Is it possible to infringe on patent rights by advertising?

Preface

In recent years, with the rise of internet sales and e-commerce platforms, product sales methods have become more diverse. Live streaming, short videos, game integration, and advertorial marketing can all showcase and promote products, including a large number of patent-related products. So, can these displays, promotions, and advertisements infringe on patent rights?

Patent rights are a type of exclusive property right. With the increasing perfection of my country’s intellectual property protection system, the strengthening of infringement liability, and the promotion of typical cases, the public’s awareness of intellectual property protection is constantly improving. Against this backdrop, offering for sale, as an independent act of infringement, should be given sufficient attention.

I. Relevant Legal Provisions

In countries that have established patent systems, most have provisions regarding offering for sale in their legislation, commonly referred to as “offering for sale,” which means an expression of intent to sell a product. The TRIPs Agreement, based on the legislative achievements of national patent laws, stipulates in Article 28 the patentee’s right to prevent offering for sale.

Prior to 2008, my country’s Patent Law stipulated that infringement of patented products included “manufacturing, using, and selling for production and business purposes” for invention and utility model patents, and “manufacturing and selling for production and business purposes” for design patents. In the third amendment to the Patent Law in 2008, “offering for sale” and “importing” were added to the list of infringement offenses. From then on, offering for sale for production and business purposes constituted an infringement of patent rights, raising the level of patent protection in my country to a new level.

Article 18 of the “Several Provisions of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Patent Dispute Cases” (Fa Shi [2001] No. 21, third amendment in 2020) stipulates that the offer for sale referred to in Articles 11 and 69 of the Patent Law refers to an expression of intent to sell goods through advertising, displaying in shop windows, or exhibiting at trade fairs.

An expression of intent is a private law concept, referring to the external manifestation of a person’s intention to have a certain effect. In judicial practice, the act of offering to sell includes not only advertising, displaying goods in shop windows, or exhibiting them at trade fairs as stipulated in the aforementioned judicial interpretations, but also sending price lists, auction announcements, tender notices, and reaching sales agreements. With the development of communication methods such as the internet, SMS, WeChat, and blogs, and the widespread adoption of e-commerce, the forms of offering to sell have become more diversified. In general, regardless of its form, as long as an offer or invitation to offer is made in a commercial sense, it may be considered an offer to sell.

II. The Independence of Offering to Sell

The aforementioned amendments to the Patent Law in 2008 legally established the independence of offering to sell, making it an independent tortious act parallel to manufacturing, selling, using, and importing. Although in judicial practice, offering to sell often coexists with sales, the independence of offering to sell has been recognized in many cases. In some cases, the court held that the act of offering for sale itself infringed the patent right, and should bear corresponding liability for infringement even if no actual sales occurred.

In the case of the heater (MU5), the alleged infringing acts included manufacturing, selling, and offering for sale. Regarding the manufacturing act, the second-instance court determined based on evidence that the allegedly infringing product was purchased by the first-instance defendant, Shanhe Company, from Chuancheng Company in May 2019. Therefore, the first-instance defendant, Shanhe Company, did not carry out the manufacturing act. Regarding the sales act, Shanhe Company claimed that there was only one allegedly infringing product and that it had not yet been sold. The plaintiff also did not submit evidence to prove the actual sale. Therefore, the court held that there was currently no evidence showing that Shanhe Company actually sold the infringing product, and therefore did not support the litigation claims related to the sales act. However, Shanhe Company displayed the infringing product at the exhibition for the purpose of sale, which constituted an infringement of offering for sale[1].

