China E-ventions
Selected Software-Related Invention Patents
Vol. 1 , No. 8 - December 24, 2001
Welcome to China E-ventions. Keeping up with technology is difficult enough, but learning about new trends in patent examination methods and policies in different countries is a monumental task. One area of keen interest these days involves a particular classification of patent that goes by many names: business method patent, Internet patent, software patent, and so on - in China, "software-related invention patents". To be clear, many of these names have distinct definitions in certain jurisdictions; however, their similarity has caused great confusion for international practitioners.
The purpose of this newsletter is to provide the foreign patent practitioner with China patent news as well as a regular snapshot of how China's State Intellectual Property Office (SIPO) is approaching these kinds of inventions.
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Injunctive Relief Under China's New Patent Law
Editor's note: With the laws protecting intellectual property rights (IPRs) amended in the past two years in China, a new legal weapon against IPRs infringement - injunction - has been introduced to better protect copyright, patents and trademarks. It is believed that the new law will be of practical use for IPR protection and also have a wider impact on Chinese law. The Supreme People's Court issued the Judicial Interpretation on the Application of Laws Regarding Preliminary Injunctions to Stop Patent Infringing Acts (the "Interpretation") in June. Business Weekly invited Chief Justice Jiang Zhipei of the No. 3 Tribunal of the Supreme People's Court to interpret a few key points concerning this legal measure based on judicial decisions. Chief Justice Jiang has heard many IPR cases over the years and has played a key role in the drive for legislative changes to improve China's IPR laws.
The newly amended Patent Law of China took effect on July 1 this year. For the first time, injunctions are allowed under Article 61 of the new law. According to this Article, if the patent owner or interested party has evidence that another party is carrying out, or will carry out, acts of infringement against the patent owner, and if any delay in action may lead to irrecoverable losses or damages to the patent owner's legal rights or interests, then he or she may apply to an appropriate People's Court for an order to stop the infringing action before commencement of legal proceedings. This is a temporary remedial measure IPR owners are entitled to enjoy once their rights are infringed upon. Though an effective temporary measure in many countries, injunctions were not available in China's legal system until this recent amendment. Therefore, it's worth taking a closer look at a few issues key regarding the application of this measure.
1. Terminology and content of the Interpretation
Measures for stopping patent infringements before legal proceedings, as defined in the judicial interpretation, are called "preliminary injunctions" or "interlocutory injunctions". Article 50 of TRIPS (Trade-Related of Intellectual Property Rights) under the World Trade Organization (WTO) uses the phrase "provisional measures." It has been argued that China should use the word "injunction" in its law. Since there is no equivalent term existing in Chinese law, Chief Justice Jiang believes the Interpretation should comply with the newly modified Patent Law, which, too, uses the term, "measure". He is of the opinion that provided the mechanism conforms to the enforcement requirements of TRIPS; it is not necessary to introduce legal terms used by Anglo-American legal systems. In this article, the term "injunctions" will be used.
The main content of the Interpretation involves the application of an injunction. In addition, it stipulates that evidence may be preserved at the same time as the Court enforces the injunction. If the patentee has not applied for the measure until after initiating an action against patent infringement, the Court may give an advance ruling.
2. Scope of "interested" party
Paragraph 1 of Article 61 of the Patent Law stipulates that an interested "party" may apply for an injunctive measure. However, the scope of the interested party is not defined. Based upon the legislative spirit of the Patent Law and precedents, an interested party refers to parties who have direct interest in the patent infringement, besides the patentee. According to provisions of the Supreme People's Court, an interested party with regard to patent infringement cases may be the licensee of a contract of exclusive licensing or sole licensing agreement, or a party who has inherited or is inheriting IPRs under the law.
3. Jurisdiction
In order to guarantee standard enforcement of the law, Article 2 of the Interpretation adopts the normal practice regarding jurisdiction in patent infringement cases - "the patentee must submit an application for a pre-trial order to cease the infringing conduct to the People's Court which has jurisdiction over patent-related cases." Here, "People's Court which has jurisdiction over patent related cases" has two meanings. Firstly, it refers to the Court that has specialized jurisdiction over patent-related cases; and secondly it refers to the Court that has geographic jurisdiction per the Civil Procedure Rules. Only a Court that meets both requirements would have the authority to issue an injunction.
4. Accepted standard of review
In view of the fact that an injunction often concerns important civil rights and interests, it should be used with caution. Only in certain circumstances will it be justifiable to hinder the rights of the alleged infringing party. The circumstances where it will be justifiable to issue an injunction are set out in Articles 3, 4, 10 and 12.
Article 3 and Article 4 stipulate the formal requirements for an application, including a statement by the applicant explaining the facts of the situation and the evidence that will be provided. Procedures are also set out for the Court handling of the application in a timely matter.
