Pursuant to the PRC Patent Law, the patent rights for inventions, utility models and designs will be under protection when they are granted and announced. When a patent owner discovers that another person has infringed his/her patent right, he/she may request administrative investigation or bring an infringement lawsuit. However, there is an interval between the filing date and the issue date for all these three types of patents. This article introduces the patent protection during such interval by focusing on the case Guangdong Golive Glass Machinery Co., Ltd. v. Dongguan Yalong Glass Machinery Co., Ltd. et al. over patent infringement disputes. There is no provisional protection for patents for utility models and designs as there is no publication procedure prior to the issue date. It is widely believed that if others manufacture products derived from utility models and designs without the permission of patent owners after the filing date and prior to the issue date of the patents for the purpose of production and business operation, then the subsequent offering for sale, sale and use of these products after the issue date do not constitute patent infringement, and royalties are not required. A patent for an invention is entitled to provisional protection after its publication date and prior to the issue date. Similarly, if others manufacture products derived from inventions without the permission of patent owners after the filing date and prior to the issue date of the patents for the purpose of production and business operation, then the subsequent offering for sale, sale and use of these products after the issue date do not constitute patent infringement, and royalties are not required.
I.Protection for patents for utility models and designs from filing date to issue date
As we all know, patent protection is achieved by public disclosure. This is designed to balance the interests between the public and patent owners as much as possible. Although the issuance of patents for utility models and designs under application will be announced to the public, the contents of patent application will not be publicly disclosed from the filing date to the issue date. In addition, the examiners of the Patent Office are also obliged to keep the contents confidential and not to disclose them to the public. The public is thus not aware of the contents of patent application, so the Patent Law of the People’s Republic of China (Patent Law) does not provide relevant provisional protection. As a result, it is undisputed that if others implement such patents without the permission of patent owners during this period for the purpose of production and business operation, such practice will not constitute patent infringement and royalties will not be required accordingly.
It is important to note that the law does not specify as to whether the use, offering for sale and sale of products derived from utility models and designs after the issue date constitute patent infringement in case they were manufactured by others without the permission of patent owners after the filing date and prior to the issue date of the patents for the purpose of production and business operation. In practice, the judgments made by different courts vary, which can be roughly summarized into two types of opinions:
Some courts held that in accordance with Article 11 of the Patent Law, such practices constitute patent infringement as they occurred after the issue date;
Others held that such practices do not constitute patent infringement on the basis of jurisprudence. According to their legal reasoning, all patent infringement acts start with the act of production. Thus, penalties on the act of production shall be different from those on the use, offering for sale, sale and import of such infringing products. Since the act of production by others without permission after the filing date and prior to the issue date for the purpose of production and business operation does not constitute patent infringement, the subsequent use, offering for sale and sale of such infringing products after the issue date shall not be considered as patent infringement either, and royalties shall not be required accordingly.
In the case Guangdong Golive Glass Machinery Co., Ltd. (“Golive”) v. Dongguan Yalong Glass Machinery Co., Ltd. (“Yalong”), Nanhai Bochangye Glass Co., Ltd. (“Bochangye”), Chengdu Shixin Glass Co., Ltd. (“Shixin”) and Chengdu Binsheng Glass Co., Ltd. (“Binsheng”) over patent infringement disputes on utility models,[1] Golive, the plaintiff, had a patent for utility model named “Glass Straight- line Four-sides Edging Machine” and numbered ZL201420198813.1, with the filing date of 22 April 2014, the issue date of 1 October 2014 and the priority date of 25 November 2013. The plaintiff first filed a lawsuit with Intermediate People’s Court of Foshan Municipality, Guangdong Province, and the court ordered interim measures to preserve the suspected infringing products of the four defendants as evidence upon the plaintiff’s application on 13 October 2014. Later, the plaintiff filed a separate lawsuit with Guangzhou Intellectual Property Court due to the conflict between the prior lawsuit and other rights. The plaintiff requested to order defendant Yalong to immediately cease producing, selling and offering to sell infringing products and to destroy such products, the special molds for their production and relevant publicity materials. It also requested to order other defendants, Bochangye, Shixin and Binsheng to immediately cease using machinery and equipment involved in infringing the aforesaid patent.
