The 4th amendment of China’s Patent Law on partial design and patent infringement lawsuits

The fourth amendments to the Patent Law went into effect on June 1, 2021, approximately a year ago. Although the detailed implementing regulations and examination guidelines for the Patent Law are still pending, some Supreme Court judicial interpretations, the draft version of the revised examination guidelines, and new judgments in legal practice have provided some guidance on hot topics like partial design, patent linkage for drugs, punitive damages in patent infringement lawsuits, and patent term adjustment.

Updates on partial design

The involvement of partial design is a significant change in the 4th amended version.

The IP sector is anticipating that examination criteria for partial design will be released in 2022, so that partial design submissions will have something to depend on. Only a draft version has been released thus far, in order to solicit public feedback (on August 3 2021). Despite the fact that this isn’t the final product, it gives you a good idea of the intentions for partial design filings.

The most appealing aspect is how to display such partial designs. The use of a solid line and a broken line combined to illustrate a partial design is restricted in this draft version, with the solid line displaying the partial design seeking protection and the broken line revealing other sections. Other methods are also permitted, such as the employment of a single color semi-transparent overlay to protect sections that are not to be covered. Dot-and-dash lines can be utilized as a border line to distinguish the partial design from the rest of the design if necessary. As a result, we can see that the argument for proving partial design is compatible with what other important jurisdictions have done in the past.

Another significant topic to consider is how to determine infringement and culpability for the incomplete design. There have been no partial design judgements until the Shanghai IP Court decided on a GUI infringement case on December 31, 2021.

The patentee in this instance, Jinshan, owns a GUI design called ‘GUI for Mobile Communication Terminals.’ Two software developers are the defendants. Previously, pursuing claims against such software developers would have been difficult because the GUI design should be closely linked to the product carrying the GUI, in this case mobile communication terminals, but the defendants are not phone manufacturers, and the accused infringing GUI is only software, not a phone. The Beijing IP Court had rejected the establishment of infringement in a similar case in 2016.

The Shanghai IP Court overruled this five years later. The Shanghai IP Court ruled that the features of goods that use a graphical user interface (GUI) as well as the unique characteristics of advancements in this sector should be fully examined. Although defendants do not directly manufacture and sell phones, the infringing GUI design has been included in the phones via programming since a device employing GUI contains hardware, OS, and APP offered by separate companies.

When a phone user uses the accused infringing software on a regular basis, all of the accused infringing GUI’s dynamic operations are necessarily shown, which the defendants subjectively seek. When the program is utilized, the infringing GUI performs an essential and irreplaceable function; hence, offering the software constitutes the cause of infringement. The court ruled that the defendants’ actions in delivering the suspected infringing software constituted infringement of the GUI patent based on the foregoing reasonings.

By diminishing the ‘role’ of the ‘products,’ the Shanghai IP Court is forging a new road to enforce GUI design patents. This might be the basis for detecting partial design infringement in the future, especially if the goods on which the partial design and accused infringing design are implemented are different.

Furthermore, because the GUI design is so widely used, this case provides guidance on how to enforce the GUI design patent right in legal practice. One suggestion might be that, in order to avoid a legally convoluted lawsuit, there would be no need to engage phone makers, and only those software developers would be qualified as defendants to make a compelling case.

According to a recent update, the Hague system has been operational in China since May 5, 2022, with 50 design proposals submitted by 50 Chinese enterprises on that date.

Punitive damages for patent infringement lawsuits

The inclusion of a punitive damages system is a contentious and significant amendment that has been debated for years and eventually determined in this 4th revised edition. Because China has moved to an innovation-driven economy, tight and robust IP protection is required to boost innovator confidence and maintain market order.

Other IP laws, such as copyright, trademark, and anti-unfair competition legislation, have included punitive damages in the past, but the Patent Law is the most recent to include such a ‘punitive’ aspect.

On March 3, 2021, while the new Patent Law implementing rules were being drafted, the Supreme Court issued a judicial interpretation to govern several key variables in computing punitive damages in IP disputes, which is expected to be integrated into the implementing regulations in the future.

In general, court interpretation requires that punitive damages must be founded on deliberate violation of a significant kind. Willful infringement takes into account factors such as the kind of IP right and its status, the popularity of the goods, and the defendant’s relationship with the plaintiff/interest party. The means, frequency, length, geographical extent, magnitude, and effect of the IP infringement, as well as the infringer’s behavior in court proceedings, are all factors in determining the seriousness of the infringement. The maximum level is equal to five times the initial damage.

Although the preliminary approach for punitive damages in patent infringement lawsuits has come into shape, the judgments really applying such punitive damages in patent cases are very few.

The punitive elements include that (i) the plaintiff and the defendant have business cooperation relation for two years, which is decided as subjective intention for manufacturing, selling and offering for sale the accused infringing products by the defendant after the cooperation; and (ii) the defendant did not cease the infringing acts after the filing of the lawsuit by the plaintiff and two administrative checks by the local IP authority, which are decided as seriousness.

Based on the above circumstances, the times/multiplier to calculate damages is decided as three, so that the original damage of around $140,000 increased to $500,000. This case is under judicial review by the Supreme Court IP Tribunal and the second instance judgment may be expected in 2022.

The lessons learned from this case indicate that a new era in patent infringement is on the horizon. Because both judicial attitudes and the evidence production and penalty system are offering solid supports, now is the greatest moment for the patentee to be a confident plaintiff who does not need to hesitate to aggressively demand for punitive large damages.

The most crucial method for proving punitive damages is to gather information from many viewpoints to construct an evidentiary chain that proves the accused defendants’ instinctive ‘willful attitude.’ Another consideration is to have the case heard in specialized IP courts/tribunals with expert IP judges and technical investigators who are familiar with claim charting.

The process of patent invalidation is worth paying attention to since it can take as little as four to six months, with an invalidity rate of roughly 30% for innovations and around 50% for utility models and designs. In the context of worldwide simultaneous patent infringement series cases, China has emerged as a key battleground, since injunctions are now automatic and punitive penalties are maturing.

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– You could see How To Register Trademark in China here.

– You could visit here to see Procedure of Trademark in China.

– You could visit here to check Required documents of filing trademark in China.

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