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A Brief Discussion on Reasonable Checks and Balances on Patent Validity Challenging - Failed Invalidation, Aggravated Compensation

22

DEC

2020

The fourth amendment of the Patent Law paid more attention to the balance between the interests of patentees and the public, introduced the clauses of good faith and fairness, introduced punitive damages mechanism, and also restricted patentees from abusing patent rights. This makes us focus more on obvious problems that may lead to unequal rights and obligations, benefits and risks between the right holders and the public. Especially, punitive damages system was introduced in the fourth amendment, which provides an opportunity to establish more connection and balance points for dual-track parallel handling system of infringement and invalidation.

Since the formal establishment of the patent system in China in 1985, patent infringement and invalidation have been handled by the courts/patent law enforcement departments and patent reexamination authorities for invalidation in parallel with their respective responsibilities. With the rapid increase in the number of patent infringement disputes, both the plaintiff and the defendant have become more proficient in understanding and applying the rules. In response to the infringement litigation initiated by the plaintiff, it is almost normal for the defendant to file a patent invalidation request as the attack. Because of the priority principle of the force of administrative behaviors, the filing of patent invalidation request often leads to the formal suspension or substantial suspension or stagnation of infringement litigation. However, there is disadvantage in the judicial review after the invalidation proceeding that it is easy to trigger circular action, which leads to prolonged trial period. Furthermore, the defendant often not only launches one round of invalidation request, but takes turns to attack, deathless endlessly. Therefore, the litigation period is be prolonged and the costs in rights protection spent by the plaintiff will be increased.

At the same time, the plaintiff/patentee, falls into a situation of dealing with both sides. On the one hand, it is necessary to constantly defend against attacks from the patent invalidation raised by the defendant. A slight error will result in the loss of rights. On the other hand, the suspension or procrastination of the infringement litigation process caused by this makes it impossible for the plaintiff to stop the continuation and expansion of defendant’s infringing acts in a timely and effective manner. Even more unbalanced is, the money, time, manpower and material resources paid by the right holder in dealing with patent invalidation cannot be remedied reasonably— —which cannot be resolved in administrative proceedings, nor can it be asserted in civil proceedings. In many cases, after several rounds of invalidation, the plaintiff has invested a large amount of time and expenses. Even if the patent right is maintained valid, however, a preemptive party in infringement litigation will lose its edge, and the defendant does not bear additional responsibilities or obligations for the delay in infringement litigation caused by (several) unsuccessful invalidation requests. As a result, the inherent problems of long patent infringement trial period and low compensation have been aggravated.

Obviously, regarding the additional burdens suffered by the right holder in the invalidation procedure due to reasonable response to the defendant's countermeasures, the current mutually independent dual-track parallel handling system lacks at least the balance and relief for it. However, for the unsuccessful invalidation requests that are continuously initiated, the defendant/petitioner for invalidation is not required to undertake the obligations equivalent to his rights, which leads to the lack of the connection and balance points in the current dual-track parallel handling system in the issue of patent validity.

The system of punitive damages introduced in the fourth amendment of the Patent Law has brought an opportunity to establish more balance points in the dual-track parallel handling system in the dealing with justice/infringement and administration/action for confirmation. In order to balance patentee’s additional expenses or losses caused in the response to the invalidation request, it should be considered to stipulate judicial interpretations that if the defendant’s request for invalidation fails (or failure after the second time request, or other different conditions), the defendant shall bear the obligation of providing aggravated or doubled the amount of compensation he originally claimed; or at least the reasonable expenses such as the plaintiff's attorney fees for responding to the invalidation request should be included in the reasonable expenses for stopping infringement.

The main benefit is that the defendant should treat the patent infringement actions more seriously. Thus, it will prevent the defendant from abusing the rights granted by the procedure or interfering with the plaintiff’s infringement claims without having to bear additional obligations. It can also avoid that the plaintiff only bears the risk of patent claims being invalidated in the invalidation procedure, but cannot get the corresponding relief after the patent right is maintained. Referring to the recent Reply of the Supreme People’s Court on The Abuse of Jurisdiction Objection to Delay the Trial Process (reply to the No.8869 proposal in the second session of the 13th National People's Congress), and the idea of “Plea Agreement” in criminal laws of some countries, if the defendant does not challenge the patent validity, plaintiff’s expenses in rights protection will be greatly reduced, and the judicial and administrative resources of the country will also be saved, which should be exchanged for reducing defendant’s liability for compensation, as appropriate. On the contrary, if the defendant's challenge and resistance become more and more intense, the intensity of confrontation will increase the difficulty and risk of the plaintiff's rights protection, increase the cost of judicial administrative resources, and is not conducive to the rapid recovery and stability of social relations and economic order. Therefore, the challenger should be responsible for the resulting the confrontational impact. In a word, risks and benefits should be balanced and equal.

Of course, sometimes the defendant will choose a “straw man” to file an invalidation request, thus concealing its identity. However, as long as the defendant attempts to obtain litigation benefits by challenging the patent validity, he should pay for the adverse consequences of his actions.

Up to now, patent infringement compensation has been limited to the "compensation principle” and in fact caused an imbalance in the protection of the right holder. In particular, the imbalance, that the rights holder “fight on both sides, get compensated on one side” caused by the dual-track parallel handling system of infringement and invalidity, is the distress of many domestic and foreign rights holders. As a result, right holders have doubts and even disappointments about whether the current system can really solve the problem of efficiently and economically maintaining the patent rights of the right holder justly, fairly and reasonably. Therefore, by adopting the new concepts and mechanisms given by the new Patent Law, the imbalance points in the patent infringement litigation and invalidation procedures will be re-balanced, which is the positive significance of practicing the amended Patent Law is, and is also a new concern to the industry and a new problem that we are facing.

About the Firm

P. C. & Associates
Address 9th Floor, Scitech Tower, No.22 Jian Guo Men Wai Avenue, Chaoyang District, Beijing, China 100022
Tel 86-10-6559 4091
Fax 86-10-6559 4092
Email mail@pcassociates.cn
Link www.pcassociates.cn

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