. It is to be noted that in the newly amended Patent Law, Article 69 differentiates between patent administrative enforcement authorities and administrative adjudication authorities. The former refers to Administrative Offices for Market Regulation, while the latter to the CNIPA and local IP administrative offices of each province. Pursuant to new Article 69, patent administrative enforcement authorities are granted stronger administrative powers than administrative adjudication authorities. Specifically, an administrative adjudication authority may conduct questioning of the involved parties and examination of sites and products relating to the infringement in a patent infringement dispute, whereas a patent administrative enforcement authority may additionally seize or detain counterfeit products and conduct evidence examination and reproduction. It can be expected that the Measures will be amended in the near future to be in line with the newly amended Patent Law.

To further strengthen the protection of patent rights and improve the efficiency and quality of administrative adjudication concerning patent infringement disputes, the CNIPA issued a more detailed Guideline on December 26, 2019, called the Guidelines for Handling Cases of Administrative Adjudication Concerning Patent Infringement Disputes (hereinafter referred to as the Guidelines). The Guidelines clarify the basic concepts of administrative adjudication on patent infringement disputes, including jurisdiction, avoidance, agency, delivery, case handling procedures such as case docketing, examination, evidence investigation, and rules of evidence. The Guidelines also explain the infringement determination of various types of patents and the relevant principles of infringement determination.

On May 28, 2021, to better handle administrative adjudication cases of patent infringement disputes that have a significant nationwide impact, CNIPA released the Administrative Adjudication Measures for Major Patent Infringement Disputes. The Measures went into force June 1, 2021, along with the amended Patent Law. The Measures provide an explanation of the categories of cases that would fall under the purview of Article 70.1 of the Patent Law. Per Article 3 of the Measures, any of the following situations is a major patent infringement dispute:

(1) Involving major public interests;

(2) Significantly affecting the development of the industry;

(3) Major cases involving cross-provincial administrative regions;

(4) Other patent infringement disputes that may cause significant influence.

The Measures set out detailed guidelines for the administrative handling of such cases by CNIPA, including the procedures of oral hearing and the technical investigator system, which is similar to procedures in a civil litigation before a court. The Measures also clarify that the only remedy available is an injunction, with no damages. Appeals of a decision of CNIPA can be filed before the Beijing Intellectual Property Court within 15 days of the ruling but enforcement of an injunction will not be suspended during the appeal process. Of note, the Measures prescribe that, during the administrative adjudication, if the involved patent is declared invalid by the Reexamination and Invalidation Examination Division of the CNIPA, the administrative adjudication case may be terminated. Where there is evidence to prove that the decision to invalidate the patent has been revoked by an effective administrative judgment, the patentee may file another administrative adjudication request. Considering that the administrative authority handling administrative adjudication cases of patent infringement disputes and the Reexamination and Invalidation Examination Division are both sub-departments of CNIPA, it is seen that, in the future, patent infringement disputes may be settled in a more convenient and cost-effective manner through the administrative adjudication route. Moreover, joint trial of administrative adjudication and patent invalidation procedures may be possible within CNIPA.

Technical investigators

Turning to the technical investigator system, it is believed that the introduction of the technical investigator into patent infringement cases is beneficial and helpful, since most patent infringement dispute cases are difficult and complex with professional and technical challenges. On May 7, 2021, CNIPA issued the Provisions on the Participation of Technical Investigators in Administrative Adjudication of Patent and Integrated Circuit Layout Design Infringement Disputes (Interim) (hereinafter referred to as the Provisions). Issuance of the provisions follows the Supreme Peoples Courts regulation on technical investigators for IP-related litigations. The provisions stipulate in detail the roles and responsibilities of technical investigators. According to the Provisions, both the CNIPA and the local IP administrative offices may assign technical investigators to participate in administrative adjudication cases of patent infringement disputes. The CNIPA is responsible for building a national technical investigator database and selecting and managing the technical investigators. The local IP administrative offices may select and manage the technical investigators in their own jurisdictions but may also apply for the deployment of technical investigators from the national technical investigator database to participate in its administrative adjudication activities. The provisions set out that the technical investigators may participate in the oral hearings and ask questions to the parties and other relevant personnel. The technical investigators may also attend meetings of the collegiate panel as nonvoting delegates. Recently, the CNIPA announced that a first panel of 35 technical investigators has been elected, covering technical fields such as machinery, electricity, communications, medical biology, chemistry, optoelectronics, materials, and design.

