A series of counterattacks by defendants in patent infringement lawsuits

Business warfare is a war without gunpowder. Both sides employ ingenious strategies to seek commercial dominance and profit. In the technology sector, patent rights have become a “standard weapon” in business warfare. Using legally valid patents to file patent infringement lawsuits, attack competitors, and seek market leadership has become a common tactic for technology companies. In patent infringement lawsuits, the plaintiff often plans meticulously, launching a decisive attack. The defendant, on the other hand, is often in a passive position at the beginning of the litigation. This article analyzes several of the most common ways defendants launch counterattacks in patent infringement lawsuits from the perspective of the patent infringement defendant.

PART 01

Filing a Patent Invalidation Request Against the Patent in Question

Article 45 of the Patent Law stipulates: From the date the State Council’s patent administration department announces the grant of a patent right, any entity or individual who believes that the grant of the patent right does not comply with the relevant provisions of this Law may request the State Council’s patent administration department to declare the patent right invalid. Article 47, Paragraph 1 of the Patent Law stipulates: A patent right declared invalid is deemed to have never existed. Article 2, Paragraph 1 of the Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Disputes (2020 Revision) (Fa Shi [2020] No. 19) stipulates that: if the claims asserted by the patentee in a patent infringement lawsuit are declared invalid by the patent administration department of the State Council, the people’s court hearing the patent infringement dispute may rule to dismiss the patentee’s lawsuit based on the invalid claims.

The legal basis of a patent infringement lawsuit is the patent right owned by the patentee. Therefore, if the patent right is declared invalid, it means that the legal basis of the infringement lawsuit no longer exists. In practice, if the patent involved is declared entirely invalid, or partially invalid, and the invalid claims include the claims asserted in the infringement lawsuit, the people’s court will usually rule to dismiss the plaintiff’s lawsuit based on the above judicial interpretation. There are many such cases, such as the “ice cream machine gas filling method case,” in which the plaintiff asserted claim 1. During the second instance, the patent involved was declared partially invalid, and the invalid claims included claim 1. In the second instance proceedings, the Supreme People’s Court ruled to dismiss the lawsuit [1]. Invalidation requests undermine the plaintiff’s civil rights in infringement lawsuits, hence the strategy is figuratively described as “cutting off the fuel supply.” Successfully invalidating the opposing patent not only avoids losses for the plaintiff but also deprives the opposing party of a patent right, achieving the desired counterattack effect.

However, “cutting off the fuel supply” is not the only significance of filing an invalidation request. Article 6 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Disputes” (Fa Shi [2009] No. 21) stipulates that: If a patent applicant or patentee abandons a technical solution through amendments to the claims or specification or statements of opinion during patent granting or invalidation proceedings, and the patentee subsequently includes it within the scope of patent protection in a patent infringement dispute, the people’s court shall not support such an inclusion. This provision is theoretically based on the “estoppel principle.” In patent infringement litigation, the scope of patent protection is crucial. Typically, during litigation proceedings, the plaintiff, in interpreting the scope of protection of the claims, often asserts the broadest possible scope to more definitively and clearly encompass the accused infringing product or method. In invalidation proceedings, to ensure the patent right is not declared invalid, the patentee (plaintiff) often needs to make necessary concessions and narrow the scope of protection when interpreting the claims. This narrow interpretation provides strong support for the defendant’s defense of non-infringement.

Specifically, regarding a certain technical feature A, in an infringement lawsuit, if a feature of the accused infringing product or method differs from the patent in question, the plaintiff must claim it as an equivalent feature; otherwise, based on the principle of full coverage, infringement would not be established. However, in invalidation proceedings, the patentee (plaintiff in an infringement lawsuit) often needs to argue that technical feature A is a distinguishing technical feature; if it constitutes an equivalent feature, the patent right cannot be preserved. In short, regarding something like technical feature A, the plaintiff cannot “win from both sides.” In the Supreme People’s Court’s annual report on intellectual property cases, in the case of “Retrial of Tibetan Medicine Duyiwei Soft Capsules,” the Supreme People’s Court held that: During the invalidation proceedings of the patent in question, Uta Company emphasized that “the four preparation methods of the Duyiwei extract described in this invention are the process steps finally determined by the inventor after conducting extensive process screening and verification experiments. These methods are not disclosed in the prior art, and the Duyiwei extract described in this invention obtained thereby is not equivalent to the Duyiwei extract in the prior art.” Therefore, the Supreme People’s Court held in retrial that the claim of non-equivalence asserted in the invalidation proceedings should not be supported in the infringement lawsuit. The Supreme People’s Court revoked the first and second instance judgments and dismissed Uta Company’s claims [2].

Based on the invalidation request, the defendant in an infringement lawsuit can also request a suspension of the proceedings. Article 5 of the “Several Provisions of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Patent Dispute Cases (2020 Revision)” (Fa Shi [2020] No. 19) stipulates that: In cases of infringement of utility model or design patent rights accepted by the people’s court, if the defendant requests the invalidation of the patent right during the defense period, the people’s court shall suspend the litigation. However, the litigation may not be suspended if one of the following circumstances exists: Defendants in infringement lawsuits are often in a state of hasty response. There is often insufficient time for formulating litigation strategies and organizing evidence. If the court rules to suspend the litigation, it can slow down the pace of the litigation, giving the defendant more time to respond and more calmly deal with the challenge from the plaintiff.

