In summaryDamages awards are key issues that right holders care about, especially after Chinese courts have implemented punitive damages since 2013. Recently, there have been some major cases in China that have granted a very high number of damages awards. This article mainly introduces some typical cases in the past year and the Chinese laws and regulations on damages awards and punitive damages, which are helpful for rights holders to collect evidence and claim punitive damages in a trademark infringement civil lawsuit.Discussion pointsRecent trademark infringement cases in China with high damages awardsMethods of calculating benefits obtained by the infringers in trademark infringement casesConsiderations of Chinese courts on damages awardsApplication of punitive damagesEvidence collection to prove damages in practiceReferenced in this articleChinese Trademark LawSupreme People's Court Interpretation on the Application of Punitive Damages in Civil Cases of Intellectual Property InfringementSupreme People's Court Provisions on Several Issues Concerning Evidence in Civil Litigation of Intellectual Property RightsChateau Lafite Pan Pan Siemens Article 63 of the Chinese Trademark Law stipulates the following ways to calculate damages: the actual losses suffered by the rights holder, the benefits gained by the infringers due to the infringement and a reasonable multiple of the trademark licensing fee. The above calculation methods should be applied in order and are subject to five times of punitive damages at most if the infringement is severe and of bad faith. If all methods are not able to determine the damages, the court shall award compensation by discretion in the range of under 5 million yuan (statutory damages).[1]In practice, statutory damages are mostly applied. After 2019, punitive damages have increasingly been applied by the courts. When calculating damages, the most commonly applicable method is calculating the benefits gained by the infringers. In the past year, there were several high damages awards cases in China, and they applied different methods to calculate the damages amounts, which demonstrates the current judicial trend towards punishing and deterring infringers. Below are three typical cases, which were listed in the national top 10 of intellectual property cases or the local top 10 of intellectual property cases.Chateau Lafite caseThe plaintiff was the trademark holder of ‘LAFITE’ and ‘CHATEAU LAFITE ROTHSCHILD’ for wine.[2] The infringers registered and used the trademarks ‘CHATEAU LAFITE in Chinese’ and ‘LAFEI MANOR’ for wine. The Court decided that both marks were similar to the plaintiff’s marks and such use constituted trademark infringement. As for the damages awards, the plaintiff claimed to calculate them based on the benefits gained by the infringers, namely, sales volume times profit rate, and claimed punitive damages. The Court thoroughly examined all the evidence submitted by each party and made the following calculation.First, based on the sales invoices and customs declaration forms of importing wine, the Court calculated the whole sales volume of the infringing goods.Second, the Court needed to calculate the profit rate by comparing the infringing goods’ selling price and cost price. As the infringing goods were sold in different units, such as bottle, box and set, etc, the Court decided to calculate the same per bottle, which is the minimum selling unit, by dividing the whole sales volume and number of sold bottles extracted from invoices.The cost price of infringing goods was calculated based on the customs declaration forms as the wine was imported to China. Pursuant to the price of each litre of imported wine and the fact that each bottle of wine contains 0.75 litre, the Court was able to calculate the cost price per bottle. Therefore, the profit rate equalled to:(Selling price per bottle – cost price per bottle)Selling price per bottleThe benefits the infringers gained could then be calculated accordingly.Finally, as for the claim of punitive damages, the Court considered the high reputation of LAFITE, the extensive sales scales of the infringers and the misleading advertising of taking a free ride on LAFITE’s reputation, and granted two times the punitive damages. Pan Pan case The plaintiff was the trademark holder of ‘Pan Pan’, which is a reputable brand of security doors in China, and its house logo is a panda.[3] The infringers registered a company with the trade name ‘Xin Pan Pan’ engaging in the same business of construction materials, including security doors and windows. The infringers also prominently used ‘Xin Pan Pan’ as a trademark extensively, including in the domain name, website, WeChat account, app, advertising brochures and offline shops. The Court decided that both parties’ marks were similar and were used on similar goods. The infringers’ behaviour easily caused confusion and constituted trademark infringement.In this case, the plaintiff was not able to collect the infringers’ sales data, and the infringers stated there were no proper financial documents to calculate their profits during the infringing period (2017–2019). Under this circumstance, although the evidence submitted by the plaintiff was not very sufficient or accurate, it could be used as valid evidence of the infringers’ profits. The evidence submitted by the plaintiff mainly included advertising material in 2018 in which the infringers declared they would reach one billion yuan in production value and a 50 per cent growth rate per year in the next five years. Based on the aforesaid statistics, the Court was able to figure out the total sales volume from 2017 to 2019 to be 361 million yuan. As for the profit rate, the Court adopted a national average profit rate of 7.5 per cent in the furniture manufacturing industry in 2017. Therefore, the profit gained from the infringement was 27.075 million yuan (361 times 7.5 per cent). The Court granted four times the punitive damages in this case, due to the following considerations: the legal representative of the infringers had business relationship with the plaintiff and should have known about ‘Pan Pan’ trademark;the infringers not only plagiarised the ‘Pan Pan’ mark, but also used a similar panda logo;the infringers sometimes omitted the ‘Xin’ character and directly used ‘Pan Pan’; even after the ‘Xin Pan Pan’ mark was invalidated, the infringers still continued the infringement; and the infringers’ business expanded to 12 provinces and 180 distributors and nearly 100 offline shops. The damages awards were determined to be 108.3 million yuan (27.075 times 4) and more than the plaintiff’s claim of 95 million yuan. Therefore, the plaintiff’s claim was fully supported by the court.Siemens caseSiemens is a famous brand of household electric appliance. The infringers used ‘Shanghai Siemens Electrics Co, Ltd’ (a shell company registered in Seychelles) on its washing machines. The Court decided the above company name was used as a trademark with the function of identifying the source and ‘Siemens’ was the distinctive part, which was identical with the plaintiff’s mark. Such behaviour constituted trademark infringement and the use of ‘Siemens’ as trade name constituted unfair competition.