With the increasing activity of e-commerce platforms, displaying products on the platform may also independently constitute an infringement of offering for sale. In the TV background wall (5) case, the defendant Liang displayed the patented product in his Taobao shop. After comparing the features, the court determined that it fell within the scope of patent protection. However, the Taobao shop showed that the product had zero sales, and there was no further evidence to prove that Liang had manufactured or sold it. Based on the above, the court determined that Liang’s offer to sell constituted infringement, ordered him to cease the infringement, and compensate the plaintiff for economic losses [2]. Therefore, it can be seen that the offer to sell is an independent infringement and exists independently without relying on manufacturing or sales. Even without manufacturing or sales, an independent offer to sell may be considered a patent infringement. Maintaining the independence of the offer to sell is beneficial to stopping infringement before actual sales occur, thus more effectively protecting patent rights. III. Analysis of the Standards for Determining the Offer to Sell In cases where the offer to sell may independently constitute patent infringement, analyzing the standards for determining infringement has strong practical significance. In practice, the following aspects deserve attention regarding the standards for determining infringement. First, an offer to sell must be made with the intention of actual sale and thus constitute an offer or invitation to offer. In the shower head case, the plaintiff, Hansgrohe, argued that the defendant, Fangfang Sanitary Ware Factory’s, online store contained multiple product images, including those of the product in question, and asserted that displaying these images constituted an offer to sell. The defendant, Fangfang Sanitary Ware Factory, countered that the product images in the store’s album were merely for illustration purposes and were not actually sold in the store, therefore not constituting an offer to sell. The Ningbo Intermediate People’s Court held that e-commerce store albums, as image libraries managed by the store operators, can generally be set to public or private viewing modes as needed, and also function as online image libraries. When the images are set to public viewing in the store, it can indeed lead web browsers to the assumption that the store sells such products. However, compared to actually selling the products in the store, simply displaying product images without explicit written indication of a sales intention is insufficient to prove that the defendant’s display constituted an offer or invitation to offer. Therefore, this form of store album display of product pictures does not deviate from the function of a simple image library and should not be considered as an offer to sell. However, in this case, the plaintiff further proved that after browsing the defendant’s store album of product pictures, when contacting the defendant to express the need to purchase the product, the defendant promised or actually sold the same product. As mentioned above, the previous invitation to offer has been confirmed, so this display of product pictures has the attributes of an invitation to offer and is an offer to sell. Based on the above determination, the court ordered the defendant to stop the infringement and compensate for the losses. In the above analysis, we can more clearly define the boundary of the establishment of infringement, that is, the confirmed offer or invitation to offer[3].

Secondly, in the offer to sell, it is necessary to be able to clearly identify the infringing product. The offer to sell needs to have evidence carriers, such as the displayed photos, product appearance, etc. It must be able to determine that the displayed product is the infringing product in order to establish the infringement. In the case of the symmetrical spray booth, the plaintiff in the first instance, Saizhi Environmental Protection Company, submitted a notarized document (2018) Jinbeifangzhengjingzi No. 459 issued by Tianjin Beifang Notary Office. The notarized document stated that the product center page included a “bicycle industrial coating equipment” page introduction, the content of which was mainly workshop drawings, without any related technical solutions. The court held that, regarding whether the defendant Kunshan Zifu Company had made an offer to sell, the notarized document provided by Saizhi Environmental Protection Company could not prove that the equipment displayed on the webpage notarized by the notarized document was an infringing product. Therefore, the evidence was insufficient to prove that Kunshan Zifu Company had made an offer to sell [4].

Third, the feature comparison object is the patent in question and the carrier of the offer to sell evidence. For example, in the case of the door (Tianyuan Tianfang), the carrier of the offer to sell evidence was a webpage. Therefore, feature comparison was made between the patent in question and the webpage. After comparison, the court held that there were certain differences between the two. The door in the webpage was a double door, while the door in the patent in question was a single door; the door in the webpage had no rectangular border, while the patent in question had a rectangular border. However, the key design elements of the patent in question are three square frames and their internal patterns. This part is more easily observed by consumers during normal product use compared to other design parts, and has a greater impact on the overall visual effect of the appearance design. Although the accused infringing design and the patent in question have the above-mentioned differences, these differences cannot produce a substantial difference in the overall visual effect. The court determined that the two were similar, and thus determined that the offer to sell was an infringement [5].

IV. Conclusion

Patent offer to sell infringement, like manufacturing, selling, and using, seriously infringes on the rights and interests of the patentee and damages the market economic order, and therefore must be taken seriously. As an independent infringement, patent offer to sell infringement undermines the patentee’s exclusive property rights and is also a legally defined infringement. Patent offer to sell is covert, and many infringers can use this method to sell large quantities of counterfeit and substandard patented products, which not only harms the interests of consumers but also impacts the legitimate market. Therefore, it is necessary to pay attention to patent offer to sell infringement, increase the crackdown on such behavior, protect the rights and interests of the patentee, maintain the market economic order, and promote technological innovation and social fairness. References

[1] Zhejiang Provincial Higher People’s Court, (2020) Zhe Min Zhong No. 731.

[2] Zhejiang Provincial Higher People’s Court, (2021) Zhe Min Zhong No. 41.

[3] Ningbo Intermediate People’s Court, Zhejiang Province, (2018) Zhe 02 Min Chu No. 1289.

[4] Tianjin Higher People’s Court, (2019) Jin Min Zhong No. 68.

[5] Zhejiang Provincial Higher People’s Court, (2014) Zhe Zhi Zhong Zi No. 87.