Text | Shanghai No. 3 Intermediate People's Court, Ye Mingxin
Liu Hui, Shanghai Intellectual Property Court
In recent years, commercial patent rights protection has appeared frequently, which has aroused widespread concern in the society. Although the act of commercial patent rights protection is objectively not illegal, it is essentially a "profit-making through litigation", which not only occupies scarce judicial resources, affects the efficiency of adjudication, but also may hinder the realization of the institutional purpose of the Patent Law to encourage innovation. Therefore, it is necessary to conduct an in-depth analysis of the issue of commercial patent rights protection and put forward effective regulatory suggestions, so as to contribute to the fairness and efficiency of judicial adjudication and the positive development of the value of the patent system.
Analysis of the definition, categories and behavioral characteristics of patent commercial rights protection
(1) Definition of commercial patent rights protection
Commercial patent rights protection is often based on the appearance of rights protection, with profit as the fundamental purpose, and the substantive operation is carried out in a commercial manner. In other words, if the same plaintiff files a patent lawsuit against more than 30 defendants within one year based on the same patent for the purpose of profit, and the method of rights protection is commercial and operational, it can generally be determined to be a commercial patent protection act. Patent batch cases are different from intellectual property infringement disputes such as pictures, music or film and television works, and it is rare for the same plaintiff to file a lawsuit against the same defendant based on dozens of pictures, animations, or TV dramas. Of course, in practice, it is necessary to make a specific judgment based on the actual circumstances of the case, and if the patent lawsuit is filed with the sole intention of stopping the infringement in the process of rights protection, even if a large number of defendants are involved, it does not fall into this category.
(2) Categories of commercial rights protection of patents
There are three typical types of commercial patent rights protection:
The first is "phishing" commercial rights protection. It means that the plaintiff induces the defendant to use and sell the relevant products for which the defendant enjoys the patent right through various means, and quickly collects evidence and files a lawsuit against the defendant after using and selling it. For example, a company advertises that its "self-service website building" software can be downloaded and used for free, but then files thousands of lawsuits on the grounds that users do not retain their copyright notices on the website pages.
The second is "preemptive" commercial rights protection. The specific manifestation is that the plaintiff preemptively applied for a patent based on the intellectual achievements of others, and then filed a batch of rights protection lawsuits against relevant businesses in the market. In judicial practice, the plaintiff has applied for a patent for a technical solution or design for a product that has just been marketed, and once the plaintiff has been authorized, it will initiate a lawsuit against the seller of a similar product in the market.
The third is the "release of water and fish farming" commercial rights protection. It means that the right holder is not in a hurry to stop the infringement after determining the infringer's infringement, but allows the infringer to expand the market before filing a lawsuit and claiming compensation to maximize the corresponding benefits.
In addition, there are also rights protection organizations and other institutions that take the initiative to contact the patentee and ask the patentee to grant the patent, and then conduct market research and other activities in the authorized area to find infringements, file a large number of civil lawsuits, and obtain economic compensation.
(3) Characteristics of commercial patent rights protection
First, the plaintiff's rights protection methods are professional and large-scale. Plaintiffs often entrust professional organizations such as law firms or patent agencies, and after special authorization to them, the relevant professional organizations carry out centralized rights protection activities. There are also plaintiffs who entrust patents in specific regions to multiple law firms or agencies to represent their patents by way of zoning, and claim attorney's fees or agency fees as part of reasonable expenses, but there are usually no corresponding bills to testify, and some lawyers clearly state in the trial that they adopt the mode of risk representation, and the lawyer's fees are determined by the court's discretion. In addition, more and more plaintiffs have obtained relevant patents through succession, and then filed large-scale rights protection lawsuits. For example, after a technology company in Kunshan City, Jiangsu Province obtained the patent involved in the case from the original patentee, it filed 113 patent lawsuits with a court in Shanghai in just half a year.