After comparing the suspected infringing products with the patent for utility model owned by Golive, Guangzhou Intellectual Property Court found that the accused infringing products used by Shixin and Binsheng fell within the protection scope of Claim 1 of the patent for utility model, while the accused infringing products used by Bochangye did not fall within the aforesaid scope as the plaintiff had no proof that they were modified without permission after the court had ordered interim measures for evidence preservation.
It can be seen that there are only 12 days from the issue date to the date when the plaintiff requested to the court for evidence preservation. The accused infringing products sold by Yalong to Shixin and Binsheng were labeled with “Yalong Machinery Energy-saving and Environmental-friendly Intelligent Four-sides Edging Machine.” Yalong argued that the production and sales both took place prior to the filing date of the patent, and thus did not constitute patent infringement. Shixin and Binsheng contended that the infringing products they used were legally purchased from Yalong, and they had no idea that such products were suspected of infringing the plaintiff’s patent rights. As none of the parties had submitted evidence related to the date of production of the accused infringing products, there is no way to determine such date.
During the trial, Guangzhou Intellectual Property Court held that it was undoubted that the issue date shall be the benchmark for deciding whether the production, offering for sale, sale and use of the patented products at issue without the permission of patent owners constitute patent infringement.
Yalong submitted to the court the originals of two purchase and sales contracts signed on 22 April 2014 respectively with Shixin and Binsheng to prove that it had produced the accused infringing products and sold them to Shixin and Binsheng. Shixin and Binsheng both acknowledged the authenticity of such contracts. The court upheld the validity of the two contracts as the plaintiff failed to provide enough evidence to support its denial of the authenticity of the contracts. Furthermore, the court, pursuant to Article 19 of the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Cases involving Disputes over Patent Infringement (II), held that the aforesaid two purchase and sales contracts came into effect upon their establishment in accordance with law, and the date of sale of the accused infringing products used by Shixin and Binsheng was 22 April 2014, being the signing date of such contracts. Both contracts stipulated that the products shall be delivered within 40 days upon receipt of the advance payment. Since the accused infringing products were large-scale machinery, it required a certain period of time in production, transportation and installation. In addition, it took certain time for the plaintiff to prepare for the litigation and apply for evidence preservation. Therefore, the court concluded that Yalong had produced and sold the accused infringing products to Shixin and Binsheng prior to the issue date, and thus did not infringe the plaintiff’s patent right. In addition, as the plaintiff failed to prove that Yalong continued to produce, sell or offer to sell the accused infringing products and hold corresponding publicity materials after the issue date, the court did not uphold the plaintiff’s claims against Yalong.
It is easy to figure out the liabilities of Yalong as the producer and seller of the accused infringing products. The key issue lies in how to define the acts of Shixin and Binsheng as the users of such products, and whether they shall be liable for patent infringement and make relevant compensation.
The production and sales by Yalong took place prior to the issue date of the patent, but the accused infringing products were delivered to Shixin and Binsheng after 22 April 2014, which is the filing date and also the signing date of the purchase and sales contracts. According to the contracts, the products shall be delivered within 40 days upon receipt of the advance payment. Two copies of the handwritten receipt provided by Yalong indicated that Shixin and Binsheng had respectively made the advance payment on 23 April 2014. Therefore, the court concluded that the products were delivered after the filing date of the patent. After hearing the case, Guangzhou Intellectual Property Court found that Shixin and Binsheng were still using the accused infringing products within the scope of protection of Claim 1 of the patent for the purpose of production and business operation when the court made another order for evidence preservation on 1 June 2015. Since the date of first use of such accused infringing products was later than the filing date, the defendants were not entitled to the prior user right. Therefore, they shall be liable for patent infringement as they had infringed the legitimate rights and interest of the patent owner by using the accused infringing products without permission for the purpose of production and business operation. However, since Shixin and Binsheng provided the legitimate source of the accused infringing products (i.e. being acquired from Yalong), the court adopted their legitimate source defense and held that they were not liable for compensation. In addition, the court upheld the plaintiff’s claim by ordering Shixin and Binsheng to cease using the accused infringing products as they did not provide strong evidence to prove that they had already paid reasonable consideration for such products, except for a copy of payment receipt of Yalong.