Most recently, on July 5, 2021, the CNIPA released the Administrative Adjudication Measures for Early Resolution Mechanisms for Drug Patent Disputes. Together with the above-mentioned administrative adjudication measures for patent infringement dispute, China has established its characteristic and comprehensive administrative adjudication system. The Measures clarify the basic concepts of administrative adjudication for early resolution mechanisms for drug patent disputes (the so called patent linkage system), including jurisdiction, parties, case handling procedures such as case docketing, examination, mediation, and oral hearing. The Measures also explain the relation with patent invalidation and the parallel proceedings with civil litigation.

Specifically, per Article 4 of the Measures, no successful prior lodging of a civil action before a court is one of the preconditions for filing a request for administrative adjudication with CNIPA. However, successful filing of administrative adjudication case with CNIPA can neither preclude from filing nor stay the civil action according to the rules of the Supreme Peoples Court. With respect to invalidation, the Measures clarify that all the claims in suit of the patent being invalidated, either before or during the administrative adjudication, can be a ground for dismissal of the administrative adjudication; in case of a part of the claims in suit of the patent being invalidated, the administrative adjudication will be based on those claims that are maintained valid. But it is not clear where the CNIPAs invalidation decision is appealed to the court, whether status of the claims here would be determined by the CNIPAs invalidation decision, or would rely on the final judgment from the appeal.

Is administrative adjudication a fast-track?

Generally speaking, the administrative adjudication route is much faster and less expensive than civil litigation. When handling patent infringement disputes, the local IP administrative office is required to complete the adjudication within three months from the date of case docketing. If the case is particularly complicated and the time limit needs to be extended, it shall be approved by the person in charge of the local IP administrative office. The approved extension shall not exceed one month at most. It can thus be seen that the administrative adjudication route is a fast-track mechanism for patent infringement dispute resolution. More and more patentees, especially small and microenterprises, choose this route in case of an infringement dispute. According to a statistic of CNIPA, in June 2021, there were as many as 4,257 administrative adjudication patent infringement dispute cases filed before local IP administrative offices in China, among which the IP Administrative Office of Zhejiang Province handled the most, up to 2,450 cases. It appears that the administrative adjudication route is becoming a preferred way to resolve patent infringement disputes, especially for those infringers that are located in a developed province.

A most famous administrative adjudication case in China may be Shenzhen Baili Marketing Service Co. Ltd. v. Apple Inc. (the Baili case). In May 2016, the Beijing IP Office issued a decision affirming that Apples iPhone 6 and iPhone 6 Plus infringed a Chinese design patent ZL201430009113.9, owned by Shenzhen Baili Marketing Service Co. Ltd. The Beijing IP Office thus rendered a ban, ordering Apple to stop selling the iPhones. Upon the issuance of this decision, the decision itself, together with Beijing IP office, came under the spotlight. Apple immediately brought forth an administrative lawsuit before the Beijing Intellectual Property Court to challenge the administrative decision. On March 24, 2017, Beijing Intellectual Property Court rendered its first-instance judgment overruling the administrative order by the Beijing IP Office. In the meanwhile, Beijing Intellectual Property Court also ruled directly over the civil dispute between Bali and Apple and reached a non-infringement judgment in favor of Apple.

Conclusion

Administrative adjudication has proved to be an efficient and efficacious mechanism for patent infringement dispute resolution in China. However, some experts have been questioning whether the bifurcated approach, the administrative adjudication and civil litigation dual-track scheme in China, will cause confusion and inconsistent judgments.

In the fourth amendment to Chinas Patent Law, the dual-track scheme has been kept and even extended to disputes involving open licenses and patent linkage disputes. The administrative adjudication mechanism should be encouraged if the primary purpose is to stop patent infringement earlier without focusing on potential damages. If, however, one of the purposes is to obtain payment of damages, it is advisable to go with the court proceedings to settle patent infringement disputes.

Last but not least, for a patent dispute that has a significant impact, it may be advisable to file both a civil action and an administrative adjudication request. But it should be remembered that the administrative adjudication request must be filed simultaneously with or before the civil action; otherwise, the administrative adjudication request will be rejected.

Original post:
The fast-track to patent dispute resolution: The administrative adjudication mechanism - Lexology