[4]The plaintiff claimed damages awards of 100 million yuan based on the infringers’ benefits due to the infringement.[5] However, the plaintiff failed to submit financial information of the infringers to prove this. The Court demanded the infringers submit their account books to ascertain the facts, but the infringers did not cooperate. The Court thus considered the following points to determine the damages: Siemens was an enterprise in the Fortune Global 500 and its trademark had acquired a high reputation.The infringers obviously acted in bad faith as they should have known about Siemens, and they also plagiarised other brands, such as Philips and AO Smith. The scale of infringement was extensive, considering the plaintiff discovered infringing washing machines in many provinces, and the infringers claimed to have more than 1500 distributors, with sales volumes of 1.5 billion yuan per year, and their business lasted for around five years.Referring to the annual reports of other peer operators in the industry of washing machines, the Court admitted an average profit rate of 35 per cent. Out of the total sales volume of 1.5 billion yuan for all washing machines, the Court decided 1/15 of them were branded with an infringing mark by discretion. Hence, the infringers’ benefits would be 1.5 billion times 1/15 times 35% times 5, namely, 175 million yuan, which was beyond the plaintiff’s claim. Based on the above, the plaintiff’s claim of 100 million yuan should be fully supported. Calculation of benefits obtained by infringersDamages awards are an important part of increasing the deterrence of civil action. If infringers could make more profits than damages awards, civil action would certainly not be able to stop infringement. On the other hand, Chinese laws follow the Principle of Indemnity that damages awards should cover the right holders’ losses but should not be more, to prevent malicious lawsuits. In practice, it has always been a challenge for right holders to collect sufficient evidence to accurately calculate infringers’ benefits, and the court is usually inclined to decide damages awards by discretion, which is easier without many calculations.The above three cases share the following common points that allow the court to determine very high damages awards: the right holders had some basic evidence to prove the infringers’ benefits, such as invoices, customs declaration forms, statements from the infringers in some advertising materials; and the benefits were clearly much more than the statutory amount (5 million yuan). Under such circumstances, it would be unconscionable to decide the damages awards under the range of 5 million yuan.There is another productive way for right holders to claim damages by requiring infringers to provide financial statistics. The Chinese Trademark Law stipulates that: In order to determine the amount of damages, when the right holders have made every effort to provide evidence, and the account books and materials related to the infringement are mainly in the possession of the infringers, the court may order the infringers to provide such account books and materials related to the infringement; if the infringers do not provide the same or provide false accounts and materials, the court may refer to the rights holders’ claims and provided evidence to determine the amount of damages.[6]Furthermore, the Supreme People's Court Provisions on Several Issues Concerning Evidence in Civil Litigation of Intellectual Property Rights stipulates that:The court, in accordance with the law, requires the parties to submit relevant evidence. If a party refuses to submit without justifiable reasons, submits false evidence, destroys evidence, or engages in other acts that render the evidence unusable, the court may presume that the claims of the other party concerning the matters to be proved by such evidence are established.[7]The above laws and regulations basically form the system of proof impairment in China and are very helpful for right holders to reduce their liability of proof. With the above support, the right holders first collect some basic evidence of the infringers’ profits, such as: sales data displayed on e-commerce platforms; the infringers’ self-admission at some event or in advertising materials (especially TikTok videos and Little Red Book posts); and the average rate of profit in the industry. Based on this evidence, the right holders further file a request with the court for account books and materials related to the infringement from the infringers. If the infringers do not cooperate with the court’s order, they shall bear the negative consequences, and the right holders’ evidence and calculations will be very likely to be admitted by the court.Punitive damagesPunitive damages are a relatively new system in China.[8] They are predicated on the plaintiff's request, and the court must not apply punitive damages on its own initiative. Punitive damages must be claimed before the conclusion of the court debate in the first instance. Applying punitive damages requires two preconditions: the infringement is severe and in bad faith (intentional). The Supreme People's Court Interpretation on the Application of Punitive Damages in Civil Cases of Intellectual Property Infringement (the Judicial Interpretation on Punitive Damages) explains in detail the application of punitive damages. In ‘severe’ cases, the Judicial Interpretation on Punitive Damages lists the following conditions: committing the same or a similar infringement again after being administratively penalised or adjudicated by the court for infringement, the infringer again commits the same or a similar infringement; engaging in the infringement of intellectual property rights as a business; abricating, destroying or concealing evidence of the infringement; refusing to comply with preservation rulings; the profits obtained from the infringement or losses suffered by the right holder are substantial; the infringement may endanger national security, public interest or personal health; andother circumstances that can be determined as severe.[9]In bad faith cases, the Judicial Interpretation on Punitive Damages lists the following conditions: the infringer continues to commit the infringement after being notified or warned by the right holder or an interested party; the infringer or its legal representative or administrator is the legal representative, administrator or actual controller of the right holder or an interested party; there exists a labour, service, cooperation, licensing, distribution, agency, representation or other such relationship between the infringer and the right holder or an interested party, and the infringer has had access to the infringed intellectual property; there have been business dealings or negotiations for the purpose of reaching a contract between the infringer and the right holder or an interested party, and the infringer has had access to the infringed intellectual property; the infringer engages in piracy or counterfeiting registered trademarks; andother circumstances that can be deemed as bad faith or intentional.