PRC Supreme People's Court's Interpretation on Implementation of Patent(s) Adopted in Industrial Standard

29 October 2008 Publication

Legal News Alert: China

In a recent patent infringement lawsuit filed by JI Qiang and LIU Hui against Chaoyang City Xingnuo Building Engineer Co, Ltd (Xingnuo) involving certain patent(s) adopted in the industrial standard of “Design Procedure of Composite Carrier Rammed Pile,” Liaoning High People’s Court sought clarifications from the Supreme People’s Court of the People’s Republic of China (PRC) on whether the implementation of such patent(s) in accordance with the industrial standard constitutes a patent infringement. On July 8, 2008, the Supreme People’s Court issued an interpretation on implementation of patents adopted in industrial standard ((2008) Ming San Ta Zi No 4) and held:

Given that the Chinese Standard-Setting Institution has not yet established the system with respect to the disclosure and use of patent information in the associated standard, if the patentee has participated in the issuance of the standard, or if a patent has been adopted in a national, industrial or local standard with the patentee's consent, the patentee shall be deemed to have licensed the others to implement such patent when implementing the standard; any third party’s relevant implementation (of such patent) does not constitute a patent infringing act as defined in Article 11 of the Patent Law. The patentee may ask the third party exploiting such patent to pay a fee for the exploitation of such patent, but the fee paid by others shall be substantially lower than the normal license fees. Where the patentee consents to give up the patent license fee, the consent shall prevail.

This interpretation will be the general rule for consideration of patent disputes involving patent(s) adopted in a standard. However, it fails to consider the scenario in which a patent has been adopted in a standard without the patentee's participation or consent. Further interpretations may be required in this respect. In addition, the interpretation sets forth a noteworthy royalty standard that the relevant fees should be substantially lower than normal licensing fees; the application of such a standard in practice is certainly worth close monitoring.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues.

If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney of the following individuals: 

Sharon R. Barner
Chicago, Illinois

Catherine Sun
Shanghai, China

Yan Zhao
Shanghai, China

Foley & Lardner LLP is licensed to operate in China as a foreign law firm. Under Ministry of Justice regulations, foreign law firms in China are permitted to advise clients on certain aspects of international transactions and to provide consultation concerning the impact of the Chinese legal and regulatory environment; foreign law firms in China are not permitted to practice Chinese law. The content of this communication does not constitute an opinion on Chinese law nor does it constitute legal advice, but is based on our research and our experience advising clients on international business transactions in China.

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