Legislative background

According to the Patent Act, after a patent application for a utility model is published, any person may file a request with the specific patent agency for a technical evaluation report of the utility model patent and the specific patent agency must publish the request in the Patent Gazette. With regard to the obligation that patentees of utility model patents should present the technical evaluation reports thereof, Article 105 of the Patent Act as enacted in 2003 originally provided as follows:

In case the patent right of a utility model is revoked, the patentee shall be liable for the damages sustained by any other persons from the exercising of such utility model right by said patentee prior to the revocation thereof. In the case set forth in the preceding Paragraph, if the exercise of the utility model patent by the patentee is carried out based on the contents of the technical evaluation report associated with said utility model, or with due care by the patentee, it shall be presumed that the patentee has done no fault in exercising the utility model patent right. (Emphasis added.)

This provision was later amended as follows to Article 117 in the Patent Act as enacted on 21 December 2011:

Where a utility model patent is revoked, the patentee shall be liable for the damages suffered by another person due to the patentee's exercise of utility model patent right prior to its revocation. The above shall not apply if such exercise is based on the content of the technical evaluation report of utility model patent and carried out with due care. (Emphasis added.)

It is understood that the proviso in Article 117 of the Patent Act 2011 was inherited from Article 105(2) of the Patent Act 2003, requiring patentees to exercise utility model patent rights:

  • based on the contents of the technical evaluation reports associated with such utility models; and
  • with due care.

As to the due care paid by patentees of utility model patents, according to the example cited in the ratio legis of Article 105(2) of the Patent Act 2003 (equivalent to Article 117 in the Patent Act 2011), if the patentee of a utility model patent does not exercise the utility model patent right until it has discreetly consulted with relevant professionals (eg, attorneys, professionals and patent attorneys) and has a substantial degree of certainty in such patent right, the patentee is deemed to carry out the exercise of the utility model patent right with due care and must not be directly held liable for the damages incurred thereof even if such patent right is subsequently revoked.

Exemplary case

In 2020 Min Zhuan Shang Zi 11, the Intellectual Property Court held that the patentee of a utility model patent had formed a reasonable certainty that the patent at dispute was valid and that the product at dispute had infringed the patent at dispute based on the following facts:

  • The patentee of the utility model patent had applied to the Intellectual Property Office for a technical evaluation report associated with the utility model patent and the comparison results of all claims in the technical evaluation report had been categorised as 'Code 6'.
  • After the patentee had obtained professional advice from its attorneys and an IP firm, the attorneys appointed thereby did not send a letter to the alleged infringer until the attorneys, to the best of their expertise and knowledge, had examined the Intellectual Property Office technical evaluation report and patent infringement assessment report and established that there were no problems therewith.
  • The patent infringement assessment report held by the patentee contained no objective or unprofessional defects.

As a result, even though the patent right at dispute was subsequently revoked due to an administrative invalidation decision, this had not been foreseen by the patentee when exercising the patent right. The court held that the patentee should be deemed to have exercised the patent right at dispute with due care and should not be held liable for the damages under Article 117 of the Patent Act.

Comment

Formality examination – rather than substantive examination – has been adopted in utility model patent applications since the enactment of the Patent Act amendment in 2003. Therefore, the Patent Act provides that patentees should present technical evaluation reports associated with their utility model patents to evidence the validity of their patent rights when exercising a utility model patent. This urges the patentee to exercise the patent right discreetly and adequately.

It may take time to apply for a technical evaluation report of a utility model patent. Therefore, the patentee of a utility model patent may, in an emergency, exercise their patent right before obtaining a technical evaluation report thereof. Nevertheless, as Article 117 of the Patent Act clearly provides that the patentee's exercise of the utility model patent right should be carried out based on the contents of an associated technical evaluation report and with due care, both the report and due care are indispensable. Consequently, due attention should be paid to this provision as it offers important evidence of the patentee's exemption from infringement liability.