Chinese IP Law Updates
June 6, 2018

Standards for determining contributory infringement in patent disputes

Co-Authors: Jessica Li, Shirley Lin

Source Material:

Case Docket No.: (2017) Jing-Min-Zhong No. 454

The civil lawsuit surrounding the invention patent ZL02139508.X granted on “a method for the secure access of the mobile terminal to WLAN and for secure communication via the wireless link”

Parties Concerned:

Appealer (defendant at first instance): Sony Mobile Communications (China) Co., Ltd. (“Sony”)

Appellee (plaintiff at first instance): Xi’an Xidian Jietong Wireless Communication Co., Ltd. (“Iwncomm”)

Case Overview:

In this case, the appellee Iwacomm owns the patent ZL02139508.X and sued Sony for the latter’s infringement thereon at the Beijing Intellectual Property Court, seeking to cease of the claimed violation and compensation for Iwacomm’s economic losses and reasonable expenses. The court ruled in Iwacomm’s favor, which dissatisfied Sony who continued to file an appeal with the Beijing Higher People’s Court. The higher court bought part of Sony’s opinions but affirmed the existing judgment anyway as its conclusions had remained intact, crushing Sony’s case.

In the second instance judgment, the higher court finds the appealer Sony’s grounds for no contributory infringement established. In details, the court says: in this case, no one could fully implement the patent concerned on his own, which is also true for non-commercial individual users. Meanwhile, there were no actors being instructed or controlled by a single person in implementation, or coordinating to jointly implement the patent. Without a direct implementer satisfying the above conditions, it is unlawful to deem a provider of a single component used in the infringement to be a contributory infringer. Otherwise, there would be too much protection to right holders, impairing public interests in turn. Therefore, the appellee Sony’s behavior does not constitute contributory infringement, pursuant to Article 21.1 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Infringement of Patent Rights (II).

HFL’s Comments:

Currently, for contributory infringement, China’s Patent Law provides no specific regulation. The only citable provisionin regarding this is the above-mentioned article, “Where any party fully aware that the relevant product is exclusively used for the materials, equipment, parts, and components or intermediates, among others, that exploits the patent provides such product for any other party for the purpose of production or business operation to implement the act infringing upon the patent right without the approval of the patentee, the patentee’s claim that the act of the provider falls within the scope of “assisting others in committing a tort” as prescribed in Article 9 of the Tort Law shall be supported by the people’s court.” However, issues still have not be solved surrounding (1) whether an indirect infringer should be held liable if a direct actor implements other’s patent for non-commercial purposes, or he behaves in a way that does not count as infringement according to Article 69 of the Patent Law, and (2) who should bear the burden of proof as to the determination of a product “exclusively used for something that “exploits” a patent?

Rightly so, in the second instance judgment, the Beijing Higher People’s Court addresses the above issues in a concrete way: (1) In an uncommon case where an “indirect infringer” should still assume civil liabilities even when direct infringement does not exist, the following conditions should all be in place: a. The actor provides, without a license from a patentee, products exclusively used for the materials, equipment, parts, and components or intermediates, among others, that exploits a patent to a direct implementer for business purposes, whilst aware of the products’ nature; b. The products being questioned “substantially” exploit the patent concerned, which is to say, the materials, equipment, parts, and components or intermediates are major enough to be indispensable to implementing the patent rather than playing a trivial or minor role; c. The products have “substantial non-infringing use”, meaning they generate no reasonable economic or commercial value except being used in relation to the patent; d. Existing evidence suffices to point to a direct implementer who at the same time is an individual with “non-commercial purposes” or his acts should be governed by Paragraph 3, 4 and 5 under Article 69 of the Patent Law; (2) Except that evidence of the above condition c should be provided by the”indirect infringer”, the burden of proof is all the patentee’s.

In an excellent attempt to balance protection of the patentee and public interests, the Beijing Higher People’s Court has rendered a judgment that helps establish standards for determining contributory infringement in patent disputes.

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