[10]If a trademark infringement case meets the above requirements, then punitive damages can be considered. The punitive damages are calculated by base number times a multiple. As mentioned above, the base number should be determined by the actual losses suffered by the right holder, the benefits gained by the infringer due to the infringement and a reasonable multiple of the licensing fee for the trademark. As for the multiple, the Judicial Interpretation on Punitive Damages stipulates the factors to consider, namely, the degree of the infringers’ subjective fault and the severity of the infringement act, etc.[11] These considerations are quite general, so in practice the multiple is mainly decided discretionarily by the court, and the multiple does not have to be an integer, according to the understanding and application of the Judicial Interpretation on Punitive Damages.[12] Technically, punitive damages only apply when the damages can be calculated by the actual losses suffered by the right holder, the benefits obtained by the infringer due to the infringement or the multiple of the licensing fee for the trademark. If the court applies statutory damages, punitive damages should not be adopted. This is mainly because of the consideration that when the court decides the amount of statutory damages within the 5 million yuan limit, it should have considered the factors of the reputation of the right holder, the severity of the infringement and the bad faith of the infringer, etc, which already include the factors of punitive damages. In the past few years, there have been some cases that adopt punitive damages and statutory damages at the same time. That is to say, for the damages that can be calculated and ascertained (with evidence such as sales data), the court calculates the same and rules punitive damages accordingly; for the damages that cannot be accurately calculated (without sufficient evidence), the court decides the amount at its discretion. The final damages awards will be the sum of the above two parts.[13] This mainly happens when the infringement is severe, and each part of damages alone may not be able to cover the right holders’ losses or to deter the infringers. This is a new and meaningful exploration of the damages awards system that can help the right holders to reduce their burden proof and better defend their interests. As we know, it is challenging for right holders to have the exact financial information of the infringers, especially considering that many infringers in China are rather small-scale, with no standardised financial management. Therefore, with this new tendency, punitive damages can be used more often and play a more important role in future trademark infringement cases.Currently, the examination criteria of damages awards and punitive damages still varies in different provinces and courts in China, especially when the evidence is insufficient to calculate the damages from infringers’ benefits accurately. Some courts stick to the statutory damages and have a high standard for evidence, some are more open to discretionary damages and are willing to apply punitive damages when there is only basic evidence. For rights holders, it is advisable to arrange a thorough investigation against the infringers before initiating the lawsuit and try to establish jurisdiction in the more open courts. Here are two insights for the right holders in defending their rights through the above three typical cases and the judicial interpretation on punitive damages: They should actively defend their rights, such as filing oppositions or invalidations against malicious trademarks, or sending demand letters to infringers, because these measures can lead to the infringers’ activities being considered repeated infringements, which can then be subject to punitive damages.They should fully utilise sales data disclosed by infringers through their website and other public channels to prove infringers’ profits.[1] Article 63 of the Chinese Trademark Law.[2] One of the national top 10 intellectual property cases in China in 2023, [2022] Zui Gao Fa Min Zhong No. 313. [3] One of the top 10 intellectual property cases in Jiangsu Province in 2023, [2022] Zui Gao Fa Min Zhong No. 209.[4] One of the national top 10 intellectual property cases in China in 2023, [2022] Zui Gao Fa Min Zhong No. 312.[5] The plaintiff claimed damages based on unfair competition, not the trademark infringement. But considering the spirit of trademark law and anti-unfair competition law on damages awards is the same, and this case is rather representative, it is included in the article.[6] Article 63 of Chinese Trademark Law. [7] Article 25 of the Supreme People's Court Provisions on Several Issues Concerning Evidence in Civil Litigation of Intellectual Property Rights.[8] Punitive damages were included in Chinese Trademark Law in 2013 when the multiple was three times at most. In 2019, the Chinese Trademark Law was amended, and the multiple was raised up to five times. In 2021, punitive damages were added into Civil Code.[9] Article 4 of the Judicial Interpretation on Punitive Damages.[10] Article 3 of the Judicial Interpretation on Punitive Damages.[11] Article 6 of the Judicial Interpretation on Punitive Damages.[12] https://www.court.gov.cn/zixun/xiangqing/297121.html. [13] [2022] Hu 73 Min Zhong No. 187. [2020] Yue 0104 Min Chu No. 46217.

David HuangIn practice, when receiving a Notice of Reexamination from the Chinese patent office, the patent applicant usually would choose to further revise (normally narrow) the claims to increase the likelihood of persuading the reexamination panel.As the general observation, it is difficult to persuade a panel to change its opinion by arguments only on this occasion.In a recent case, after receiving the Notice of Reexamination, LexField proactively called the examiners for a more accurate understanding of the panel' sreal opinion and presumption untold in the Notice, and then searched for and submitted evidence to prove that certain presumption by the panel is wrong, eventually managing to persuade the panel to reverse the lower rejection and then obtaining a patent for the client protecting a new pharmaceutical conjugate.Subject applicationThe application seeks to protect a conjugate of mutant fibroblast growth factor 21 (FGF-21).FGF-21 has long been considered to have the potential to treat diabetes, especially type II diabetes.When entering the reexamination proceeding, claim 1 of the application protects a specific mutant FGF-21 peptide conjugate whose structure attaches the peptide sequence at an amino acid position near the C-terminus of the sequence to a glycosyl moiety, which is then attached to a linear PEG of 20 kDa (i.e. glycoPEGylation