PART 02

Using the Defendant’s Patent Rights for Reciprocal Countermeasures

In some famous patent wars, the defendant often uses reciprocal countermeasures to retaliate. After the plaintiff files a lawsuit against the defendant, the defendant, based on its own patent rights, also initiates patent infringement lawsuits against the plaintiff’s products. Especially in the technology field, using patents as weapons to launch attacks and reposition the industry has almost become a regular development method for some industries. Patent wars often occur between competitors within the same industry. Typical examples include emerging industry players challenging established giants, and traditional industry leaders attacking potential competitors.

The widely publicized series of patent infringement disputes between Huawei and Samsung is a typical example. These cases began in 2015. In May 2015, Huawei first filed patent infringement lawsuits against Samsung in California and Shenzhen. Then, on June 27, Huawei filed a lawsuit against Samsung in the Quanzhou Intermediate People’s Court, seeking 80.5 million yuan in damages. Just 25 days later, Samsung retaliated swiftly, filing several patent infringement lawsuits against Huawei in the Beijing Intellectual Property Court, seeking a total of 161 million yuan in damages. At the time, this news attracted widespread attention, especially since the total amount in Samsung’s several cases, 161 million yuan, was exactly twice the 80.5 million yuan sought by Huawei in the Quanzhou case. Industry insiders generally believed that this coincidence proved that Samsung’s lawsuits were a counterattack against Huawei’s lawsuits.

Another typical case began with a surprise attack. In 2020, OPPO and Sharp were negotiating patent licensing. During the normal progress of the negotiations, Sharp launched a surprise attack on OPPO. Moreover, the timing of the surprise attack was very clever. It is said that OPPO received the news of the patent infringement lawsuit just in time for the Chinese New Year. Taking advantage of such an opportunity to launch a patent infringement lawsuit was obviously to increase the bargaining chips and force OPPO to accept a humiliating surrender. OPPO’s response strategy was textbook-like. While actively responding to the lawsuit, OPPO filed invalidation requests against the patents involved in the patent infringement lawsuit filed by Sharp. About a month after Sharp launched its patent surprise attack, starting from the end of February 2020, OPPO filed two infringement lawsuits against Sharp in Tokyo, Japan and Shenzhen, China, to fight back against Sharp. It is generally believed in the industry that OPPO won the final victory in this patent war. Some intellectual property lawyers commented that OPPO can be said to have won the “Stalingrad Defense” in the Chinese patent war [3]. PART 03

Filing Lawsuits Against Patent Infringement Plaintiffs for Abuse of Rights, Commercial Defamation, and Malicious Litigation

As a civil right, patent rights, like most civil rights, involve the issue of fair use. Specifically, when exercising patent rights, it is necessary to avoid abuse of patent rights, commercial defamation, and malicious litigation. From the perspective of the defendant in a patent infringement case, if they discover that the plaintiff has engaged in the aforementioned behaviors, they can file a corresponding lawsuit to counter the plaintiff.

In the “Surveillance Camera Case,” the plaintiffs in the patent infringement lawsuit, Zhang Moumou and Kai Mou Company, sued the defendant, Qiao Mou Company, for infringing their patent rights, seeking damages of RMB 10 million and applying to the court for property preservation. The court ruled to freeze RMB 10 million in Qiao Mou Company’s bank accounts and Alipay accounts or seize other property of equivalent value. The defendant, Qiao An Company, disagreed and filed a lawsuit against Zhang Moumou and Kai Mou Company for maliciously filing intellectual property lawsuits and applying for pre-trial property preservation, causing damages to the defendant. The court held that Zhang abused his right to sue and maliciously filed a lawsuit against Qiao’s company, which was in competition with him, and applied for property preservation of RMB 10 million at the same time. Zhang should have had a duty of care to exercise due diligence in this preservation action, that is, he should have considered whether the application for property preservation was necessary, whether the amount was obviously too high, and whether it would cause unnecessary losses to the plaintiff. After considering the above factors, the court determined that Zhang’s application for property preservation was wrong and ordered Zhang to compensate Qiao’s company for economic losses totaling RMB 254,000[4]. It should be noted that the constituent elements, identification standards, and judgment standards in cases of abuse of rights, commercial defamation, and malicious litigation are all very professional issues and will not be discussed in this article. This article only proposes the above countermeasures from the perspective of the defendant in patent infringement. PART 04 Summary and Outlook “Sitting at home, trouble comes from the sky” is the first feeling of many defendants in patent infringement when they receive the lawsuit materials served by the court. In fact, patent infringement litigation is often a continuation of commercial competition. In countries and regions with relatively mature patent systems, patent wars are very common as a common form of commercial warfare. The strategies and methods for attacking and defending patent infringement lawsuits are very mature. Being accused of patent infringement is certainly not a pleasant thing, but there is no need to be overly nervous. One should adopt proactive attack and defense strategies and comprehensively utilize various tools to strive for final victory.

References:

[1] Supreme People’s Court, Civil Ruling No. 594 of 2023.

[2] Supreme People’s Court, Civil Judgment No. 158 of 2010.

[3] Baijiahao: Bay Stream Economic Review, This Shenzhen technology company won an epic patent war,

https://baijiahao.baidu.com/s?id=1722480880293605833&wfr=spider&for=pc.

[4] Shanghai Higher People’s Court, Civil Judgment No. 139 of 2019.