Prior art defence in patent litigation: A legal quagmire?

Under the PAD, the alleged infringer needs to first construe the technical features of the asserted patent. This requirement in practice poses a conundrum for the alleged infringer because, with regard to the issue of infringement, the patentee should have the burden to interpret the asserted technical features and prove infringement. Because courts usually prefer to resolve the PAD before any infringement claim, the burden of construing the claim is effectively switched from the patentee to the alleged infringer in cases where the PAD is raised. Claim construction is very important in patent litigations because it usually forms the basis for determining the scope of patent protection and whether the patent is infringed. This burden shift thus has the unintended consequence of strongly favouring the patentee and may also generate serious conflict with the general principle of civil litigation upon which the plaintiff needs to prove every element of its claim.

It is critical that, in practice, the alleged infringer takes into consideration all issues in dispute when interpreting a claim for the purpose of the PAD, especially in situations where the alleged infringer may have a legitimate argument for non-infringement based on a different set of interpretations. For example, a term in the asserted claim may be interpreted either narrowly or more expansively. The patentee may prefer one interpretation, which may also be the one that better supports the alleged infringer's PAD. The alleged infringer thus has to make a difficult choice of whether to interpret the term in a way that favours the PAD but may potentially damage its subsequent non-infringement argument.

Scope of the prior art

When the Patent Law was amended for the third time in 2008, the scope of available prior art was expanded to include evidence of prior public use outside of China. Thus, for patent applications filed prior to October 1 2009, the inventions may be novel and inventive even if they had already been disclosed through public use in foreign countries. If the patent applications were filed after October 1 2009, this type of foreign public use evidence would render the inventions non-patentable. According to the Supreme People's Court, the Third Amendment of the Patent Law shall govern in cases originating from alleged infringing activities that occurred after October 1 2009. Thus, it appears that foreign prior public use can support a Prior Art Defence if the alleged infringing activities took place after October 1 2009, regardless of when the patent application was filed.

For patents filed prior to October 1 2009, but allegedly infringed after October 1 2009, the change in the scope of prior art may force the patentees to forsake part or all of its legitimate patent protection if the patented invention had been in use in a foreign country before the application date. On one hand, the foreign prior use does not in any way render the inventions un-patentable or otherwise narrow the scope of their protection during prosecution. On the other, the PAD essentially allows any party to practise these patented inventions without authorisation or compensation after October 1 2009. In principle, any permissible encroachment on a patent right should be clearly provided in statute. But it is debatable whether Article 62 intends to potentially narrow the protection scope of any patent filed before October 1 2009. To some extent, the PAD is similar to a compulsory licence as far as this group of patents is concerned. However, unlike a compulsory licence, the legality of the PAD to restrict or eliminate the patentee's monopoly right in its inventions is suspect.

Timing for comparison of technical features

Patentability and infringement are both factual inquiries from the perspective of persons skilled in the art. But the two analyses require persons skilled in the art to evaluate the subject matter at different timeframes. Whether an invention is novel or inventive is studied at the time of filing of the patent application and whether a product or process infringes a patent is determined at the time of infringement. Because infringement often occurs at a much later time than the filing of the patent application, how the relevant prior art and background technology will be understood by persons skilled in the art is likely to be different at these two dates. For example, technology developed after the patent application may be able to support an infringement claim, but is unable to show the patent is not novel or inventive.

Because the PAD combines certain elements of the patentability and infringement analyses, it is not clear whether the time of filing the patent application or the time of infringement should be the reference point. The time of filing is important to the PAD as it is when persons skilled in the art understood and construed the patent claim. However, the time of infringement may be equally important as patent infringement litigation mainly concerns how persons skilled in the art compare the patented invention with the product or process at issue when the alleged infringement occurs. So far the courts have not indicated which the preferred timeframe for comparison is and patent litigants may also elect to stay away from this contentious issue unless there is clear later-developed technology that may have a significant impact on the understanding of prior art.

Not substantially different

Under the Patent Law, a technical solution may lose novelty if all technical features of the invention are identical to or a direct substitution of customary means of corresponding technical features in a prior art, and the technical solution is not inventive if it does not require inventive work from persons skilled in the art. With regard to the issue of infringement, a product or process infringes if its technical features are identical to, or considered equivalent to, those disclosed in the patent. Furthermore, two technical solutions are equivalent under the doctrine of equivalents if they perform substantially the same function by substantially the same means, and bring about substantially the same result.

Therefore, the standards of comparison among novelty, infringement, and inventiveness analyses are different: arguably, a direct substitution of customary means demands a smaller degree of variation than the doctrine of equivalents; whereas inventiveness requires that the technical solution is more than equivalent to the target of comparison, and incorporates certain unique technical features. Despite these three different standards, for some reason, the Supreme People's Court created a new one for the PAD: not substantially different. In the past two years since the Patent Law was amended, it appears courts have not come to an agreement for the criterion to determine the level of variation that falls under the “not substantially different” test.

The decided cases generally fall into three categories. In the first group, courts literally followed the novelty standard and reasoned that the PAD requires that the technical features be derived from a prior art directly and undoubtedly by persons skilled in the art. Courts in some other cases instead read “not substantially different” as identical to equivalents and directly apply the standard of comparison as in the doctrine of equivalents to the PAD. There is still a third group of cases where courts believe that “not substantially different” applies to even a greater degree of variation than equivalents and is actually close to the inventiveness standard. Thus, in these cases, courts ruled that the PAD only requires that the allegedly infringing technical features be obtainable by the persons skilled in the art without inventive work based on the teachings of a prior art.

Final note

As courts in China are unable to declare issued patents invalid, the PAD is an important tool for alleged infringers in patent litigations to avoid the thorny issue of infringement. To some extent, it offers an opportunity for alleged infringers to indirectly attack the validity of the asserted patent before the court. However, because of the different analytical frameworks applied in patent validity and infringement, as a hybrid of two systems, the PAD unavoidably suffers from uncertainty and how it may be applied in practice remain to be clarified through legislation or judicial interpretation.

Fang Qi, Fangda Partners, Beijing

Bridging the gap: broad interpretation as a strategy

An electronics company was defending an allegation of patent infringement before a court in Beijing earlier in the year. Due to the similarity between the asserted patent claim and the accused infringing product, the defendant used the prior art defence as its main litigation strategy, arguing that the patented technology was published in a prior art before the application date of the patent.

A contentious issue throughout the litigation was the definition of a key technical feature in the asserted patent claim, which was also a central element for comparison in the prior art defence as well as in the patentee's infringement claim. The technical feature was defined in very broad terms in the claim language. But the relevant part of the specification appeared to suggest that the scope of the technical feature for the purpose of the patent protection was much narrower.

As part of its prior art defence, the company could not argue that the claim language was indefinite or the disclosure insufficient, but it has to make clear whether it supports a broad or narrow interpretation of the technical feature to make a comparison between the prior art and the alleged infringing product.

A broad interpretation would be beneficial to the prior art defence as it would bring the alleged infringing product closer to the prior art. However, the broad interpretation may also be potentially damaging to the subsequent non-infringement argument if the court decided against the prior art defence. There also wouldn't be a second chance for the defendant to revisit the interpretation during litigation as the court will hear both the prior art defence and infringement argument in the same hearing before it made its decision on the case. In the end, after carefully balancing the pros and cons of the two approaches, the defendant's legal team advocated for the broad interpretation because it was confident that the court would be likely to rule in its favour on the prior art defence so that there was no need for the court to go into the issue of infringement in its decision.