- Case study on the first successful invalidation case due to no foreign filing license

On 9 May 2022, the CNIPA has issued an Invalidation Decision No. 55586, attracting widespread attention since it is the first successful case that a Chinese patent is invalidated completely due to no request for confidentiality examination before first foreign filing. In the Decision, the CNIPA shows some exemplary criterion on how to prove the location where an invention was made. These points of view are valuable for reference in future Chinese invalidation cases.

Brief Overview of the Case

The Decision relates to a Chinese utility model patent CN201720389490.8 (referred to as the ’490.8 patent hereinafter). The patent application was filed on 14 April 2017 claiming domestic priority from CN201720025981.4 (10 January 2022). For the same invention, the applicant “Zhejiang Jiechang Linear Motion Technology Co Ltd” (referred to as Jiechang hereinafter) earlier filed a U.S. provisional application on 20 December 2016. The formal U.S. patent application 15/639,005 was then filed by Jiechang on 30 June 2017 claiming priority from the U.S. provisional application.

That is to say, there are four CN and U.S. applications in total in relation to the invention. Timeline for the applications are summarized as follows.

Evidence Production From the Petitioner

According to Article 20.1 of the Chinese Patent Law (2008), any invention(s) made (or at least partially made) in China must first request for confidentiality examination in CNIPA before it can be filed as a patent application outside China. If an applicant skipped this procedure, the legal consequence will be that the corresponding Chinese patent be invalidated (Article 20.4).

Specific to this case, whether the ’490.8 patent shall be invalidated is mainly based on the answers to the following questions:

• Q1: Is the invention solution in the ’490.8 patent substantially identical to the U.S. provisional application?
• Q2: Did the applicant really skip the confidentiality examination before submitting the invention solution as a U.S. provisional application?
• Q3: Was the invention solution in the ’490.8 patent made in China or outside China?

Regarding these questions, the petitioner organized the following key evidences as listed in table 1.

Table 1 – Evidences for Answers of Q1 & Q2

*It is worth noting that the petitioner also filed other evidences for supporting other invalidation grounds, which will not be disused in detail in this article.

Regarding the answer to Q1, based on evidences I-1, I-2, and I-4, the answer is “YES” – the solutions in these patent applications are substantially identical with very same figures – for which the patentee acknowledged during the oral hearing.

Regarding the answer to Q2, based on evidence I-3, the answer is “YES” – there is no confidentiality request in the file history of the ’490.8 patent – for which the patentee also acknowledged during the oral hearing.

In this case, the ’490.8 patent is a patent that firstly filed in the U.S. without a foreign filing license and then filed in China. Whether the patent violates Article 20.1 of the Chinese Patent Law or not, is based on the answer to Q3, that is, the invention solution was made in/outside China.

This seems to be a very difficult issue to prove according to the previous invalidation practice in China. The fact is there were almost no successful cases which relied on Article 20.1 of the patent law to invalidate a Chinese patent.

How Did The Petitioner In This Case Succeed?

In an effort to prove that the invention was made in China, the petitioner further submitted the following evidences listed in the below table.

Table 2 – Evidences for Answers of Q1 & Q2

The CNIPA classified the information contained in evidences II-1 and II-2 into two categories:

1. Address of the Patentee

• Domicile of Jiechang – Xinchang County, Shaoxing City, Zhejiang Province (II-1);

• R&D institutions of Jiechang are located inside China in or before 2016 (II-1); and
• Jiechang has undertaken provincial projects in relation to the invention (II-1).

2. Nationality of the Inventors

• 1^st to 3^rd-named inventors are employees of Jiechang – they are recorded as “Chinese citizens with no permanent residence in any other countries” (II-1); and

• 4^th-named inventor Donghang ZHANG – his work is associated to the invention and his work place is in China (II-2).

On a basis of the above information provided by the petitioner’s evidences, the CNIPA holds that there is “high probability” ⁽¹⁾ that the invention of the patent was made in China.

In this situation, if the patentee cannot provide any counter evidence to overturn the above, “it shall bear adverse legal consequences” ⁽¹⁾.

The patentee counter-argued that the invention was made by the 1^st-named inventor Renchang HU during his stay in the U.S. in November 2016. Further, the patentee submitted a counter-evidence – Mr. HU’s passport record to support the argument. The passport record shows that Mr. HU has stayed in the U.S. for 10 days (13 November to 24 November 2016) prior to the filing date of the U.S. provisional application.

