50 days: Chinese SPC IP Tribunal closes its first case

As this Kat reported in At last, the sun rises, since 1 January 2019, China has had an IP Tribunal within the Supreme People's Court (“the SPC IP Tribunal”), serving as the national IP appeals court. On 27 March, this IP Tribunal opened its first trial of an appeal case over an invention patent. (case reference: No. 2, [2019], Final, Civil Division, IP, SPC) 

The 1st instance: The Shanghai IP Court 

Valeo Systèmes d'Essuyage (Valeo, the plaintiff in the original trial) is a global automotive supplier headquartered in France and owns the invention patent for a “wiper connector of motor vehicle and the corresponding connecting device” (No. ZL200610160549.2) in China. 

Valeo initiated proceedings before the Shanghai IP Court, claiming that the three Chinese defendants, namely Xiamen Fu Ke Auto Parts Co., Ltd. (Fu Ke Auto), Xiamen Lucas Auto Parts Co., Ltd. (Lucas Auto) and its general manager Shaoqiang Chen, had been manufacturing and selling three specific models of windscreen wipers which fell within the scope of Valeo’s patent claims 1-10. Valeo thus requested an order that the defendants must cease and desist from their infringing activities and compensate for the loss and the reasonable expenses for deterring the infringement in the amount of CNY 6 million. Further, considering the ongoing nature of the infringements, Valeo petitioned to the Court to take immediate measures to prevent the infringing activities whilst the trial proceeded. 

The Shanghai IP Court acknowledged the infringement but reserved the issue of damages, so on 22 January 2019, it issued an interim judgment, requiring Fu Ke Auto and Lucas Auto to immediately cease and desist from infringing the plaintiff’s patent rights (the evidence was not sufficient to prove that also Shao Qiang Chen had committed infringing acts). Fu Ke Auto and Lucas Auto lodged an appeal against the decision to the SPC IP Tribunal. 

The 2nd instance: the SPC IP Tribunal 

On 15 February 2019, the SPC IP Tribunal accepted the case, and formed a collegiate panel of five judges, four Doctors of Law and one Master of Science, all with extensive judicial experience. Mr. Dongchuan Luo, one of China’s top IP judges, presided the collegiate panel. The hearing was held on 27 March 2017, and the final judgment was rendered right after the hearing. 

The functional features 

See below the side-by-side comparison of the plaintiff's patent and the defendants' alleged infringing products (unfortunately this Kat could only find the information of two relevant products from the defendants’ website).

Katfriend Yifeng She (Fangda Partners, Valeo's attorney team) provided some more details: 

The key of the patented invention lay with the connector connecting wiper blade to wiper arm, in particular, the safety fastener that would prevent deformation of securing elements, so that wiper blade would not be detached from wiper arm.

        * Infringement analysis and redundant feature: 

... the SPC judges clarified that the subject matter of patent infringement assessment should be a technical comparison between the patent claim and the accused infringing product, rather than between products manufactured by the patentee and the accused infringer. Associate Justice Luo made it clear, during the reasoning part of the hearing, that whether the product had manufactured by the patentee or whether the patentee had manufactured any patented product was irrelevant. 

The SPC judges also refuted the defendants’ argument that the allegedly infringing product contained a central pin, in addition to the safety fastener, as defined by the patent’s claim 1, and thus should perform a superior function in terms of “securing”. The judges reiterated the “all-elements rule”, which meant, as long as all features of a patented claim could read on the infringing product, there should be patent infringement. Any additional feature, other than the features claimed by the patent claim, should be regarded as “redundant” for technical comparison purpose, regardless of whether the additional features can improve the function of the patented product. 

       * Means plus Function Claiming: 

While the IP Court of SPC sustained the first-instance interim judgment of the Shanghai IP Court, it slightly disagreed with the trial court in the claim construction. The difference was so subtle but so important that it would be entirely wrong to neglect it. As we see it, it could be even regarded as one of the “crown jewelleries” of the said IP hearing. 

The SPC judges overruled the Shanghai IP Court’s finding and indicated that the “safety fastener”, which is an essential feature of the patent in dispute, was not a means plus function claim. According to Article 8 of the SPC’s Second Judicial Interpretation for Application of Law in Adjudicating Patent Infringement, Chinese courts need to carry out a two-step test with respect to means plus function claiming. First, the court needs to identify the indispensable, essential functional feature that may achieve the claimed function. Second, the court should compare the accused infringing product against the patent claim to determine whether the accused infringing product contains said indispensable, essential functional feature or feature that is equivalent to it. Despite the two-step test set forth by the SPC, the concept of means plus function claim is quite controversial under Chinese law, as some courts are over-cautious in interpreting a means plus function claim, so that the protection scope is unreasonably narrowed down. 

The ruling of the IP Court of SPC that the “safety fastener”, though apparently containing description of a “function” (i.e., “safety”), is not means plus function claiming, indicates a clear, positive sign that the IP Court of SPC will probably unleash the yoke fastened over the necks of inferior courts in claim construction. In the field of mechanics, such as, in the art of the patent in dispute, it is more likely that Chinese courts would be more lenient toward technical features, whose structures can be easily understood to the person skilled in the art, even if the features, from their wordings, may appear descriptive. 

Interim judgement v. Preliminary injunction v. 

In the first instance, the plaintiff requested both a preliminary injunction and an interim judgment, but the Shanghai IP Court only rendered an interim judgment. 

Article 153 of the Civil Procedure Law of the People’s Republic of China provides that where a portion of the issues being tried are already evident, the court may firstly entry an interim judgment on such portion of issues, while the remaining issues can be decided at a later stage. 

The interim judgment, as a significant part of the diversified dispute resolution mechanisms promoted in China in recent years, is especially conductive to define and stabilize part of the legal relationship at the early stage, so as to give remedies in a timely manner, and to accelerate resolving the remaining part of the disputes, thereby to enhance the overall trial efficiency. In essence, an interim judgment is a final judgement with independent legal force and is capable of being challenged separately on appeal (comparable to Endurteil, in contrast to Zwischenurteil). 

For all its merits, the interim judgment is still extremely rare in Chinese IP trials. The interim judgment issued by the Shanghai IP Court was the very first one since this court's establishment in 2014.

One core issue that was expected to be clarified by the SPC was how to deal with the preliminary injunction issued by the first instance Court in the context of interim judgment. Whilst the academia was abuzz with discussions, instead of offering a direct answer, the SPC IP Tribunal opined that the permanent injunction issued in the final judgment made it needless to render any preliminary injunction -- the question therefore remained unanswered. The Court did point out that the preliminary injunction and interim judgment were two procedural tools that had their respective values and they could co-exist. 

Observations 

The SPC IP Tribunal completed the whole procedure (15 Feb – 6 April, from case-filing to serving the written judgement) in 50 days (incl. festivals and holidays).

It is a remotely accessible open trial (which is not exceptional). The hearing at the SPC IP Tribunal was on live broadcast at tingshen.court.gov.cn. Since September 2016, all the public hearing cases went online on this website, covering all the 3,520 domestic courts. By 19 February 2019, in total 2,490,000 hearings were broadcasted, and the total website visits exceeded 14.5 billion times. 

As an initiative of increasing judicial openness, the SPC inserted a QR code in the final judgement, which linked to the PDF version of the complete document. 

Shelley: "The document is Google translatable."