The court provided legal basis for each of its conclusions in the whole judgment, and there seems to be no substantial mistake in its deductive reasoning as it consists of the major premise, minor premise and conclusion. However, when we re-examine this case, it seems odd that Yalong, who played the most important role as the producer and seller, was held not having infringed the patent right of the patent. And the products produced and sold by Yalong after the filing date and prior to the issue date of the patent were not held as infringing but legitimate products. In contrast, the subsequent use of such legitimate products of Shixin and Binsheng was found having infringed the patent right. Although they were not held liable for infringement compensation because of the legitimate source defense, they must cease using the products immediately after the judgment took effect. The issue date of the patent for the utility model is the same as the signing date of the purchase and sales contracts, and such patent was not disclosed to the public during the period from the filing date to the issue date. Users didn’t know the existence of the application when negotiating contracts with the producer and seller, but they had to pay for the patent that suddenly came into sight when using the purchased products. And the legitimate products purchased suddenly became infringing products. The technical scheme having not been made public was also protected prior to the issue date. Formal logic reasoning is not appropriate for this special condition. This judgment lacks predictability for the public, and provides too much protection to the patent owner, which is inconsistent with the legislative intent.
The first type of opinion overlooks the legislative purpose and intent. It is simply subject to the literal meaning of the law, which is equivalent to providing patent protection for technical schemes not publicly disclosed or not being patented. It seems to be supported by laws and regulations, but in fact damages the public interest due to its rigidity.
In contrast, the second type of opinion is preferable as it fully complies with the legislative purpose and intent, taking into account the balance of interest between the patent owner and the public.
The latest judgment also reflects the contention between the two opinions. In the case Gree Electric Appliances Inc. of Zhuhai v. Ningbo AUX Air-conditioner Co., Ltd. and Guangzhou Gome Home Appliance Co., Ltd. over infringement disputes on two patents for utility model,[2] similar to the above-mentioned case Golive v. Yalong et al., the courts of first and second instance both found that AUX had produced and sold the accused infringing products, Gome had sold the accused infringing products, the production dates of the accused infringing products were all prior to the issue date of Gree’s patents for utility model at issue, and the accused infringing products fell within the scope of protection of such patents. The parties had no objection to these findings. The focus of the first and second instance was whether the continued sale of patented products after the issue date which had been produced and sold prior to the issue date constituted patent infringement.
Gree argued that the Patent Law did not stipulate that the continued sale of patented products without permission after the issue date which had been produced prior to the issue date shall not be considered as patent infringement. Whether an act constitutes patent infringement should be determined according to different periods of time. The acts of producing, using, offering to sell, selling and importing patented products for the purpose of production and business operation without permission of the patent owner after the issue date constitute patent infringement. The above five prohibited acts are independent of each other, and each constitutes a single category of infringement. Therefore, AUX and Gome had infringed its two patents for utility model by continuing to sell products that fall within the scope of patent protection after the issue date which had been produced prior to that date.