Second, most of the defendants were sellers with relatively weak ability to respond to lawsuits. The defendants in commercial rights protection cases are often online store operators on e-commerce platforms, or individuals who operate independently, individual industrial and commercial households that lease physical stores or stalls, or small and micro enterprises that operate on a smaller scale. At the same time, due to the relatively low profit margin of the defendant in such cases, the defendant generally does not have enough funds to negotiate or litigate with the plaintiff, and rarely appoints a lawyer or patent agency as an agent. This makes the defendant weak in the defense of prior design and legal source, for example, the defendant is often unable to find the prior art that matches the patented product due to the large scope of patent search data and the lack of corresponding patent search capabilities. In fact, the plaintiff also took advantage of the information asymmetry caused by the defendant's relatively weak ability to respond to the lawsuit and the relatively complex determination of patent infringement to maximize benefits.
Third, the plaintiff prefers mediation and settlement in the litigation. Considering that the long litigation period and enforcement period of patent cases will weaken the maximum benefits obtained, the plaintiff often tends to obtain a more substantial compensation as soon as possible through mediation, and the amount of the subject matter of the case is generally not large, mainly between 500 yuan and 10,000 yuan. In addition, design and other patents are unstable to a certain extent, so the plaintiff hopes to settle as soon as possible and obtain the corresponding amount of compensation in a timely manner, so as to avoid the final inability to obtain the corresponding amount of compensation due to reasons such as the invalidation of the patent. In practice, there are also cases where the plaintiff passively responds to mediation in the pre-litigation stage. After discovering the infringement and completing the collection of evidence, a considerable number of plaintiffs did not issue infringement warning notices, lawyer's letters, etc. to the defendant to stop the infringement, but filed a lawsuit directly, and even refused to communicate when the defendant stopped the infringement after receiving the prosecution materials and took the initiative to contact and was willing to pay appropriate compensation, relying excessively on mediation or obtaining an effective judgment through the court.
Analysis of the causes of commercial patent rights protection
First, it is more economical for the right holder to maximize profits or protect its rights. In patent commercial rights protection cases, the plaintiff usually adopts a templated method of rights protection, sharing a notarial certificate in multiple cases when collecting evidence, and the complaint only needs to be replaced with simple words, which is relatively easy to protect rights, and can seek considerable and predictable economic benefits at a low litigation cost, which is in line with the principle of cost-effectiveness. At a deeper level, with the advent of the information technology era and the iteration of global intellectual property dissemination methods, the uncertainty of the right holder has increased, or the right holder has been determined but unable to effectively contact and obtain its permission, and the emergence of a large number of such works and technologies has made the transaction costs paid by the right holder in the process of collecting transaction information and supervising the performance of the contract likely to be much greater than the benefits obtained, so its enthusiasm to collect relevant information and facilitate the transaction will be weakened. In the case of market transaction anomie and self-reliance remedy, judicial remedies with lower costs and predictable benefits have become the best choice, which is one of the reasons why a large number of disputes turn to judicial remedies, and indirectly promote the generalization of commercial patent rights protection.
Second, a large number of e-commerce platform sellers are one of the motivations for commercial rights protection. With the rapid development of the digital economy, a large number of individual industrial and commercial households, small and micro enterprises have settled in the e-commerce platform for sales. On the one hand, such sellers generally do not have sufficient understanding of patent rights, and often only pursue popular models, tend to low prices, and emphasize market share when selling products, and lack the awareness of effectively examining the production qualifications of relevant suppliers and whether the products have patent rights. On the other hand, most of the defendants such as individual industrial and commercial households and small and micro enterprises have the mentality of "giving money and doing things", which further generalizes the phenomenon of commercial patent rights protection. In addition, filing a lawsuit with an e-commerce platform operator and a platform merchant as co-defendants also makes it easier for the plaintiff to determine the jurisdiction and reduces the time and money cost of filing a lawsuit across the country.
Third, there is an institutional basis to a certain extent. From the perspective of judicial practice, the proportion of commercial rights protection of design in mainland China is relatively high, which has a certain correlation with institutional design. In addition, the defendant's understanding of patent rights is weak, the ability to control market risks is also poor, and the cost of initiating patent invalidation proceedings is high, so it is relatively easy for the plaintiff to protect its rights in design cases and the certainty of obtaining compensation is greater. Therefore, the current patent system is designed to grant basically the same degree of protection to patent rights with different intellectual contributions without distinction, which makes the convenience of patent acquisition and the exclusivity of right exercise form an asymmetry, and provides the possibility for the preemptive patent applicant to apply for the prior art and the existing design as the corresponding utility model and design patents and use the corresponding defective patents to sue others for infringement, which is also an institutional reason for the gradual generalization of commercial rights protection.
