Abstract
Abstract
As the number of patent disputes increases, so do also the requirements of biopharmaceutical companies for fairness and efficiency in dispute resolution, the patent system established in China based on the principle of separation of functions and powers exhibits increasingly prominent drawbacks in the processes of patent infringement litigation and patent invalidation trials, posing a challenge to the efficient, fair, and convenient resolution of patent disputes. In the future, as China further strengthens patent protection, we suggest enhancement through optimizing patent invalidation trials, establishing appellate courts for intellectual property, and adjusting litigation structures for patent validation, thereby stimulating biopharmaceutical companies motivation for innovation.
Because the innovation process requires large investments and has high-risk characteristics, patents are very important for the biopharmaceutical industry. Biopharmaceutical companies have always been the main promoters of strengthening patent protection as well as frequent participants in patent invalidation and infringement litigation. The manufacture of chemical active pharmaceutical ingredients (APIs) is an important component of the biopharmaceutical industry. With the industrial transfer of international chemical APIs, China has become the world's largest producer and exporter of APIs. 1 Referring to the Reference Relationship Table of the International Patent Classification and National Economy Industry Classification prepared by the National Intellectual Property Administration of the People's Republic of China (CNIPA), the review and decision retrieval system of the Patent Reexamination Board, and China Judgments Online, we analyzed the processes of patent infringement litigation and patent invalidation trials in China's chemical API manufacturing sector and proposed solutions to the outstanding problems.
1. PATENT INFRINGEMENT AND PATENT INVALIDATION TRIALS IN THE BIOPHARMACEUTICAL INDUSTRY IN CHINA
In China, determinations of the validity of patent rights and the resolution of disputes over patent infringement occur in the context of a separation of functions and powers. Patent validity dispute cases are reviewed and determined by the Patent Reexamination Board's patent invalidation proceedings, while disputes involving patent infringement cases are mainly settled in the civil proceedings of the people's courts. Patent invalidation proceedings refer to a legal procedure of review and decision by the Patent Reexamination Board in response to a request by any organization or individual who believes the granting of a patent right does not comply with the relevant provisions of the Patent Law and the Rules for Implementation of the Patent Law and seeks to have patent rights declared invalid. As an important part of the patent system, the invalidation declaration system is not only a continuation of the patent examination and approval procedures but also a necessary administrative remedy to protect the legitimate rights and interests of patent holders and the public.
Patent infringement litigation should determine whether the defendant's actions infringe on the lawful rights and interests of the patentee, whether the defendant should be liable, and, if so, what responsibility these actions entail. In patent infringement litigation, the alleged infringer is often defended by an invalid patent, and the court accepting the patent infringement litigation is not entitled to hear the patent invalidation case together with the patent infringement litigation. Disputes over patent infringement and the determination of patent validity are related in many cases but are heard in different forums. The validity of the relevant patent right and the determination of its scope of protection are the premise and basis for judging whether an act constitutes infringement of the patent right, and obtaining legal protection is the purpose of determining the validity of the patent right. In patent law theory, the principle of understanding claims in patent invalidation proceedings and the principle of interpretation of claims in patent infringement litigation should be consistent. 2
2. ANALYSIS OF PATENT INFRINGEMENT LITIGATION AND PATENT INVALIDATION PROCESSES IN THE BIOPHARMACEUTICAL INDUSTRY IN CHINA
According to the Reference Relationship Table of International Patent Classification and National Economic Industry Classification, 3 we confirmed that the query term for patent invalidation cases in the field of chemical API manufacture is the international patent classification code of A61K31. The patent invalidation trial data used were derived from the review and decision retrieval system of the Patent Reexamination Board, 4 and the judgment documents were collected from China Judgments Online, 5 which contained more than 4,000 cases as of December 31, 2018, from which 189 valid cases were obtained through manual screening.