However, the CNIPA refused to acknowledge the rationality of the argument, since:

1. The passport record can only prove Mr. HU was in the U.S. during the 10-days period, but cannot prove the invention was made during that period, let alone the contributions made by other 3 inventors; and
2. It is obviously unreasonable that Mr. HU can raise a complete technical conception and solution within a period of just 10 days further complete all preparation procedures of the U.S. provisional application.

The CNIPA further relies on the IPO prospectus (II-1) and points out that Jiechang shall be able to provide direct evidence to prove the invention was made outside China since Jiechang is a listed company with complete structure. In this case, Jiechang shall bear the legal consequences due to adverse proof.

After comprehensive consideration of the evidences from both parties, the panel believes that the evidences from the petitioner can mutually confirm each other, and confirms the invention was made in China. Based on this confirmation, the ’490.8 patent has been invalidated completely.

What Can We Learn From This Particular Case?

1. As a Petitioner – important criteria confirmed by CNIPA

The petitioner in this case showed a good logic for proving that a Chinese patent violates Article 20.1 of the Chinese Patent Law. The CNIPA supported the logic in the Decision, which is summarized as follows.

• S1: Proving that an application filed abroad recites identical subject matter as the target Chinese patent (possible evidences: file histories of foreign application and CN patent);
• S2: Proving that the patentee did not request for confidentiality examination when filing application of the target Chinese patent (possible evidence: file history of CN patent); and
• S3: Proving that the substantial content of the invention was made in China or partially in China (two important criteria: the address of the patentee and the nationalities of inventors).

Among the above, the key issue is that, it is apparent that the PRID considers the address of the patentee and the nationalities of inventors are two important criteria to show where the invention was made ⁽²⁾. Thus, if a petitioner wishes to rely on Article 20.1 of the Chinese Patent Law to invalidate a Chinese patent, the petitioner shall focus on these two criteria to prepare the invalidation request – paying more attention to the evidences and arguments in this regard.

However, no doubt that it is relatively difficult for the petitioner to form a flawless chain of evidence, at least since the evidences which can be collected are indirect ones with uncertainty. The panel in the Decision provides criteria for the evidences of the petitioner – these evidences shall support each other, further can prove “high probability” of the location where the invention made.

Even if the standard for meeting “high probability” varies from case to case, the position of the PRID explains the petitioner shall try their best to collect evidences from all available channels, so as to complete the burden of proof further meet the standard of “high probability”. The exemplary channels can be the IPO prospectus of the patentee, the articles in relation to the patentee, or the interview/report on the inventor published on the Internet etc. It is worth noting that when collecting evidence, attention should be paid for fixing the authenticity or disclosure time of the evidences via e.g. time stamps or other ways.

2. As a Patentee - consciously retain evidence and actively proving

We may see in this case, if the patentee cannot provide sufficient counter-evidence to rebut any of the above S1-S3, especially the two criteria in S3, the decision will likely be more in favor of the petitioner.

In practice, if the patentee does miss the confidentiality examination procedure before filing abroad, what evidences/arguments will save the Chinese patent from being invalidated? The patentee Jiechang in this case seems not to have successful defense. Just think about if Jiechang can show any of the following points, then the CNIPA would probably find it difficult to support the petitioner ⁽²⁾:

1. They have R&D center or at least R&D capacity outside China before the filing date of the U.S. provisional application, and/or
2. One or more of the Chinese inventors have stayed for a sufficiently long period outside China to complete the substantial content of the invention.

On a more general level, it is advisable for the patentee to consciously retain evidences of the location where the invention was made during their R&D process. These evidences, for example, include but are not limited to the followings:

1. - Registered and authorized location of a project which the invention relies on;
2. - Venue of a meeting or conference which the invention relies on;
3. - Place where key experiments/tests involved in the invention carried out; and/or
4. - Information transfer records of the invention with foreign IP addresses, etc.

At last, the applicant/patentee may refer to the proof method of the U.S. system – submitting a statement of good faith upon filing or in subsequent procedure, stating the place of completion of the invention.

That is, if the patentee consciously and reasonably retains and actively produces evidences, the risk of a Chinese patent being invalidated due to violating Article 20.1 of the patent law can be largely avoided.

References

1) Invalidation Decision No. 55586 issued by PRID of CNIPA on 9^th May 2022;

2) China IP Law Update: First Successful Patent Invalidation in China Based on No Foreign Filing License, by Haoyu ZHOU (Elliot) of Foundin Intellectual Property, 18^th May 2022.