Analysis of the solution path of patent commercial rights protection
(1) Reasonably determine the amount of compensation awarded, and promote the uniform application of law
In a number of cases, the Third Civil Division of the Supreme People's Court and the Intellectual Property Tribunal have expressed a negative attitude towards the use of intellectual property rights as a means and tool to earn profits, emphasizing that "while the people's courts protect the proper exercise of patent rights by the parties, they must also guide the exercise of patent rights in accordance with the law, so as to ensure that limited judicial resources can provide necessary and sufficient judicial remedies for patentees". Specifically, the people's courts should strictly adhere to the basic concept of the "principle of filling in damages" in such cases, and standardize the judicial application of statutory compensation in patent commercial rights protection cases by strengthening basic work such as fact-finding. When using discretion to determine the amount of compensation for infringement, consideration should be given to distinguishing the nature of the infringement, reasonably determining the legal liability that the infringer should bear, and focusing on strengthening the crackdown on the manufacturing of the source of the infringement. In addition, consideration should also be given to the overall amount of compensation and reasonable rights protection expenses of the right holder in related cases, and adhere to the total amount analysis and individual case measurement, so as to not only make the infringer pay the corresponding price, but also avoid duplicate compensation and multiple benefits for the right holder. At the same time, in the face of patent infringement disputes, the people's courts should distinguish between different types of rights protection entities. For plaintiffs who do not use for the purpose but make profits through commercial rights protection litigation, the amount of damages awarded may be appropriately restricted. For infringing sellers who have filed a large number of rights protection lawsuits with the plaintiff at the same time, and the sales amount is very low, the reasonable expenses for the right holder may be considered to be compensated, and the rights protection expenses of the rights holder may not be filled under certain conditions, so that the amount of compensation awarded is commensurate with the infringer's infringement costs, subjective malice, and objective harmfulness. Where rights holders deliberately abuse their rights by means such as "fishing for rights protection" or "double litigation in one case", the people's courts shall regulate them in accordance with law, and may order the plaintiff to bear the defendant's reasonable expenses in accordance with relevant judicial interpretations as appropriate.
At the same time, judges should thoroughly study and earnestly implement the Supreme People's Court's "Guiding Opinions on Unifying the Application of Law and Strengthening the Search for Similar Cases (for Trial Implementation)", making full use of artificial intelligence, big data, and other technical means to optimize and improve the search function for similar cases, and solve the problem of inconsistent application of the law, such as the disparity in the amount of compensation awarded in such cases due to factors such as geography and random division of cases. For example, the Shanghai court system is exploring the establishment of multiple application scenarios for identifying commercial intellectual property rights protection cases and promoting the unification of applicable laws, and through digital reform and empowerment, the system can automatically identify and actively push relevant batch cases according to the names of the parties, patent numbers and other factors, so that judges or mediators can grasp the information of related cases. At the same time, if it is discovered within the same court that the rights protection cases filed by the same right holder against the same patent or trademark are scattered among different judges, the judges undertaking the case shall strengthen communication and coordination, and once possible abnormal situations are discovered, they shall be submitted to a professional judges' conference for discussion. In addition, it is necessary to promote the sharing of national judicial data on intellectual property rights, accelerate the construction of a judicial big data platform, timely grasp the situation of nationwide batch litigation of intellectual property rights, comprehensively understand the amount of compensation for intellectual property rights involved in litigation, avoid excessive differences in the odds of awards between different regions, and prevent duplicate compensation.
