Some companies, aside from wilful infringers, may unknowingly incorporate another’s patented technology into their products. They may unexpectedly receive a summons or notice from a Chinese court, indicating they are being sued for patent infringement. The threat of injunction and substantial damages can be alarming.
Here I outline some key defence strategies to help alleviate the pressure of facing unexpected patent litigation in China.
A straightforward defence to a patent assertion is filing a patent invalidation action.
For cases involving utility models or design patents, the timing of the invalidation filing is critical. Under the Chinese laws, if an invalidation request is filed before or within the defence period (normally 15 days for domestic defendant and 30 days for foreign ones without domicile in mainland China, after receiving the plaintiff’s complaint), the defendant can request a stay of the trial. The court will typically grant the stay until the invalidation decision is made, unless there are exceptional circumstances, such as a favourable patent evaluation report affirming the patent’s validity or insufficient grounds for invalidation. If the patent is declared invalid, the court will dismiss the lawsuit, regardless of whether the patentee appeals, unless the plaintiff voluntarily drops the infringement case upfront.
Because prior art searches can take time, defendants may file a simplified invalidation request within the defence period, followed by a comprehensive submission within the statutory one-month period. Early preparation is essential, especially since defendants might discover the lawsuit through certain data crawl platforms before being formally served. Additionally, pre-trial mediation, which is increasingly common in China to reduce court backlogs, can provide defendants more time to prepare their invalidation arguments and evidence.
A common legal trick for the defendant is to challenge the jurisdiction of the forum within the defence period, to delay proceedings. However, without justified grounds, this may be deemed procedural abuse and could result in fines up to CNY 1 million.
In the absence of a licence or qualified sub-licence from the patentee, actions such as manufacturing, selling or importing the patented product, or using the patented process would constitute infringement if done for commercial purposes.
After reviewing the patent, the defendant may determine that its product or manufacturing process falls outside the patent’s scope and can assert a non-infringement defence.
Patent infringement is typically established through literal infringement or the doctrine of equivalents. The defendant would compare each technical feature of the patent claims with its product and argue that the features are neither identical nor equivalent. Claim construction plays a pivotal role in this analysis. An important aspect of judicial practice is that if the patentee has disparaged a prior art solution in the patent documentation, that solution would be excluded from the patent’s protection. The defendant can leverage such language to bolster their non-infringement argument.
Generally, the prior art defence is available only after infringement is established. However, if the alleged infringing technical solution is identical or substantially the same as a single piece of prior art, the prior art defence can be asserted, making it unnecessary to determine whether infringement occurred.
The key distinction between the prior art defence and the non-infringement defence lies in their comparison. The prior art defence compares the alleged infringing solution to a single piece of prior art, while non-infringement focuses on comparing the patent claims to the infringing product.
The defendant may invoke the prior use defence in the following two situations:
However, the scope of this defence is limited to the production scale achievable with pre-existing equipment and preparations as of the patent filing date, without exceeding prior actual or expected production capacity.
Distributors and product users may unknowingly purchase the infringing products. The Chinese court would support the plaintiff’s requests for injunction relief and damages against them, even if they were unaware of the infringement.
However, if they purchased such products through legitimate sales channels, as per standard purchase agreements, or through other normal transactional practices, they could avoid paying the damages by raising the legitimate source defence, although the injunction would still be enforced against them. An exception for the users only is that they could be exempted from the injunction order, if they paid a reasonable price for the products. Documents such as purchase contracts, invoices, and delivery notes are key evidence to support this defence.
When facing a lawsuit, companies may have a range of options available and can select the most appropriate defence based on the merits of their case.
Other defences, such as exhaustion of patent rights (first sale doctrine), use for non-commercial purposes, or implementation of patented technology for scientific research and experimentation are not covered here, as they are less common in commercial practice.
However, if the risk of infringement is high and the patent is strong, negotiating a settlement or licence may be a more practical solution, as is the case in many jurisdictions.
Authored by Daoyuan Li
