*AI-generated translation, for reference only.

Keywords: Administrative; Administrative Adjudication of Utility Model Patent; Infringement; Prior Use Right Defense; Non-infringement Defense; User; Manufacturer

Case Facts

 [REDACTED] Peng Company is the patentee of a utility model patent with Patent No. 201920646395.0, entitled “Vertical Special-purpose Cutting Device for Self-insulating Blocks.” On December 10, 2021, [REDACTED] Peng Company filed a request with the Zibo Municipal Administration for Market Regulation for handling a patent infringement dispute, on the ground that two pieces of equipment used by [REDACTED] Lin Company to produce self-insulating blocks as profit-making products infringed the patent right at issue. On December 31, 2021, the Zibo Municipal Administration for Market Regulation rendered Administrative Ruling Lu Zi Shi Jian Zhi Chu Zi [2021] No. 16 (i.e., the contested ruling), holding that: the technical solution of the accused infringing products fell, as a whole, within the protection scope of the patent right at issue; however, [REDACTED] Lin Company's use of the accused infringing products constituted prior use and was a continued use within the original scope, which was an act of exercising the prior use right and was not deemed to infringe the patent right. Dissatisfied, [REDACTED] Peng Company filed an administrative lawsuit with the Intermediate People's Court of Jinan, Shandong Province, asserting that the second accused infringing product lacked a legitimate source and did not constitute prior use.

The Intermediate People's Court of Jinan, Shandong Province held that [REDACTED] Lin Company's prior use right defense was not established, and on August 19, 2022 rendered Administrative Judgment (2022) Lu 01 Xing Chu No. 96: (1) revoking Administrative Ruling Lu Zi Shi Jian Zhi Chu Zi [2021] No. 16 rendered by the Zibo Municipal Administration for Market Regulation on December 31, 2021; and (2) ordering the Zibo Municipal Administration for Market Regulation to render a new administrative act with respect to the patent infringement dispute at issue. Dissatisfied, [REDACTED] Lin Company appealed. On April 25, 2023, the Supreme People's Court rendered Administrative Judgment (2022) SPC IP Admin. Final 839: (1) revoking Administrative Judgment (2022) Lu 01 Xing Chu No. 96 of the Intermediate People's Court of Jinan, Shandong Province; and (2) dismissing the claims of [REDACTED] Peng Company.

Judge's Opinion

The court's effective adjudication held that: Article 75, Item 2 of the Patent Law provides that where, before the filing date of the patent application, an identical product has already been manufactured, an identical method has already been used, or the necessary preparations for the manufacture or use have already been made, and the manufacture or use is continued only within the original scope, such conduct shall not be deemed to infringe the patent right. Products that the prior user continues to manufacture within the original scope, or products directly obtained according to the patented method, do not constitute products that infringe the patent right; and products that such prior user has already manufactured before the filing date of the patent application naturally do not constitute products that infringe the patent right either. Where, after the filing date of the patent application, a third party uses, offers for sale, or sells products that such prior user has already manufactured before the filing date, products manufactured within the original scope, or products directly obtained according to the patented method, such conduct likewise does not constitute an act of patent infringement. In this case, based on a comprehensive assessment of the evidence on record, it is found that, before the filing date of the patent at issue, the manufacturers of the two accused infringing products, namely [REDACTED] Machinery Company and [REDACTED] Manufacturing Company, had already actually manufactured the accused infringing products at issue. Although the accused infringing products and the products of the patent at issue are identical products, the accused infringing products, as products already manufactured by the prior user before the filing date of the patent at issue, just like products that the prior user continues to manufacture within the original scope or products directly obtained according to the patented method, naturally do not constitute products that infringe the patent right either.

The prior use right is a right expressly provided for in the Patent Law in the form of a defense; its main purpose is to protect normal production and business operations and to reflect fairness, while also serving to remedy the deficiencies of the first-to-file system. To achieve the above purpose of the prior use right, it is necessary to protect the normal circulation in the market of, and the security of transactions in, products that the prior user manufactures within the original scope or products directly obtained according to the patented method. Where a manufacturer, as a prior user, holds the prior use right, the accused infringing products it manufactures within the original scope do not constitute infringing products, and third parties who subsequently purchase and use such accused infringing products likewise do not constitute infringement of the patent right. To hold that the subsequent conduct of purchasers and users in using products manufactured by the prior user within the original scope, or products directly obtained according to the patented method, constitutes an act of infringement would run counter to the original intent of establishing the prior use right system. Therefore, a user may, with respect to its conduct of using the accused infringing products, assert the prior use right enjoyed by the manufacturer.

Judgment Digest

Where, after the filing date of a patent application, a party uses, offers for sale, or sells products manufactured by a prior user in the lawful exercise of its prior use right, and the user or seller asserts, on the ground of the manufacturer's prior use right, that it does not constitute infringement of the patent right, the people's court shall support such assertion.

Related Index

Article 75, Item 2 of the Patent Law of the People's Republic of China (the provision applied in this case is Item 2 of Article 69 of the Patent Law of the People's Republic of China that came into force on October 1, 2009)

First Instance: Administrative Judgment (2022) Lu 01 Xing Chu No. 96 of the Intermediate People's Court of Jinan, Shandong Province (August 19, 2022)

Second Instance: Administrative Judgment (2022) SPC IP Admin. Final 839 of the Supreme People's Court (April 25, 2023)