(2) Give play to the active role of the judiciary and actively innovate trial mechanisms
Active justice to promote both the symptoms and the root causes, can explore the establishment of a "model judgment + litigation and mediation docking" mechanism, the first case of patent commercial rights protection is carefully reviewed, and the concept of "filling in the principle" is adhered to scientifically determine the standard of judgment and compensation - neither to give a higher award for commercial rights protection cases, nor to allow the occurrence of patent infringement, and to quickly review and adjust subsequent similar cases, reduce procedural idling and improve trial efficiency. The model judgment mechanism was first seen in group securities and futures disputes, which refers to a dispute resolution mechanism that selects representative cases to be tried and adjudicated first, and properly resolves parallel cases by giving full play to the leading role of model judgments. Patent commercial rights protection disputes have certain commonalities with group securities disputes, such as the fact and legal issues are relatively fixed, the number of parties is large and scattered, the litigation capacity is weak, and the application of law needs to be unified. After the model judgment takes effect, similar parallel cases may be entrusted to the relevant mediation organization for mediation. Where the parties reach a mediation or settlement agreement and conclude the case through mediation or withdrawal of litigation, the people's court may appropriately reduce or reduce the case acceptance fee in light of the specific circumstances of the case. If a party to a parallel case refuses to accept the mediation plan proposed by the model judgment and fails to obtain a more favorable judgment result in subsequent litigation, the court may, at its discretion, increase the burden of litigation costs, so as to provide a reasonable expectation and clear standard for the patent defender, prompt it to resolve the relevant dispute more rationally, and encourage it to resolve the batch dispute through mediation, reconciliation and other means. In addition, the relatively low but reasonable amount of damages can guide the right holder to actively claim rights against the source of infringement, thereby promoting the substantive resolution of patent infringement disputes.
(3) Actively extend judicial functions and vigorously promote pluralistic co-governance
At present, the contradictions between the people's courts and cases are relatively prominent, and it is difficult for a single litigation channel to meet the needs of the public to resolve disputes. This also means that solving the problem of commercial patent protection needs to be organically combined with the work of "great protection" of intellectual property rights. Therefore, judicial organs should take the initiative to extend their judicial functions, cooperate with relevant administrative functional departments, and guide more administrative and social forces to follow up synchronously and form a joint force.
First, it is necessary to speed up the improvement of the non-litigation dispute resolution mechanism. The people's courts should adhere to and develop the "Fengqiao experience" in the new era, effectively put the non-litigation dispute resolution mechanism at the forefront of patent commercial rights protection cases, and increase the intensity of litigation and mediation. Further strengthen cooperation and docking with administrative organs, industry associations, intellectual property professional institutions, etc., actively introduce professional social mediation forces, and form a large mediation work pattern of people's mediation, administrative mediation, industry mediation, and judicial mediation that complement each other's advantages, are organically connected, and are coordinated and linked.
Second, it is necessary to guide industry associations to give full play to the role of industry self-discipline. The people's courts may publish white papers and typical cases on the trial of commercial patent rights protection cases, convene symposiums, tour lectures, and other means to inform lawyers associations and patent agency industry organizations of common problems and opinions and suggestions in the course of adjudicating such cases. Local intellectual property offices can focus on supervising agencies whose per capita agency volume is obviously too high and the growth rate of agency volume is obviously abnormal, and pay close attention to and correctly guide agencies that repeatedly represent a large number of patent commercial rights protection cases. Establish and complete patent agency credit record files, record the agency circumstances that constitute malicious patent litigation and other conduct confirmed by the people's courts in effective judgments into the agency and individual credit files, promptly report them to the State Intellectual Property Office and announce them to the public, give play to the role of credit restraint mechanisms, and guide rights holders to properly protect their rights.
Third, it is necessary to guide e-commerce platforms to increase their duty of reasonable care through judicial rulings. If the platform excessively raises the standard of proof for complaints, fails to take necessary measures in a timely manner, and thus causes the infringement losses to expand, it shall bear joint and several liability with the merchant for the part of the increased damages. For products that have been repeatedly complained about or involved in litigation, such as a patent for a selfie stick or a facial cleansing device, the duty of care of e-commerce platforms should be reasonably increased. In addition, judicial organs may also urge e-commerce platforms to improve platform rules by sending judicial recommendations and other means, and actively assume the main responsibility for the protection of intellectual property rights.
Cover and table of contents of this issue
China Trial, Issue 6, 2024
China Trial News Semi-Monthly No. 340
Editor/Xu Chang