The Higher People’s Court of Guangdong Province as the second instance court reached a conclusion by dialectical reasoning, taking into account various factors. The court first made it clear that, in accordance with Paragraph 1 of Article 11 of the Patent Law, any unit or individual shall not implement the patent without permission of the patent owner after the issue date, that is, they shall not produce, use, offer to sell, sell or import patented products for the purpose of production and business operation. Therefore, the implementation of relevant patents prior to the issue date was not prohibited by the Patent Law. However, the court stressed that the above-mentioned five prohibited acts had different status in the Patent Law. It pointed out that the patent exhaustion defense, the prior user right defense and the legitimate source defense respectively prescribed in Paragraph 1 and 2 of Article 69 and Article 70 of the Patent Law suggested that the law clearly distinguishes between the liabilities for unlicensed production and several other acts if they constitute patent infringement. It is undoubted that producers shall assume greater liabilities, because such act is the source of all patent infringement. The Patent Law pays more attention to controlling the source of patent infringement. Therefore, the court upheld the rules that “subsequent acts such as the sale and use of patented products produced prior to the issue date of patents for utility models and designs do not constitute patent infringement,” which had been developed by the court of first instance based on guiding cases. Such reasoning stroke a balance between various interests and values and finally led to a fairer judgment, achieving better legal and social effects.
According to the legislative intent and purpose of the Patent Law, since the implementation of the patent for utility models or designs prior to the issue date is not prohibited, the subsequent implementation of the products derived from such implementation shall also be allowed, and there shall be no sudden status change of legitimate products into infringing products upon the issue date of patent for utility models or designs under application. If the implementation of relevant patent prior to the issue date of the patent for utility models or designs is not prohibited by the Patent Law, its subsequent offering for sale, sale and use of the products shall also be allowed even without permission of the patent owner. In other words, the patent owner has no right to prohibit others from the subsequent use, offering for sale and sale of accused infringing products which were produced, sold or imported prior to the issue date of patent for utility models or designs. It is inappropriate to go against the legislative intent of the Patent Law by providing patent protection for technical schemes not publicly disclosed or not being patented, thus infringing on public interests.
The above cases suggest that the Patent Law should protect the rights and interests of both the patent owner and the public, so as to better promote social development and progress.
II.Protection for patents for inventions from filing date to publication date
Generally, if an application for patent for an invention is qualified after preliminary examination, it shall be published 18 months from the filing date, or it may be published at an earlier date upon the request of the applicant. Therefore, during the period from the filing date to the publication date, the content of the application for a patent for an invention will not be available to the public, and the examiner of the Patent Office are also obliged to keep the contents confidential and not to disclose them to the public. The public is unaware of the content of the application, so the Patent Law does not provide provisional protection, and the implementation of the patent for the purpose of production and business operation by others without permission during this period does not infringe upon patent rights, and royalties are not required accordingly. Referring to the relevant comments on utility model patents and design patents in the previous section, if others manufacture products derived from inventions without the permission of patent owners after the filing date and prior to the issue date of the patents for the purpose of production and business operation, then the subsequent offering for sale, sale and use of these products after the issue date do not constitute patent infringement, and royalties are not required. Here we will not elaborate on this point.
III.Protection for patents for inventions from publication date to issue date
The Patent Law provides provisional protection for a patent for an invention after publication date and prior to issue date. Pursuant to the Patent Law and its implementation rules, after the application for a patent for an invention is published, the applicant may require the unit or individual that implemented such invention to pay appropriate fees.[3] If such unit or individual refuses to pay or the parties fail to reach an agreement on the royalties, after the issue date, the patent owner may either request the competent authority to mediate the dispute,[4] or bring a lawsuit to the people’s court with jurisdiction.[5] The statute of limitation shall be calculated as of the date when the patent owner knows or should know that others used the invention, but if the patent owner knows or should know it before the issue date, the statute of limitation shall be calculated as of the issue date. At present, the provision on statute of limitation in the Patent Law has not been revised in accordance with the promulgated General Provisions of the Civil Law of the People’s Republic of China (General Principles of the Civil Law),[6] but it is widely believed that the provision of the Patent Law on the statute of limitation is only a repetition of that provided in the General Principles of the Civil Law. After the implementation of the General Provisions of the Civil Law, the statute of limitation as provided in the Patent Law should also be three years.