Articles 10 and 11 prescribe the review process of the injunction order. During the review, the Court should examine the materials offered by both parties in a timely manner. If the Court is in agreement with the original order, it shall disregard any application by the respondent; otherwise, the Court should change or withdraw the original ruling. For purposes of standardizing the review process, the Interpretation sets out four considerations for the Court: (1) the possibility of the applicant winning; (2) whether the decision may harm the public interest; (3) whether irrecoverable harm may incurred by not issuing the order; and (4) whether a sufficient bond has been provided to the Court.
5.Applicant should provide security
TRIPS stipulate that the party applying for the injunction should supply security. Furthermore, most countries that offer similar measures require the applicant to supply adequate security in order to prevent the applicant from abusing their right to apply.
Paragraph 2 of Article 61 in the newly modified Patent Law stipulates that Articles 93 to 96 of the Civil Procedure Rules govern the handling of injunction applications. Article 93 of the Civil Procedure Rules addresses the issue of security matters in tort cases. However, it and the other above-mentioned articles deal with the seizure of property by a Court to ensure the enforcement of a judgment - no special stipulations have been made regarding injunctions against patent infringement. For this reason, Article 6 of the Interpretation stipulates that security should be supplied when applying for an injunction.
In addition, it would be useful to have provisions for determining the amount of security, such as the sale of the goods in question and the cost of storage.
Article 8 of the Interpretation stipulates that additional security may be required in circumstances where issuance of the injunction may cause additional losses to the respondent. The Court that hears the application may decide on any necessary added security on a case-by-case basis.
6. Enforcement of the Injunction
According to Article 61 of the Patent Law, an injunction is issued when the applicant would suffer irrecoverable losses unless such a measure is urgently taken. Timing is crucial. Therefore, Article 9 of the Interpretation stipulates that the Court should issue a written ruling within 48 hours of accepting the application, and the ruling should be enforced without delay. Article 5 states that such a ruling should be limited to the scope of the application submitted to the Court. This is a measure designed to prevent a Court from abusing their right of discretion.
Article 50 of Section 3 of the TRIPS agreement, regarding preliminary measures, stipulates that stopping infringement may be "executed unilaterally" before the Court, and the party against whom an application is filed should be informed after the measure is adopted. That is to say, in order to ensure effective execution, the Court should not notify the party against whom an application is filed until after the measure is adopted. That party shall then have the right to apply for a review of the application. In line with the regulations of TRIPS, the Interpretation stipulates that the party against whom an application is filed should be notified of such a unilateral ruling no later than five days after the ruling.
The preliminary measure against patent infringement is different from the area of seizure in terms of both content and requirements, as the damages resulting from patent infringement may be irrevocable and cannot simply be compensated financially. In seizures, the Court ruling can be stayed upon counter security furnished by the party against whom an application is filed. However, it would lead to failure of the pretrial injunction if it could be stayed by counter security in cases of patent infringement. For this reason, Article 8 of the Interpretation states that a Court ruling for an injunction shall not be stayed against a counter guarantee furnished by the party against whom an application is filed.
In some respects the rights of injunction puts the applicant in a favorable position in a patent infringement suit. However, according to TRIPS and intellectual property rights agreements of other countries, the injunction should be rescinded if the applicant has not sued or sued improperly within a certain time period after application of the injunction. If the party against whom an application is filed suffers losses because either no legal action is taken or action is applied incorrectly, the applicant shall make due compensation. Articles 12 and 13 of the Interpretation stipulate detail the proceedings for resolving compensation issues.
The Interpretation provides that the validity of the ruling should generally be maintained until a judgment or ruling comes into force. A Court may also determine the specific time limit for enforcement of the measure, given the particulars of the case. When the time limit expires, the Court may decide whether the measure should be continued as per the parties' request. This stipulation is more flexible and suitable for the demands of trial practice.
In addition, in order to guarantee the smooth execution of rulings and to maintain the dignity of law and unification of the legal system, parties who violate rulings will be fined penalties according to Article 102 of the Civil Procedure Rules. Parties whose acts constitute a crime may be prosecuted for criminal liabilities.
7. Other issues requiring clarification
Enforcement of injunctions to stop patent infringement may require the co-ordination of many government agencies responsible for registration and intellectual property rights administration. In view of the strict time limit for stopping relevant tort before the institution of an action, an experienced judge should administer injunctions.
Below is the complete text of Article 61 of the Patent Law on which the Interpretation is based:
If the patentee or interested party has evidence to testify other people are carrying out or will carry out infringement of his/her patent right, and his/her lawful rights and interests would suffer irrecoverable losses if infringing actions are not suppressed in time, he/she may apply to the Court for measures to order the cessation of the tort and seizure before filing an action.
If the patent owner or interested party has evidence that another party is carrying out, or will carry out, acts of infringement against the patent owner, and if any delay in action may lead to irrecoverable losses or damages to the patent owner's legal rights or interests, then he or she may apply to an appropriate People's Court for an order to stop the infringing action before commencement of legal proceedings.