of the peptide sequence).Meanwhile, the specification includes detailed experimental data showing that the subject conjugate can effectively reduce the level of glycosylated hemoglobin (HbA1c) in subject patients.Examiners' opinionFrom the lower substantive examiner to the reexamination panel, the examiners have held that the conjugate of the present application is obvious over the cited references.The closest prior art R1 generally discusses glycoPEGylation of peptides.Among the numerous peptides, R1 also tested FGF-21 of the same sequence (numbered B.41).In comparison, differences between B.41 and claim 1 include: (1) differences in the glycosyl structure, (2) differences in PEG : B.41 uses branched PEG of 40kDa, while claim 1 uses linear PEG of 20kDa.R1 does not address medical purpose or efficacy of the tested substances (including B.41), and in particular does not discuss or test whether B.41 has efficacy on diabetes.In the Notice of Reexamination, the collegial panel held that: (1) besides B.41, R1 also taught the various glycosyl groups in the structure of claim 1, and (2) another reference R2 taught the use of 20kDa linear PEG-butyraldehyde to modify FGF-21, and the modified product retained the biological activity of the protein, and its thermal stability, anti-trypsin hydrolysis ability and in vivo half-life were significantly improved.Therefore, on the basis of the above teachings of R1 and R2, those skilled in the art would be motivated to modify B.41 to reach the structure of claim 1.As for the effect of"lowering HbA1c level" of the present application, since HbA1c level has been the gold standard for diagnosis and treatment of diabetes, and R2 has taught that FGF-21 has the potential to treat diabetes, this effect could hardly be characterized as "unexpected". The panel finally held that claim 1 is not inventive.Previously, the applicant had presented the following arguments: (1) R1 did not discuss the pharmacological efficacy of B.41 at all, but only generally discussed glycosylation of various peptides, and those skilled in the art could not determine how to modify B.41 or predict whether the modification would have efficacy similar to the present application, (2) the specification of the present application clearly states that glycoPEGylation at the C-terminus of the peptide sequence overcomes a long-held prejudice in the art, because it was traditionally believed that the C-terminus should be preserved for binding with β-Klotho protein to achieve its pharmacological efficacy.The applicant also cited the failed FGF-21 conjugates with similar glycoPEGylated structures from Pfizer, Eli Lilly and Bristol-Myers Squibb as counter evidence to prove that the effect of the conjugate of the present application would be unexpected.On the above arguments, the examiners gave these comments: (1) teachings of R1 and R2 would be sufficient to motivate those skilled in the art to modify B.41 to realize the present application, and since it was known that FGF-21 has the potential to treat diabetes, the effect of this application could be expected, (2) the effect of glycoPEGylation at the C-terminus or at the N-terminus could be easily determined through routine experiments.As for the products of Pfizer, Eli Lilly and Bristol-Myers Squibb, the examiners held that their specific sequences or glycoPEGylation sites are different, and thus they have no reference value.Communication with examiners and evidenceSince some of the comments in the Notice of Reexamination were vague and others indicated opportunities for the applicant to present counter evidence, LexField called the presiding examiner of the collegial panel several times in order to better understand the examiners' true opinion.In a telephone conversation, the presiding examiner revealed that in the panelists' minds, whether a FGF-21 conjugate has efficacy mainly depends on the specific mutation while glycoPEGylation has only a minor effect, and thisunwritten presumptionactually is the root cause why the panel considered the conjugate of the present application obvious over B.41 of R1.However, according to the previous communication with the inventor, LexField knew that this understanding is actually wrong.LexField thus had in-depth discussions with the inventor and decided to introduce the following evidence:(1)historical experimental data developed by the inventor, especially comparison data testing diabetes therapeutic potential of multiple FGF-21 mutants before and after glycoPEGylation, to show that the effect of glycoPEGylation on the therapeutic potential is actually more significant than the selection of mutants.(2)analysis by the inventor to show that B.41 of R1 is likely inactive based on existing experimental data.At the same time, LexField searched for literatures on the selection of the C- and N-terminus of the peptide sequence, and submitted a number of papers (including very new ones published after the priority date of this application) to prove that "the C-terminus of the sequence of the FGF-21 peptide should not be used for glycoPEGylation because it needs to be bound with the β-Klotho protein" was a longstanding understanding in the art, as further corroboration and reinforcement to existing statements in the specification of this application.Based on further telephone communication with the presiding examiner and the final result, the above evidence played a decisive role.The examiner must have paid more attention to the choice ofparameters of glycoPEGylation, including the choice of C-terminal/N-terminal and the choice of PEG configuration and molecular weight.The examiner even conducted his own search, and found and cited another reference occurring with references submitted by LexField, showing that "peptide sequences should not be glycoPEGylated near the C-terminus" was indeed a longstanding knowledge in the art.In the end, the collegiate panel concluded that, in view of the above facts, those skilled in the art would be unable to determine whether B.41 of R1 was active, would not be motivated to modify it to realize the present invention, and thus the claimed conjugate would be non-obvious.On top of this, the panel further recognized the experimental data in the specification of this application on controlling triglyceride and HbA1c levels, and held that the conjugate of claim 1 has achieved beneficial technical effects and thus made "notable progress" over the prior art, which completed the inventiveness analysis with a result favorable to the client.ConclusionApplicants and practitioners are often frustrated with examiners' stubbornness. This case highlights the need for effective communication to find out possible untold presumption examiners may be preoccupied with that are unwritten in the formal text of an office action.The applicants can then try to search for evidence to rebut such assumptions.From LexField's experience with this and other similar cases, when presented with convincing evidence and arguments based on the same, Chinese examiners can be persuaded.

