Beijing Wei Chixue Law Firm--The Standard of Proof of the “Original Scope” in the Prior-User-Rights Defense

Xiushuang WU
Sai CHEN
Chinese Attorney-at-Law

According to the relevant provisions of the Patent Law of the People's Republic of China, if the same product has been manufactured, the same method has been used, or the necessary preparations have been made for manufacturing or use before the filing date of the patent, and the manufacturing and use is continued only within the original scope, it is not deemed to infringe the patent right. The original scope herein includes the scale of production that has been established before the patent filing date and the scale of production that can be achieved by using existing production equipment or according to the existing production preparations.

Applying this provision, in the event of alleged infringement, the alleged infringing party may defend the right of prior use. The key and difficulty in the success of the prior-user-rights defense is to submit evidence that can prove that the requirements for the establishment of the prior use right are met.

When asserting the prior user rights, evidence should be prepared from the following aspects.
(1) Evidence to prove that the act of implementation predates the filing date of the patent;
(2) Evidence to prove the legality of the subject of the prior act of implementation and the source of the implemented technology;
(3) Evidence to prove that the implementation has been carried out or the necessary preparations for implementation have been made;
(4) Evidence to prove that the technology implemented, i.e. the product produced or the method used is the same as the allegedly infringing product or method;
(5) Evidence to prove that the alleged infringement is within the original scope.

However, in judicial practice, it is difficult to establish the prior-user-rights defense.

For example, in the case of Shenzhen Sai Yuan Electronics Co., Ltd. (hereinafter referred to as “Sai Yuan”) v. Dongguan Le Fang Industrial Co., Ltd. (hereinafter referred to as “Le Fang”) for infringing a utility model trialed before the Guangzhou Intellectual Property Court, the court held the following: A. The relevant evidence submitted by Le Fang includes evidence to prove that the design of the A25 speaker has been completed before the filing date of the utility model involved, other evidence to prove that preparation has been completed for mass production and sales, and the evidence that the accused infringing product has been promoted and sold. Most of the evidence is provided by unilateral production. In the circumstance that Sai Yuan does not recognize its authenticity and legitimacy, it will not be accepted. B. The evidence provided by Le Fang is limited to the fact that it has prepared for and manufactured the accused infringing product before the patent filing date, but it did not provide evidence of its manufacturing scope and its continued manufacturing was only within the original scope. Therefore, the evidence submitted by Le Fang was not sufficient to establish its prior-user-rights defense.

From the legal provisions and the above judgment, it can be known that the prior-user-rights defense must meet the following two conditions: one is that the same product has been manufactured, the same method has been used, or the necessary preparations for manufacturing and use have been made before the patent filing date; the other is that the continued manufacturing and use are only within the original scope. The two complement each other and are indispensable. As such, the proof of the original scope of the prior user rights is crucial to the major issues of interests including whether the defense can be established, whether the accused infringer can continue to implement it in the future and the scope of implementation.

Regarding the aforementioned case, Le Fang appealed to the Supreme People's Court (hereinafter referred to as the “SPC”) against the first-instance judgment. In the second instance, Le Fang added four pieces of new evidence and testimony of witnesses to prove the scale of its factory and evidence ordering molds from a third party, etc., intending to reinforce the fact that Le Fang continues to manufacture and use the accused infringing products only within the original scope.

The SPC made the second-instance judgment after trial, holding that the evidence of order review forms, forecast orders, etc. submitted by Le Fang can prove that Le Fang had a certain production scale and production capacity to manufacture the products involved before the filing date of the utility model involved. The combination of the quotation of mold factory, mold receipt, and witness testimony in the second instance can preliminarily prove that Le Fang only holds one set of production molds. The “Plant Lease Contract” can preliminarily prove that its plant area has not changed since 2013. Therefore, the evidences submitted by Le Fang corroborate each other and can form a chain of evidence, which preliminarily proves that Le Fang’s production scale and production scope before the filing date of the utility model involved, and that it has not expanded its production scale. The evidence on the original scope submitted by Le Fang in this case is reasonable to a certain extent, and has preliminarily reached the proof standard of high degree of probability. Under the circumstance that Sai Yuan did not submit evidence in contrary to prove that Le Fang exceeded the production scale before the involved patent filing date, the SPC determined that Le Fang did not manufacture the products involved in the case beyond the original scope.

From the above-mentioned judgment made by the SPC, we can understand the SPC's determination and standard on the judgment of evidence in support of the original scope. With regards to the evidence in support of the original scope, the scale of the factory, the area of the factory building, the number of employees, orders for outsourced molds or equipment, product orders, the number of equipment, and the supporting evidence for the maximum production capacity, etc. can be taken into consideration. When these evidences can form a complete chain of evidence and initially reach the proof standard of high degree probability, if the patentee does not provide sufficient evidence in contrary to refute it, it can generally be determined that the alleged infringer has implemented within the original scope.

In addition, the judgment in this case also provided us with another enlightenment, that is, the validity of the unilaterally produced evidence. For self-developed technologies, evidence such as minutes of preliminary R&D meetings, drawings of product design, experimental records, and technical achievement reports, etc. can only be produced unilaterally. In the event that the court of first instance did not recognize its validity, the SPC made it clear through this judgment that the technical drawings, process documents, inspection reports, etc. are all technical documents formed in the process of research and development. It is common sense that such evidence is made unilaterally by the accused infringer. It is not disclosed to the public before the product is officially manufactured and sold, and it also conforms to the objective situation in product development. When examining the validity of such evidence, a comprehensive judgment should be combined with other relevant evidence. The validity of such evidence cannot be simply denied due to the reason that the drawings, process documents and inspection reports are made unilaterally.

Although in this case, the SPC recognized the validity of this part of evidence produced unilaterally and finally held that the prior user right was established, in more patent infringement disputes, the prior-user-rights defenses asserted by the accused infringers were not supported. The reason is that it is not easy to find and collect evidence in support of research and development or prior implementation when disputes arise, as many documents were formed too long time ago, not docketed or managed in order, or have been lost.

Based on the above, it is recommended that companies should file patent applications in the earliest opportunity. As for technologies protected in the form of technical secrets, precautionary measures can be taken to preserve evidence through notarization or other methods for the research and development process, implementation preparation process, implementation process and the original scope. In the future, in the event of an infringement dispute, such measures may ensure that the company will continue to implement it within the original scope and safeguard the interests of the company.