The People's Court shall apply the aforementioned Articles of application according to the stipulations of Articles 93 to 96 of the Civil Procedure Law of the People's Republic of China.
A Selection of Software-related Invention Patents Published in China
Application Number : 00112106
Publication Number : 1261188
Application Date : 00.03.03
Publication Date : 00.07.26
Title : Bill (receipt) verification method and system based on electronic signature
Intl. Class. Nr. : G06K 5/00
Applicant(s) Name : Zhu Wenhe
Inventor(s) Name : Zhu Wenhe
Legal Status : Publication
Abstract : A bill (receipt) verification method and system based on electronic signatures. The electronic signature is the basis of verification generated by an electronic signature device, which can generate a unique effective electronic signature each time. The legality of electronic signature is verified by a signature verification system. The electronic signature device is issued by a distribution system. The verification system is composed of an electronic signature generator, signature distribution system and signature verification system.
Application Number : 00123600
Publication Number : 1282041
Application Date : 00.08.25
Publication Date : 01.01.31
Title : Electronic commercial distribution system and its implementing method
Intl. Class. Nr. : G06F 17/60
Applicant(s) Name : Meng Huadong
Inventor(s) Name : Meng Huadong
Legal Status : Publication
Abstract : This invention belongs to the field of network electronic business material flow technology, and includes hardware formed from terminals consisting of several electronic business automatic distributing mechanisms, central server and network interface and software programs which are used for controlling information and managing information and stored in the described terminal and central server, and every electronic business automatic distributing mechanism is connected with a central server by means of respective network interface. Said system can all-weather serve on time for 24 hr., operates at rapid speeds, maintains security, makes necessary payments and quickly feeds back information.
Application Number : 99120239
Publication Number : 1289981
Application Date : 99.09.23
Publication Date : 01.04.04
Title : In-line auction method and system
Intl. Class. Nr. : G06F 17/60; G06F 15/163
Applicant(s) Name : Zheng Ju
Inventor(s) Name : Zheng Ju
Legal Status : Publication
Abstract : An inline auction method and system. This method includes such steps as recording the articles to be auctioned, determining price, collecting information about bids (including certificate code, bid price and address), price comparisons, announces results, informs winner, and effects payment.
Application Number : 00109289
Publication Number : 1278086
Application Date : 00.06.21
Publication Date : 00.12.27
Title : Electronic business real-time payment method
Intl. Class. Nr. : G06F 17/60
Applicant(s) Name : Ren Chunlei
Inventor(s) Name : Ren Chunlei
Legal Status : Publication
Abstract : The steps of the method are: (a) the electronic business network station publishes commodities information via internet to customers and receives feedback from customers; (b) the network station receives purchasing information from customers sent by telecommunication systems, stores the phone number of customer and the purchasing information provided by customer in the network station and the teleommunication department; (c) the network station determines the goods payment in the telephone rate of customer and provides goods to customer; (d) the network station and communication department check and settle the payment used for goods from telephone rate paid by customer to finish the payment for purchasing. It can increase trade speed, avoid the problems of credit guarantees of the network station, allowing customers to purchase goods.
Application Number : 00113896
Publication Number : 1283829
Application Date : 00.08.03
Publication Date : 01.02.14
Title : Method for checking antiforge bar code of commodities over network
Intl. Class. Nr. : G06F 17/60
Priority Data : CN99115831.8 990804
Applicant(s) Name : Yang Meng
Inventor(s) Name : Yang Meng
Legal Status : Substantial Examination
Abstract : A method for checking antiforge bar codes of commodities over network using central network site connected to Internet and user terminal for inquiry. Antiforge bar code is scanned by user terminal and then compared with information about the commodity stored in central site to determine the correct commodity. It features the antiforging ID of network sites, user authentication and inquiry records. Its advantages are high antiforgery capabilities and convenient checking.
Application Number : 00114324
Publication Number : 1304110
Application Date : 00.01.08
Publication Date : 01.07.18
Title : Commodity negotiable instrument and its application
Intl. Class. Nr. : G06F 17/60
Applicant(s) Name : Fu Zhenzhou
Inventor(s) Name : Fu Zhenzhou
Legal Status : Publication
Abstract : The present invention relates to a negotiable instrument for commodity circulation, and is characterized by the information record carrier; a circulation process code containing some unit commodity identification attributes information, and the said code can be divided into n+1 successively correlated circulation participator cyphers by using at least one node, every circulation participator can obtain one cypher. At the saime time, it is an identification card of commodity, and can make people discriminate the same-batch similar commodity, and can make circulation participator obtain a voucher participating commodity circulation. It also can be used as a voucher for logging crypto key of correspondent Internet electronic business network station, lottery ticket and checking and verification.
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