In patent infringement disputes, the patentee’s claims of including the expenses incurred in the patent invalidation proceedings as reasonable expenses for protecting the patent are generally not supported.
In the dispute over invention patent infringement between Appellant Liaoning A Company and Appellee Danyang B Company and Defendant of the First Instance Nantong C Company, an invention patent owned by Danyang B Company was involved (hereinafter referred to as the patent in question).
Danyang B Company claimed that the products, manufactured and sold by Liaoning A Company and sold by Nantong C Company, infringed upon its patent, and therefore filed a lawsuit with the court of the first instance. Danyang B Company requested an order for Liaoning A Company to cease infringement and compensate Danyang B Company for economic losses and reasonable expenses for patent protection, as well as for Nantong C Company to cease infringement and be held joint liability for the said compensation.
The court of the first instance concluded that the accused infringing products fell within the protection scope of the patent in question and constituted infringement. It ordered Liaoning A Company to cease the production and sale of the accused infringing products and compensate Danyang B Company with CNY400,000 for economic losses and CNY 110,000 for reasonable expenses for patent protection (including CNY100,000 spent by Danyang B Company to maintain the validity of the patent in the invalidation proceedings and CNY 10,000 for expenses for patent protection in this case). The court also ordered Nantong C Company to cease using the accused infringing products.
Liaoning A Company, dissatisfied with the judgment, filed an appeal with the Supreme People's Court, arguing that the accused infringing products did not fall within the protection scope of the patent in question and that the awarded compensation amount in the first instance was too high.
On December 5, 2022, the Supreme People's Court upheld the first-instance judgment that ordered Liaoning A Company to cease infringement and compensate Danyang B Company with CNY400,000 for economic losses. However, the Supreme People's Court reduced the reasonable expenses for patent protection awarded to Danyang B Company to CNY20,000.
The Supreme People's Court, in the second-instance judgment, concluded that the first-instance judgment had made an error in determining the reasonable expenses for patent protection incurred by the patentee during the litigation process.
Firstly, due to the limitations of the current system for patent examination, granting and confirmation, it cannot be guaranteed that when a patent is granted, all aspects of the patent that do not comply with the provisions of the Patent Law have been identified. Therefore, Article 45 of the Patent Law stipulates that “where, starting from the date of the announcement of the grant of a patent by the patent administration department under the State Council, any entity or individual considers that the grant of the said patent is not in conformity with the relevant provisions of this Law, it or he may request the Patent Reexamination Board to declare the patent invalid.”
Secondly, the patentee is legally entitled to exercise, license, or prohibit others from implementing their patent and gain or can expect to gain corresponding economic benefits from their patent. To safeguard these economic interests, the Patent Law stipulates that the patentee must pay annuities, which are necessary expenses for maintaining the validity of their patent. Additionally, expenses inevitably incurred by the patentee, including attorney fees, in response to invalidation actions that others took against their patent also fall under the category of necessary expenses for maintaining the validity of the patent.
Furthermore, any entity or individual has the right to request to declare a patent invalid. The patentee cannot demand that the party filing the invalidation request reimburses the necessary expenses incurred by the patentee to maintain the validity of their patent. Similarly, in patent infringement proceedings, the accused infringing party is also one of the entities or individuals specified in the aforementioned provision, without any distinction.
Lastly, Article 65(1) of the Patent Law stipulates that "... the amount of compensation shall include the reasonable expenses paid by the patentee for putting an end to the infringement.” According to this provision, reasonable expenses are incurred due to actions to prevent infringement. The request for patent invalidation is a legitimate exercise of the requester's rights and does not constitute an illegal act resulting in legal expenses of the patentee. Filing an invalidation request is a lawful means for the accused infringing party to counter the infringement lawsuit filed by the patentee.
Therefore, it is not appropriate to demand, during civil litigation, the accused infringing party to pay the expenses that the patentee incurred in the invalidation proceedings simply because the accused infringing party has filed the patent invalidation request.
Furthermore, the litigation procedure for patent infringement disputes and the patent invalidation procedure are two separate procedures. Although they are somewhat related, it is not advisable to consider the expenses that the parties concerned incurred in the patent invalidation procedures as reasonable expenses in the patent infringement litigation procedures and support claims on such expenses.
In conclusion, the reasonable expenses that the patentee incurred in the patent infringement litigation procedure generally should refer to the direct costs incurred by the patentee to stop the accused infringing party's unlawful actions in that specific infringement case. The expenses related to the patent invalidation procedure, regardless of whether the requester of the patent invalidation is also the accused infringer, are generally not considered part of the patentee's reasonable expenses for protecting their rights.
(2022) Zui Gao Fa Zhi Min Zhong No. 1165
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