Changes to Administrative Patent Infringement Proceedings in China

Following the amendment of the Patent Law and the Implementing Regulations, the State Intellectual Property Office ("SIPO") recently issued the revised Measures for Administrative Enforcement of Patent Rights (the "Measures"). These came into effect on 1 February 2011. The Measures increase the role and power of the local Intellectual Property Office ("IPOs"). The roles of the IPOs are threefold:

• handling patent infringement disputes;
• mediating patent disputes; and
• investigating passing off of patent rights.

Enhancement of IPOs' role and power

The amended Patent Law expressly grants investigative powers to the IPOs. During investigations of the passing off of patents, the IPOs may make enquiries of the parties, carry out on-site investigations at the premises, inspect and copy contracts, invoices, account books and other relevant information, examine products, and may seize and take into custody suspect products. In light of the increasing role and workload of the IPOs, the Measures provide for the increased participation of SIPO and local IPOs:

• The provincial IPOs may delegate IPOs at the city and county level to investigate and handle passing off of patent rights cases and to mediate in patent disputes. However, the delegating IPOs shall supervise the city and county level IPOs and will be legally responsible for their actions.
• SIPO shall provide local IPOs with necessary support and guidance.

The changes are expected to greatly increase the amount of resources available and provide know how and support to the local IPOs.

Patent infringement enforcement

The procedures for handling administrative enforcement actions in respect of patent infringement have been streamlined by providing guidelines which simplify the procedures for initiating patent infringement cases through IPOs.

• The Measures set out a timetable for the handling of patent infringement cases.
• After a case is filed, the IPO shall notify the complainant whether the case is accepted within 5 days.
• The complaint documents shall be served on the respondent within 5 days from the acceptance of the case.
• The respondent must file a defence within 15 days after the complaint is received.
• Unless there are exceptional circumstances, the IPOs are given a target of 4 months after acceptance of the case to complete and give a ruling on a case.

In addition, the Measures provide a number of amendments regarding the procedures in handling patent disputes and to strengthen the laws in administrative enforcement of patent rights. The amendments, including the rules of withdrawal and evidence, are in line with the practices of the People's Courts and the Civil Procedure Law and do not substantially change the law. In terms of the enforcement of an administrative order, once the IPO grants an injunction against a respondent, the injunction order shall be in force even if the respondent files an administrative appeal against the decision of the IPO.

The revised Measures largely favour patentees. It is expected that patentees may now be more willing to enforce their patent rights through the administrative route, provided that the IPOs have sufficient manpower. Administrative enforcement of patent rights was previously seen to be ineffective and difficult but, with the new case handling time targets, administrative enforcement may become a relatively quick and cost effective means to enforce patent rights.

Most importantly, once an injunction is granted by an IPO, the injunction will automatically be in force pending any appeal of the decision at the administrative court. This can effectively stop the alleged infringer. On the other hand, it remains to be seen how the IPOs will enforce the injunction, particularly in cases where an administrative appeal has been filed against the IPO order.

Foreign companies with weak patent portfolios in China, may find that the Measures are used against them by competitors (with their own Chinese patents), to stop the manufacturing of their goods in China. It is already difficult for foreign companies to collect evidence. With the short time frames introduced by the revised measure, it may become even more difficult for foreign companies to collect evidence and prepare for a defence.

Key Contacts

Annie Tsoi

Partner | Intellectual Property

Email or call +852 2825 9255