2.1. Long cycle time for patent processing in the biopharmaceutical industry in China
China's patent invalidation declaration system results in judicial finality. In addition, the judicial review of the administrative decisions made by the Patent Reexamination Board is targeted to administrative litigation, and a three-level, two-instance system is implemented. The review decision made by the Patent Reexamination Board is successively reviewed by the Beijing Intellectual Property Court in the first instance, the Beijing Municipal High People's Court in the second instance, and the Supreme People's Court in the third-level judicial review. According to the administrative procedural law to hear such cases, the court can only decide to revoke, partially revoke, or maintain the review decision, but it cannot directly confirm the validity of the patent right. This process easily leads to recurring litigation and thus the loss of the market value of the biopharmaceutical patent. In 2015, the Supreme People's Court reported to the Standing Committee of the National People's Congress about rectifying the issues described in the report on patent law enforcement. The Court also noted that the fundamental reason for the long processing time of patent infringement disputes was the complicated proceedings of the patent invalidation review process, which included the patent invalidation declaration procedure as well as the administrative proceedings in the first and second instances.
Through empirical analysis and research (Table 1), we found that the average trial period for patent invalidation cases in the biopharmaceutical industry in China, from the day of the invalidation request to the day of the second-instance administrative decision, is approximately 928 days. For cases meeting the retrial conditions, the trial period for patent invalidation cases is even longer. For example, the review period of the patent invalidation case for Patent No. 200410046807.5 was 1,700 days (or more than four-and-a-half years) for reexamination by the Supreme People's Court.
Cycle Time for Patent Processing in the Biopharmaceutical Industry in China
Data from the Patent Reexamination Board of CNIPA and China Judgments Online.
2.2. Differences in the review standards between the processes of patent infringement litigation and patent invalidation trials in China's biopharmaceutical industry
Identifying the judicial process of patent infringement litigation and the administrative process of patent invalidation trials involves the relationship between the alleged infringing substance, the prior technology, and the patent. On the one hand, patent infringement litigation investigates the relationship between the alleged infringing substance and the patent, i.e., whether it constitutes literal or equivalent infringement. On the other hand, the administrative process of patent invalidation examines the relationship between the alleged infringing substance and the prior technology, i.e., whether the existing technology defense holds. The patent invalidation trial mainly examines the relationship between the patent and the existing technology, i.e., whether the patent possesses novelty, creativity, and practicality. A further clarification of the aforementioned review criteria and their connection with one another are the necessary prerequisites for ensuring the realization of substantive justice in patent invalidation trials and patent infringement dispute resolutions.
In the patent dispute for Patent No. 01817895.2, the Beijing No. 2 Intermediate People's Court issued Civil Judgment No. 07639 in 2014 supporting the plaintiff's claim to stop the infringement of patent rights during the pre-litigation procedure. In the same year, the Beijing Municipal High People's Court upheld the decision in Judgment No. 278. At approximately the same time, the Patent Reexamination Board issued Decision No. 27371 for a review of the invalidation request, declaring that the invention patent was completely invalid. This decision was also supported by the Beijing Municipal High People's Court in 2017 as upholding Administrative Judgment No. 2871. The whole case will inevitably be the subject of confusion from the public's perspective: for the same case, why is a tort established and a patent invalidated in different proceedings?
2.3. Existence of civil and administrative intersectional issues and recurring litigation in patent infringement litigation and patent invalidation in China's biopharmaceutical industry
In the framework of the dual system of parallel patent infringement litigation and patent invalidation administrative litigation, the civil procedure of patent infringement disputes intersects with the administrative procedure of patent invalidation. Patent infringement litigation is affected and constrained by patent invalidation trials, resulting in protracted litigation and forming a cycle of patent infringement litigation, patent invalidation declaration, and administrative litigation (Table 2). In practice, once a patentee files a lawsuit for patent infringement, the defendant often immediately files a patent invalidation request with the Patent Reexamination Board. 6 This approach by the defendant has become a business strategy widely used to delay cases.
Civil and Administrative Intersectional and Recurring Litigation in Patent Infringement Litigation and Patent Invalidation in China's Biopharmaceutical Industry
Data from the Patent Reexamination Board of CNIPA and China Judgments Online.
CNIPA, National Intellectual Property Administration of the People's Republic of China.