For example, in the case regarding disputes over infringement of patent for utility model involving Great World Communications Equipment Store of Nanchang County and Yuandesheng Plastic Electronics (Shenzhen) Co., Ltd. which was concluded on 27 February 2019,[7] the Higher People’s Court of Jiangxi Province as the court of second instance held that the General Provisions of the Civil Law in implementation had completely replaced the General Principles of the Civil Law. It is true that the General Provisions of the Civil Law stipulates that the law shall be subject to other specific provisions in other laws regarding the statute of limitation, and the General Provisions of the Civil Law as the general law shall be subject to the Patent Law as a special law according to the principle that the special law shall apply first before the general law, which lead to the conclusion that the provision on the statute of limitation of the Patent Law shall apply. However, the nature of the two-year statute of limitation in the Patent Law is the same as that of the two-year statute of limitation stipulated in the General Principles of the Civil Law. Therefore, the principle that the new laws shall apply before the old law shall apply, and the statute of limitation in this case shall be three years.
The Patent Law does not specify as to how to determine whether provisional protection can be obtained under specific conditions. Pursuant to the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Cases involving Disputes over Patent Infringement (II),[8] if the alleged technical scheme falls within the scope of protection requested at publication date of the application for a patent for an invention and the scope of patent protection at the issue date, the people’s court should hold that the defendant implemented the invention between the publication date and the issue date of the patent for an intention, and may reasonably determine the fees payable to the patent owner by the unit or individual that implemented the invention during that period by reference to the patent royalties. It is also for the protection of public interests to require the alleged technical scheme to fall into both the scopes of protection mentioned above in order to give provisional protection. Judging from the existing cases, the courts were very strict in handling such matter. It should also be noted that the “scope of patent protection” mentioned in the judicial interpretation includes not only the scope of protection at the issue date, but also the scope of patent protection maintained after the patent invalidation procedure. For example, in the case Hangzhou Gaomaogui Trade Co., Ltd. v. Cheng Enguang regarding disputes over the royalties for the provisional protection period of the patent for an invention,[9] the patent owner Cheng Enguang’s patent was claimed invalid several times. The patent right later remained valid on the basis of the technical scheme of Claim 2 quoted in Claim 3. The court of second instance held that the alleged technical scheme fell within the scope of protection requested at the publication date of the patent for an invention and the scope of patent protection maintained after the invalidation of the patent for an invention, and thus upheld Cheng Enguang’s claim which required Gaomaogui to pay the royalties for the provisional protection period of the patent for an invention.
To conclude, there is no provisional protection for patents for utility models and designs as there is no publication procedure prior to the issue date, while a patent for an invention is entitled to provisional protection after its publication date and prior to the issue date. It is widely believed that if others manufacture products derived from utility models and designs without the permission of patent owners after the filing date and prior to the issue date of the patents for the purpose of production and business operation, then the subsequent offering for sale, sale and use of theseproducts after the issue date do not constitute patent infringement, and royalties are not required. Similarly, if others manufacture products derived from inventions without the permission of patent owners after the filing date and prior to the issue date of the patents for the purpose of production and business operation, then the subsequent offering for sale, sale and use of these products after the issue date do not constitute patent infringement, and royalties are not required.
Yue Zhi Fa Zhuan Min Chu Zi [2015] No.199.
Yue Min Zhong [2018] No.1194, Yue Min Zhong [2018] No.1197.
Article 13 of the Patent Law of the People’s Republic of China.
Article 85 of the Rules for the Implementation of the Patent Law of the People’s Republic of China.
Article 68 of the Patent Law of the People’s Republic of China.
Article 188 of the General Provisions of the Civil Law of the People’s Republic of China.
Gan Min Zhong [2019] No.28.
Article 18 of the Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Cases involving Disputes over Patent Infringement (II).
Zhe Min Zhong [2018] No.81.