David HuangLexField Law OfficesWhether it is a patent infringement action or an invalidation action, how to interpret the terms of the claims is a basic issue.The Intellectual Property Division of the Supreme People’s Court tookbasicallyopposite directions on this issue in two recent judgments: in one case, the court interprets the key term as the usual meaning in the subject field that is wider and beyond embodiments taught in the specification, while in the other case the key term is interpreted in a restrictive manner according to the purpose of the invention.It is worth noting that the result of the interpretation is beneficial to the patentees in both cases.These two judgments are worthy of in-depth comparative reading, and have strong guiding significance for infringement actions, invalidation actions and the drafting of patent specifications and claims."Touch screen" case: the usual meaning in the subjectfieldThis case is an infringement case, the involved patent is patent No. 201010235151.7, and the title is "A touch screen and its multi-channel sampling method".Claim 1 reads:1. Atouch screen, comprising an infrared emitting tube, an infrared receiving tube, a touch detection area, a first-level processing circuit and a second-level processing circuit...The key question in this case is whether the term "touch screen" coverstangiblephysical hardware.The court of first instance, the Guangzhou Intellectual Property Court, interpreted the term as a tangible hardware structuremainlybased on the general dictionary "Modern Chinese Dictionary", and determined that there was no infringement on the grounds that the alleged infringing product does not have a corresponding hardware structure, with the following specific reasoning:•The specification of the subject patent does not give a special definition for "touch screen".•From the interpretation of "touch screen" given by the Modern Chinese Dictionary, it can be determined that it is a tangible medium.•The touch screen in all embodiments throughout the specification of the subject patent is a tangible medium.The Supreme People's Court however reached the opposite conclusion based on the following reasons:•According to the evidence submitted by the parties on common knowledge in the field, "touch screen" is a technical term with a definite meaning in this field, covering contact touch screens with a physical screen structure and non-contact touch screens without a physical screen structure.The lower court used the Modern Chinese Dictionary and other reference books that are not from this field as the main evidence, which is out of touch with the technical background and knowledge system of this field and needs to be corrected.•The embodiments related to the touch screen in the specification do not specifically limit the term, and the construction of this term should not be restricted.In particular, the invention of this patent does not lie in improving the material or structure of the touch screen, but in how to improve the response speed of the touch screen, the sampling method and the corresponding circuitry.•Even if dependent claim 16 further limits the touch screen in its technical solution as a touch screen with a physical screen structure, this limitation should not be applied to independent claim 1."Calculation" case: purpose of the invention can narrow the meaning of a termThis case is a patent invalidation case.The involved patent is patent No. 201310072198.X, and the title is "Planar echo imaging sequence image reconstruction method".Claim 1 reads: 1. An image reconstruction method of planar echo imaging sequences, characterized in comprising the following steps: acquiring planar echo imaging data Si, and simultaneously collecting three reference echo signals R1, R2, R3 that are not phase-encoded…; calculating, via the reference echo signals, parameters that are needed to correct the plane echo imaging data...The key issue in this case is how to interpret the term "calculation" in claim 1.In the invalidation proceeding before the National Intellectual Property Administration (CNIPA), the invalidation requester argued that "calculation" should cover all calculation methods (including the calculation method in the prior art it cited), and accordingly claim 1 is not novel.However, in its decision, CNIPA, based on the teachings on the defects of the prior art in the specification of the patent, held that the "calculation" of this patent should reflect improvements over the prior art, and should therefore be construed as "direct calculation from the reference echo signals".Based on this, CNIPA concluded that claim 1 is novel over the prior art cited by the requester.The court of first instance (Beijing Intellectual Property Court) overturned CNIPA’s determination based on the following reasons:•The term "calculation" has a clear and definite meaning to those skilled in the art: calculating an unknown quantity based on known parameters.Thus, it is not necessary to use the relevant definitions in the specification to construe its meaning.•Even if the term is interpreted in accordance with the principle of “broadest reasonable interpretation" as determined by the Supreme People's Court, the above-mentioned broad interpretation ("calculating an unknown quantity based on known parameters") does not exceed the reasonable range.•The decision in dispute interpreted the "calculation" as "direct calculation", which essentially is a conclusion from first summarizing the specific embodiments taught in the specification and then comparing it with the calculation method of the cited prior art.This method of interpreting claims will bring great uncertainty, and what is "direct" is vague in itself.As the result, the scope of protection of claim 1 will become unclear, which does not comply with the purpose of claim construction.However, in the second instance, the Supreme People’s Court basically adopted CNIPA’s determination based on the following reasons:•Article 2 of the Supreme People’s Court’sProvisions on Several Issues Concerning the Application of Law in the Trial of Administrative Cases for Patent Examination and Validation (I)stipulates: “The People’s Court shall define terms of a claim according to the usual meaning persons in the art would understand after reading the claims, specification and drawings.If a term of a claim has a definite definition or explanation in the specification or drawings, the definition or explanation shall be followed.”•Accordingly, the interpretation of the term "calculation" in claim 1 of this patent should not simply be based on its literal meaning, but should be understood by those skilled in the art after reading the claims, specification and drawings.Even when applying the principle of broadest reasonable interpretation to interpret the claims, “reasonable” should be the start and end within the broadest scope of meaning of the term.•Inview of the purpose of the subject invention and explanations and descriptions of "calculation" in the specification and drawings of this patent, it can be known that the "calculation" in this patent does not cover all possible calculation methods, but has its specific meaning.This patent points out several shortcomings of the prior art in the Background section and Content of the Invention section.In order to overcome the above shortcomings, this patent intends to provide a more accurate image reconstruction method for planar echo imaging sequences.It can be seen that the purpose of the invention of this patent has clearly excluded the calculation method of the two echo signalshaving phase difference and thus losing phase information.Thus, those skilled in the art could understand by reading the specification and drawings that the "calculation" in claim 1 of this patent is a direct calculation without loss of phase and other information.