By studying the 189 patent dispute cases in the chemical API manufacturing sector, we found that unless the patent in question was fully invalidated by the Patent Reexamination Board after a request for invalidation, most of the cases had to proceed through multiple invalidation requests and administrative proceedings. For example, Patent No. 200410031071.4 was subject to six requests for patent invalidation. Our study found that, in practice, due to patent infringement litigation, a patent invalidation request is commonly filed, and the situation of recurring litigation and delaying proceedings is rather prominent.
3. SUGGESTIONS FOR ENHANCING THE PATENT INFRINGEMENT LITIGATION AND PATENT INVALIDATION TRIAL PROCESSES IN CHINA'S BIOPHARMACEUTICAL INDUSTRY
The aforementioned problems existing in the patent infringement litigation and the patent invalidation processes in China's biopharmaceutical industry are both wasteful of administrative and judicial resources and not conducive to the timely and effective protection of the legitimate rights and interests of biopharmaceutical enterprises and the public. Currently, China is continuously strengthening patent protection. We propose further improvements to the patent infringement litigation and patent invalidation processes in the biopharmaceutical industry through optimizing the patent invalidation review process, unifying the judicial standards for patent validity evaluation and patent infringement judgment, and exploring and innovating upon the trial mechanism of intellectual property courts.
First, we recommend that the patent invalidation system be reformed, the patent invalidation trial process be optimized, the quasi-judicial status of the Patent Reexamination Board be established, and litigation review be reduced. The Patent Reexamination Board has long implemented the judicial system as a collegial, conflict-avoidant, and open system for the handling of invalidation cases, which complies with judicial principles such as disposition by the parties, ne bis in idem, and full hearing, as well as having a quasi-judicial status. Compared to the general administration, it has less administrative arbitrariness. Therefore, it does not need to adopt the two-instance final review system of the general administrative litigation. We recommend endowing the Patent Reexamination Board with a quasi-judicial status, increasing the judicial power of evidence investigation and evidence preservation, and implementing the first-instance review of the administrative decisions on patent invalidation: those who disagree with the administrative decision on invalidation made by the Patent Reexamination Board can directly appeal to the appellate court. Through this approach, the cycle of patent invalidation cases can be shortened to avoid the waste of administrative and judicial resources.
Second, although China has initiated the reform of intellectual property courts and established three intellectual property courts in Beijing, Shanghai, and Guangzhou, the final judicial power of patent invalidation declaration cases and patent infringement litigation cases has not been unified. The lack of institutional connection between the two types of cases is not conducive to the effective protection of patent rights. We propose an appellate court for intellectual property be established at a level comparable to that of the Higher People's Court, in which a technical judge and a legal judge jointly form a collegial panel to unify the power of the final judicial adjudication of patent infringement cases and patent infringement litigation cases. Doing so would effectively link the proceedings of patent invalidation trials and patent infringement litigation; unify the administrative, judicial, and judgment standards; and maintain the unification of the patent system.
Finally, we recommend allowing intellectual property courts to determine the validity of a patent right in patent infringement litigation under certain circumstances. If the patent has obvious reasons for invalidation or is likely to be considered invalid by the Patent Reexamination Board in the patent invalidation trial, then the plaintiff's indictment can be directly dismissed without suspending the trial to avoid recurring litigation in the patent infringement litigation case. However, the relativity of patent invalidation in the patent infringement litigation case must be insisted upon. The review of the validity of patent rights by intellectual property courts in patent infringement litigation is not a substitute for the patent invalidation declaration procedure in patent infringement litigation. In such cases, the Intellectual Property Court should judge the validity of patent rights based on dispute resolution, fairness, and efficiency. Its effectiveness is limited to individual cases and only occurs between parties of the individual cases. The final judgment on the validity of patent rights still needs to be solved through patent invalidation administrative proceedings.
ACKNOWLEDGMENTS
This work is supported by the research grants from Soft Science Foundation of the National Intellectual Property Administration, PRC (No. SS18-B-24), and China Scholarships Council (No. 201806845002). The authors would like to thank these organizations for their financial support.