China Law & Practice

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Preliminary Patent Injunctions in China: Fact or Fiction?

Issue: October 2004

Keywords (click to search): patents patent law patent patent proceedings patent infringment the State Intellectual Property Office SIPO patent injunctions

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By Justin Davidson & Connie Carnabuci

justin.davidson@freshfields.com; connie.carnabuci@freshfields.com

www.freshfields.com

The patent law system in China has come a long way since the introduction of the PRC Patent Law (中华人民共和国专利法)20 years ago. The law has been through two major sets of revisions, with the most recent amendments bringing the law into conformity with the requirements of the TRIPs Agreement. We will concentrate on one of the newer aspects of the Chinese system: pre-litigation injunctions for patent infringement.

Pre-Litigation Injunctions

The second revisions to the Patent Law in 2001 introduced the possibility of interim injunctions. However, it was left to a Supreme People's Court practice statement to provide some of the details (hereafter, the Pre-Litigation Injunction Provisions). The Pre-litigation Injunction Provisions are not that extensive, however, and still leave scope for interpretation by individual courts.

When can applications be made? Applications may be made in advance of or during the course of patent proceedings. If in advance, the only requirement is that if successful, patent infringement proceedings must be commenced within 15 days of execution of the injunction if the pre-litigation injunction is to remain effective.

Who can apply? The patentee or other interested parties may apply. Original registration certificates and recordals of assignment bearing the red seal of the State Intellectual Property Office (SIPO) are generally expected to be produced. Applications made by a licensee should ensure that licences are duly recorded at the SIPO, as the court may not accept the licensed party as "interested" solely on production of a patent licence.

To which court can applications be made? Only certain People's Courts in Beijing, the provincial capitals and several developed coastal cities have jurisdiction to hear patent cases. Interim injunction applications must be made to one of them. Court selection can be determined either by reference to where the respondent is domiciled; where the infringement took place; or where the damage is occurring. This allows for an element of forum shopping within China.

Since there is no formal system of reported cases in China, it is difficult to see how particular courts decide applications. It is clear, however, that certain jurisdictions look much less favourably on applications for interim injunctive relief.

One consideration is the issue of local protectionism. If the potential respondent is of any size, or well connected in the particular city or province, then applicants may want to consider a court other than the respondent's "home" court.

What needs to be included in the application? Applications should be made in writing and are not required to follow particular formats. The application document must include all the supporting evidence that specifies the applicant; respondent; details of the patent; alleged acts of infringement; harm to which the applicant is and will continue to be subject if the acts are not halted; and the irreparable nature of such harm.

Form of evidence Chinese courts give great credence to evidence that has been notarized as it then becomes more difficult for a respondent to challenge. While it makes for a time consuming preparatory process (having to involve a notary at every stage of evidence collection), it can significantly improve the admissibility and probative value of evidence. Evidence originating from overseas must be legalized, which can be a lengthy procedure for China and should be planned ahead.

Does security need to be provided? Security, as in most countries, will be required to safeguard the respondent's interests. Security is determined by reference to the respondent's potential losses, which can be difficult to ascertain at the time of application. A rule commonly adopted is to require an equivalent amount to the damages being sought by the applicant.

Security can be provided in a number of ways, most obviously in cash, but also in the form of letters of guarantee, mortgages, property deeds, etc.

Will the respondent hear about the application? The proceedings are not automatically inter partes, but the Pre-Litigation Injunction Provisions do allow the court to "summon one or both parties" to verify relevant facts. Applicants should therefore assume that the respondent will hear about the application. Upon making a ruling, the court must notify the respondent within five days.

Is there any form of hearing? Applications are decided based on the written papers submitted and there is no procedure for a formal hearing. It is possible for a Chinese court to summon one or both parties for an (informal) interview to verify relevant facts.

How long does it take to hear if the application has been successful? In theory, the Chinese court should render a written ruling within 48 hours of accepting the application for a pre-litigation injunction. In practice, it is usually considered swift if a court renders a ruling within one week.

Is an appeal possible? If either party is dissatisfied with the injunction ruling, it may within ten days submit a one-time application for a "review" to be carried out by a specially commissioned board of (different) judges from the same court. In foreign-related patent cases, the assigned judges will likely have already reached a prior consensus with the other judges so a review is not usually recommended. There is no appeal to a higher court.

To date there have not been a large number of interim injunction applications by foreign holders of Chinese patents. As China's courts become better understood by foreign holders of Chinese patents, the number of these applications will increase.