David HuangWhether it is a patent infringement action or an invalidation action, how to interpret the terms of the claims is a basic issue.The Intellectual Property Division of the Supreme People’s Court took basically opposite directions on this issue in two recent judgments: in one case, the court interprets the key term as the usual meaning in the subject field that is wider and beyond embodiments taught in the specification, while in the other case the key term is interpreted in a restrictive manner according to the purpose of the invention.It is worth noting that the result of the interpretation is beneficial to the patentees in both cases.These two judgments are worthy of in-depth comparative reading, and have strong guiding significance for infringement actions, invalidation actions and the drafting of patent specifications and claims."Touch screen" case: the usual meaning in the subject fieldThis case is an infringement case, the involved patent is patent No. 201010235151.7, and the title is "A touch screen and its multi-channel sampling method".Claim 1 reads:1. Atouch screen, comprising an infrared emitting tube, an infrared receiving tube, a touch detection area, a first-level processing circuit and a second-level processing circuit...The key question in this case is whether the term "touch screen" covers tangible physical hardware.The court of first instance, the Guangzhou Intellectual Property Court, interpreted the term as a tangible hardware structure mainly based on the general dictionary "Modern Chinese Dictionary", and determined that there was no infringement on the grounds that the alleged infringing product does not have a corresponding hardware structure, with the following specific reasoning:•The specification of the subject patent does not give a special definition for "touch screen".•From the interpretation of "touch screen" given by the Modern Chinese Dictionary, it can be determined that it is a tangible medium.•The touch screen in all embodiments throughout the specification of the subject patent is a tangible medium.The Supreme People's Court however reached the opposite conclusion based on the following reasons:•According to the evidence submitted by the parties on common knowledge in the field, "touch screen" is a technical term with a definite meaning in this field, covering contact touch screens with a physical screen structure and non-contact touch screens without a physical screen structure.The lower court used the Modern Chinese Dictionary and other reference books that are not from this field as the main evidence, which is out of touch with the technical background and knowledge system of this field and needs to be corrected.•The embodiments related to the touch screen in the specification do not specifically limit the term, and the construction of this term should not be restricted.In particular, the invention of this patent does not lie in improving the material or structure of the touch screen, but in how to improve the response speed of the touch screen, the sampling method and the corresponding circuitry.•Even if dependent claim 16 further limits the touch screen in its technical solution as a touch screen with a physical screen structure, this limitation should not be applied to independent claim 1."Calculation" case: purpose of the invention can narrow the meaning of a termThis case is a patent invalidation case.The involved patent is patent No. 201310072198.X, and the title is "Planar echo imaging sequence image reconstruction method".Claim 1 reads:1. An image reconstruction method of planar echo imaging sequences, characterized in comprising the following steps:acquiring planar echo imaging data Si, and simultaneously collecting three reference echo signals R1, R2, R3 that are not phase-encoded…;calculating, via the reference echo signals, parameters that are needed to correct the plane echo imaging data...The key issue in this case is how to interpret the term "calculation" in claim 1.In the invalidation proceeding before the National Intellectual Property Administration (CNIPA), the invalidation requester argued that "calculation" should cover all calculation methods (including the calculation method in the prior art it cited), and accordingly claim 1 is not novel.However, in its decision, CNIPA, based on the teachings on the defects of the prior art in the specification of the patent, held that the "calculation" of this patent should reflect improvements over the prior art, and should therefore be construed as "direct calculation from the reference echo signals".Based on this, CNIPA concluded that claim 1 is novel over the prior art cited by the requester.The court of first instance (Beijing Intellectual Property Court) overturned CNIPA’s determination based on the following reasons:•The term "calculation" has a clear and definite meaning to those skilled in the art: calculating an unknown quantity based on known parameters.Thus, it is not necessary to use the relevant definitions in the specification to construe its meaning.•Even if the term is interpreted in accordance with the principle of “broadest reasonable interpretation" as determined by the Supreme People's Court, the above-mentioned broad interpretation ("calculating an unknown quantity based on known parameters") does not exceed the reasonable range.•The decision in dispute interpreted the "calculation" as "direct calculation", which essentially is a conclusion from first summarizing the specific embodiments taught in the specification and then comparing it with the calculation method of the cited prior art.This method of interpreting claims will bring great uncertainty, and what is "direct" is vague in itself.As the result, the scope of protection of claim 1 will become unclear, which does not comply with the purpose of claim construction.However, in the second instance, the Supreme People’s Court basically adopted CNIPA’s determination based on the following reasons:••Article 2 of the Supreme People’s Court’sProvisions on Several Issues Concerning the Application of Law in the Trial of Administrative Cases for Patent Examination and Validation (I)stipulates: “The People’s Court shall define terms of a claim according to the usual meaning persons in the art would understand after reading the claims, specification and drawings.If a term of a claim has a definite definition or explanation in the specification or drawings, the definition or explanation shall be followed.”•Accordingly, the interpretation of the term "calculation" in claim 1 of this patent should not simply be based on its literal meaning, but should be understood by those skilled in the art after reading the claims, specification and drawings.Even when applying the principle of broadest reasonable interpretation to interpret the claims, “reasonable” should be the start and end within the broadest scope of meaning of the term.•In view of the purpose of the subject invention and explanations and descriptions of "calculation" in the specification and drawings of this patent, it can be known that the "calculation" in this patent does not cover all possible calculation methods, but has its specific meaning.This patent points out several shortcomings of the prior art in the Background section and Content of the Invention section.In order to overcome the above shortcomings, this patent intends to provide a more accurate image reconstruction method for planar echo imaging sequences.It can be seen that the purpose of the invention of this patent has clearly excluded the calculation method of the two echo signals having phase difference and thus losing phase information.Thus, those skilled in the art could understand by reading the specification and drawings that the "calculation" in claim 1 of this patent is a direct calculation without loss of phase and other information.

