Introduction

After six years of proceedings, on August 12 2012 the Beijing Higher Court issued its decision to vacate the lower court's decision in a high-profile civil suit between Neoplan Bus GmbH and the alleged design patent infringer Zhongda Group, a domestic bus producer. The court found that no infringement had occurred, due to the invalidation of Neoplan's design patent.

Facts

On September 23 2004 Neoplan submitted Design Patent ZL200430088722.4 to the China Patent Office for its Starline coach. The patent office approved the registration on August 24 2005.

On September 26 2006 Neoplan lodged a civil suit before the Beijing No 1 Intermediate Court against the Zhongda Group's affiliated companies and a trader of Zhongda on the grounds that their A9 coach infringed Neoplan's design patent for the Starline coach.

Decision

The court decided in favour of Neoplan in January 2009, finding that the defendants had infringed the patent, and awarded damages of Rmb20 million plus Rmb1.16 million for Neoplan's legal costs.

The defendants immediately appealed to the Beijing Higher Court. In July 2009 the defendants requested the Patent Re-examination Board to invalidate Neoplan's design patent, as the defendants had found that this patented design had been published in German magazines (including the ninth issue of BUS Magzain and BUS aktuell) before its application date. This prior publication was not in accordance with Article 23 of the Patent Law (2000 amendment) on the requirement of novelty. The board invalidated the design patent in February 2010. On July 11 2012, in the follow-up administrative suits, the Beijing Higher Court upheld the board's invalidation decision.

Since the patent at issue had been invalidated, the Beijing Higher Court rendered a final decision on August 12 2012 to vacate the decision of the Beijing No 1 Intermediate Court and rejected all of Neoplan's claims.

Comment

Neoplan could have won the lawsuit with injunction and collection of a large sum of compensation, but regretfully, its patent was invalidated due to the prior publication of the design. Several lessons may be drawn from this case regarding patent prosecution and enforcement in China.

Keep the design strictly confidential before application

China's patent law requires that a design patent be novel. The 2000 amendment required only 'relative novelty':

"Article 23 (2000): Any design for which patent right may be granted must not be identical with or similar to any design which, before the date of filing, has been publicly disclosed in publications in the country or abroad or has been publicly used in the country, and must not be in conflict with any prior right of any other person."

In the Neoplan case the defendant found evidence that Neoplan's coach design had been published in foreign magazines before the patent application was filed in China, and the novelty was destroyed due to this publication.

In 2008 China amended the Patent Law for a third time, raising the requirement to 'absolute novelty':

"Article 23 (2008): Any design for which patent right may be granted shall not be a prior design, nor has any entity or individual filed before the date of filing with the patent administration department under the State Council an application relating to the identical design disclosed in patent documents announced after the date of filing."

The applicant should take measures to maintain the confidentiality of the design or invention before filing for the patent. Release of the design, even by a third party (the so-called 'spy photo' in the automobile industry), can be disastrous, as illustrated in this case.

Mind the discrepancy between Chinese and foreign law

As previously mentioned, China requires either relative novelty or absolute novelty in designs. Article 24 of the Patent Law provides that under certain circumstances, an invention will not lose novelty during the six-month period after disclosure, but there is no similar provision for designs. However, according to Article 6 of the EU Designs Directive and Article 7 of the EU Community Design Regulations, under certain circumstances, disclosure will not destroy the novelty of the design. This discrepancy in legislation between the European Union and China may result in a situation where the patentee can maintain the design patent in the European Union, but lose the patent on the same design in China.

Evaluate patent stability before taking legal action

As design patent applications in China do not undergo substantial examination, the design patent may actually have no novelty. Before taking legal action by citing the design patent, the patentee should carefully evaluate its stability.

There are several methods of evaluating the novelty of a design patent. First, the patentee may review the development history of the design. For example, if it is a new generation of an old product, the extent to which the new design differs from the old one should be considered. Second, the patentee may conduct database searches of different IP offices for prior art.

Many patentees trust the China Patent Office to conduct prior art searches. The patent office provides two kinds of search:

For a design patent filed before October 1 2009 (when the 2008 amendment to the Patent Law became effective), the Information Centre of the State IP Office can provide a 'novelty search report', which is unofficial and sent to the applicant only for reference.

For a design patent filed after the 2008 amendment, the State IP Office can provide an 'evaluation report', which will be kept as official record and can be used as evidence in infringement disputes.

If the patentee is not confident in the novelty of its design patent filed after October 1 2009, it may still apply to the Information Centre for an unofficial search and then decide whether to proceed with legal action against the alleged infringer.

In most patent infringement disputes, the alleged infringer will usually first seek invalidation of the patent at issue. The patentee must be well prepared for this invalidation request. Otherwise, it may spend a lot of time and money, but still gain nothing in China, while also exposing itself tovpossible counterclaims.

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