Saelink Law - Wenxuan Chen and Sandy Kong

Presumably you are a right holder of a Chinese patent, and you find out that a competitor manufactures only parts or components of your patented products in China and sells it to company X, which uses those parts or components to produce the whole patented products. As company X may be your client or has some sort of connection with you, therefore you avoid to bring a sue directly against company X. However, another way to address this problem that you are considering is to sue the competitor for indirect patent infringement. Is it workable? Below are some important things you need to know if you want to do so.

• Is there an indirect patent infringement system in China?

YES. Although to date, PRC Patent Law is silent on indirect patent infringement, in practice, Article 9 of the Tort Liability Law, together with Article 21 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Cases (II), provide legal basis for determining whether a patent indirect infringement exists.

• What are the essential elements for an indirect patent infringement?

Four elements are typically regarded as necessities for an indirect patent infringement:

1. The accused product as a whole does not fall into the protection scope of a patent (in absence of at least one technical feature of an asserted claim).
2. The accused product is a material, equipment, part and component or semi-finished item, etc. specifically adapted for use in an infringement of a patent.
3. The accused infringer knows that the accused product can be used to practice a patented invention.
4. A third party has conducted or will conduct a direct infringing act, and a causal chain can be established between the third party’s infringing act and aids and/or abetment of the infringer.

• How to interpret the above-mentioned “specifically adapted for” and “knows”?
  1. The absent technical feature(s) of the accused product is(are) a necessary part/component(s) etc. and must be used in order to practice the asserted patent.
  2. The accused product has no other reasonable economic or commercial use than practicing the asserted patent.
  3. The accused product has an important role/status rather than a secondary role/status in practicing a patented invention (this opinion is held by some verdicts, but it has no binding effect as China is not a case law country).

What needs to be added is that, if “specifically adapted for” can be proved, it would be presumed that the infringer “knows” about the existence of the direct patent infringement. Otherwise, the right holder may need to provide further evidence to prove that the infringer “knows” about the direct patent infringement and has provided aids or abetment which leads to the direct infringement.

• What types of evidence are useful for proving “specifically adapted for”, “knows” and/or “aids or abetment”?

Although useful evidence may vary from case to case, the most commonly used (accepted) evidences are mainly the followings:

1. Websites or product manuals/instruction manuals for the accused product, in which it has been clearly mentioned that the accused product is used for practicing the asserted patent.
2. Correspondences etc., between the infringer and the buyer, in which the buyer is introduced and instructed on how to use the accused product to practice the asserted patent.
3. Judicial appraisal reports, which are used to prove that the accused product is specifically adapted for practicing the asserted patent (also can be used to prove substantial non-infringing use by defendant).
4. Websites/Articles/News etc., which can demonstrate that competitor knows the buyer’s business (for example, the buyer has been a regular customer of the competitor, etc.), as well as knows that the buyer has an intention to practice or is practicing the patent, and still sells products to the buyer;
5. Documents which can prove that the competitor has filed an invalidation petition against the asserted patent or the competitor has cited the asserted patent in some of its own patent applications;
6. Others we may discuss otherwise.

Take-aways

In sum, lots of necessary evidences need to be collected before you go into the court. Based on our experience,  seek advices from those expert Chinese lawyers and get started to collect relevant evidence as early as possible is quite essential.