In two judgments issued consecutively in November, the Supreme People’s Court of China (“SPC”) reversed the lower courts’ finding of infringement under the doctrine of equivalents.In both judgments, SPC held that the specification and claims of the patents include language that would lead persons in the art to believe that the accused technical solution should be outside the scope of the patents, thus preempting the application of the doctrine of equivalents.In one of the judgments, SPC revives the “foreseeability” concept in the equivalency analysis, while the other judgment revives the “intentional exclusion” concept (which can also be analyzed under the “foreseeability” concept).SPC’s reasoning in applying the concepts points to imperfections in the drafting of the two patents in dispute.Apparently, by issuing the judgments consecutively and giving them good publicities, SPC wants to send a stern alert that while China is enhancing protection of patent rights, patent owners should also spend more resources enhancing the drafting quality of their patents.ForeseeabilityThe plaintiff in this case owns invention patent No. 201610201500.0 entitled “Electricity-driven Hedge Trimmer”, which is also the preamble of claim 1.The defendant’s trimmer is driven by fuel while reflecting all other features of claim 1.The lower Intermediate People’s Court of Suzhou found equivalency between “driven by electricity” and “driven by fuel” on the following grounds:--Both “driven by electricity” and “driven by fuel” have been commonly used in the art.--The core function of the patent, switching between two trimming modes, is irrelevant to how the trimmer is driven.That is, the problem to be solved by this patent, the key technical features adopted and the technical result achieved are all irrelevant to how the trimmer is driven.--Therefore, “driven by electricity” and “driven by fuel” are features adopting substantially the same means, realizing substantially the same function and achieving substantially the same result that could be perceived by persons in the art without innovative efforts.SPC however found no equivalency based on the following rules:--Determining the scope of a patent needs to balance the patent owner’s interests and the public’s reliance on the “public notice” function of patent documents.--If the patent owner, when drafting the patent application documents, clearly knew (i.e. foreseeable) a technical solution but failed to include the solution within the scope of the claims, he should be prohibited from claiming that solution back via the doctrine of equivalents.--To determine whether the patent owner “clearly knew” a technical solution when drafting the patent should be done based on a wholistic reading and understanding of the claims, specification and drawings from the perspective of persons in the art.SPC applies the above rules to the following facts related to the subject patent:--From the title of the patent, the preamble of the claims and relevant teachings in the specification (particularly the Background section), it is clear that the patent owner was aware of the two driving modes (by electricity or by fuel).--The specification also states that “environment friendly without pollution” is a very effect to be achieved by the subject patent over the prior art.--From all the above factors, persons in the art would know that to achieve the “environment friendly without pollution” effect, the patent owner explicitly did not seek to protect technical solutions driven by fuel.If the patent owner is allowed to cover such solutions via the doctrine of equivalents, the public’s reliance on the “public notice” function of patent documents would be undermined.Intentional ExclusionThe plaintiff in this case owns utility model patent No. 201420474545.1.Claim 1 of the patent defines a tin printing patch welding fixture for PCB comprising a square fixture ray, and specifically recites that “each edge of the fixture tray is movably provided with an edge-position push-pull device for clamping each edge position of the PCB”.The accused product also has a square fixture tray, and is different from claim 1 only in that its fixture tray has the push-pull devices provided only at two opposite edges.The lower Intermediate People’s Court of Shenzhen found equivalency between the two features on the following grounds:--Both the patent and the accused product use corner-position and edge-position push-pull devices of the same configuration for clamping a PCB and facilitating the assembly and disassembly of the PCB.--When both the patent and the accused product also use the corner-position push-pull devices, providing edge-position push-pull devices at each of the four edges or only at two opposite edges achieves substantially the same function and effect, and the interchange between the two options would not need innovative efforts.In reversing the lower court’s equivalency finding, SPC again highlights the public’s reliance on the “public notice” function of patent documents, and specifically holds that if persons in the art, after reading the specification and claims, would understand that the patent owner intentionally excluded a technical solution from the scope of the patent, the patent owner should be prohibited from claiming that solution back via the doctrine of equivalents.Specific to this case, SPC made the following reasoning:--When a claim uses language like “at least” or “no more than” to limit a numerical value and persons in the art after reading the specification and claims would understand that the patent specifically stresses the limiting effect of such language, the patent owner should be prohibited from trying to cover a different numerical value via the doctrine of equivalents.--Persons in the art would know that providing the push-pull devices at four or two opposite edges of the tray has substantially the same effect, and the patent owner also admitted to this in the legal proceedings.However, the patent owner still used the language “each edge” in claim 1, which should be regarded as an intentional highlight.Given this, persons in the art would understand that the patent owner intentionally excluded the “two opposite edge” solution from the scope of the patent when applying for the patent.In this case, the patent owner should be prohibited from claiming the solution back via the doctrine of equivalents.CommentsThe “foreseeability” concept has been the subject of controversy since it was introduced into the patent laws, as opponents argue that the concept would impose an unduly burden on patent owners in drafting patent applications.While SPC has applied it several times in individual cases, the High People’s Court of Beijing has formally stipulated it in Article 60 of its Guidelines for the Determination of Patent Infringement (2017) (which are legally binding on courts in the Beijing Municipality and also commonly referenced to by courts across the country).This article limits the application of this concept to 3 scenarios: (1) a non-innovative feature of invention patents, (2) an amended feature of invention patents and (3) features of the claims of utility model patents.The above SPC judgment corresponds to scenario (1).Meanwhile, Article 59 of the Guidelines has stipulation on the “intentional exclusion” concept.The High People’s Court of Beijing has published a book giving article-by-article explanations to the above Guidelines, and the explanations on Article 60 provide a complete examination to the history of and debates around “foreseeability”, including a comparison with practice in the United States and Japan, which is a must-read on this concept.The book particularly explains SPC’s key rational to have introduced this concept: to discourage the filing of patent applications of a low quality (which are usually the products of patent attorneys working under very low legal fees for the drafting) and encourage patent filers to spend more resources enhancing the quality of drafting.The High People’s Court of Beijing also recognizes the disagreements on this concept and states in the book that it should be applied very carefully.In view of the history, and given the publicities SPC made to the above two judgments, obviously SPC wants to send a stern alert to the public on quality of patent drafting.

David HuangLexField Law Offices•The interpretation includes noteworthy rules on substance and procedures, and brings more consistency with rules for infringement actions.•The promulgation of this interpretation has taken unusually long, and the final interpretation is much narrower and more modest than its previous drafts.Objection from CNIPA is an important cause to the delay and watering-down.•Several articles present in earlier drafts are not included in the final text.The deletion implies that relevant disagreements between CNIPA and the courts were not totally resolved and the deletion was a compromise for now.The Supreme People's Court ("SPC") of China has recently promulgated its first judicial interpretation ("JI") governing judicial review of CNIPA's patent reexamination and invalidation decisions.The JI includes articles addressing both substantive laws and procedural issues.Many of the articles merely codify practice that has been adopted by the relevant courts and CNIPA and thus are not discussed here.Below we focus on articles that are particularly noteworthy and some articles that were included in the earlier drafts of this JI but are conspicuously absent from the final text.Claim construction in examination and invalidation actionsArticles 2 and 3 of the JI relate to rules for claim construction in examination and invalidation, although the two articles intentionally use a Chinese term for "claim construction" different from that for infringement actions.Consistent with infringement actions, Article 2 provides that intrinsic evidence should be preferred over extrinsic evidence in claim construction.Since SPC had close communication with CNIPA in making this JI, it is believed that Article 2 will overtake the relevant paragraphs in CNIPA's Examination Guidelines ("Guidelines") which apparently prefer extrinsic evidence.Article3 provides for the so-called "reverse estoppel" in that arguments made by a patent owner can be used to interpret the claims in an invalidation action.This article completes the mutual influence between invalidation and infringement actions, and imposes a higher requirement for patent owners in making arguments.There was a notable deletion of a provision from the earlier draft, which would stipulate that prior examination history can be used to construct the claims in examination and invalidation actions.This deletion means that CNIPA and the courts would give little weight to the patent applicant/owner's prior arguments in previous examination or invalidation actions and focus more on objective evidence on records, which is a major difference from the rule for infringement actions.Experimental dataIt has been well known that China emphasizes experimental data in the inventiveness analysis and disclosure sufficiency analysis, particularly for chemical and life-science inventions.Several articles in this JI relate to this topic.Codifying the spirit given by courts in the high-profile case eventually invalidating pharmaceutical patent No. 201110006357.7, Article 5 formally provides that if evidence on records proves that the embodiment, technical effect, data or diagrams in the specification and drawings were fabricated, the court can invalidate the relevant claims based on the applicable legal grounds.Meanwhile, Article 10 deals with supplemental data submitted by applicants for pharmaceutical patent applications to prove the inventiveness or disclosure sufficiency.This article is notable for both what it says and what it does not say.It says that, in line with Chia's commitment made in the phase-one trade agreement with the US, the court shall examine supplemental data submitted by the applicant after the effective filing date.But what is more notable is that this article does not say: (1) whether it also applies to granted patents (i.e. data submitted in invalidation actions), (2) whether it applies to other types of applications than pharmaceutical ones, and (3) what criteria the court will use to recognize or deny the value of such data regarding inventiveness of disclosure sufficiency, particularly whether the court should adopt the standard CNIPA gives the Guidelines: the value of such data can be recognized only if the "technical effect" to be proven by such data should be able to be derived from original disclosures of the application.Actual problem to be solved by a distinguishing featureArticle 12 codifies the spirit SPC gave in its judgment on the reexamination proceeding of patent application No. 201210057668.0, where it held that the requirement of inventiveness serves a different legislative purpose from disclosure sufficiency, and there is no need for the specification and drawings to provide teachings on the technical effect to be achieved by a distinguishing feature of the subject claim over the closest prior art; instead, the court can make a determination on the technical effect (and thus the actual problem to be solved) based on common knowledge in the art, the relationship between the distinguishing feature and other features in the claim and the function of the distinguishing feature in the technical solution defined by the claim.CNIPA strongly objected to SPC's judgment, but the formal promulgation of this article in this JI implies that SPC and CNIPA have reached agreement.This article calls for new considerations from patent challengers and patent owners in future invalidation actions.Even if a claim survives an inventiveness challenge because the authority recognizes the actual problem based on the determination methodology provided in this article, there is a question whether the claim can be challenged on the grounds that the specification and drawings provide no explicit teachings on the relevant technical effect.Space for design and factors to determine itArticle 14 will introduce this concept into the novelty and marked-difference analysis for designs, as it has been used in infringement actions, in that when the space for design is large, general consumers are less likely note a small difference between two designs, and if the space is small, the consumers are more likely to note such a difference.This article further lists the following factors by which the court may determine the space:(1)function and usage of the subject product;(2)the overall situation of the prior designs;(3)designs commonly used in the art;(4)compulsory provisions in laws and administrative regulations;(5)national or industrial technical standards; and(6)other applicable factors.Although this JI is for validity actions, the above factors should also be used in infringement actions.Invalidation decisions beyond the scope of the challenger's requestsThis issue is about some controversial invalidation cases where CNIPA's decisions were challenged for having gone beyond the challenger's requests, which was regarded as an abuse of its ex officio powers.An article included in an earlier draft of this JI would provide that CNIPA should make an invalidation decision within the scope of (1) the challenger's requests and (2) a list of exceptional scenarios given in the Guidelines where CNIPA can make ex officio actions beyond the challenger's requests; otherwise the court should reverse the decision.With the deletion of the above article, Article 23 of the formal JI addressing CNIPA's procedures in invalidation actions is more focused on whether CNIPA gives the parties a notice and opportunity to respond for any new ground CNIPA may introduce that goes beyond the normal scope.This supposedly will give CNIPA more leeway to introduce ex officio grounds (on the legal basis or evidence) in invalidating patents, and patent owners need to be vigilant.Partial reversal of CNIPA's decisionsArticle 24 of the JI states that the court can partially reverse a CNIPA decision toward some of the claims or designs while maintaining the decision on the other claims or designs.This is a long-awaited procedural improvement, particularly for an invalidation action accompanying an infringement action.Under this article, the portion of a CNIPA decision that is not reversed would be regarded as becoming effective earlier, which would bring more procedural certainty to the proceedings.Also, Article 25 and 25 together give courts the flexibility on whether it is necessary to order CNIPA to make a new decision for a decision that was fully or partially reversed by the court.The possibility of no need for a new decision is also a procedural improvement.Deletion of an article on new matterAn article in a previous draft of the JI would adopt the same standards for the determination of new matter determination as for the determination of the support by the specification to claims, but this article is not present in the formal JI, likely because of strong objection by CNIPA.Deletion of an article on standing to invalidate a design patentA design patent can be invalidated if it is in conflict with a prior right (e.g. copyright) of a third party.A relevant procedural question is who has the standing to invoke this ground in an invalidation action.PRC Patent Law and its Implementing Rules as the superior laws do not provide any limitation on the standing, but CNIPA's Guidelines stipulate that only the owner of the prior right or an interested party related to that right has the standing.There are arguments that this CNIPA stipulation is invalid as it is inconsistent with the PRC Patent Law and its Implementing Rules.And there were cases where the courts issued judgments overruling the CNIPA stipulation, which has brought some certainty to this issue.An article was included in a previous draft of this JI which appeared as a formal codification of those court judgments, but now it is not present in the formal JI.No reason was given on this deletion, and uncertainty on the standing issue is back again.