China – Countermeasures For Knockoffs Sold On E-Commerce Platforms.

Complaints and requests for removal of design patent infringing products – the use and highlights of patent evaluation reports
 

Background
 

The sales of products have in recent years been gradually moved to online platforms from physical stores. Products ordered by customers online are delivered directly to customers. As a result, it is hard to identify the sellers of infringing products or the locations where infringing products are manufactured or stored, leading to the difficulty in conducting administrative investigation and punishment. The trend of manufacturing and selling the infringing products targeted only at export markets (overseas customers) is increasing in intensity in the mainland of China. Making intellectual property complaints to e-commerce platforms is featured with low cost and fast response to solve the infringement-related matters, at present mainly trademark infringement. This article is to expound the intellectual property complaints about removing the recently increasing products that infringe design patents from e-commerce platforms and relevant points for attention.
 

1. Complaints and requests for removal of patent-infringing products from e-commerce platforms
 

In accordance with the provisions of the PRC E-commerce Law [1] (“E-Commerce Law”), the patentee of an invention, a utility model or a design shall have the right to make infringement complaints to e-commerce platform operators (“Platform”) requesting for removal of any alleged infringing products from e-commerce platforms.
 

2. Documents required for making complaints against design patent infringement
 

In relation to the complaints against design patent infringement, the well-known e-commerce platforms such as Alibaba Group (Taobao, Tmall, 1688 , Alibaba, etc.), Pinduoduo, JD, Made in China, etc. often ask a proprietor (“Complainant”)[2]  to provide the following documents together with the patent infringement complaints and the request for removal of infringing products. If the proprietor is a foreigner, there is no need to notarize and legalize the documents set forth in (1) to (3) below
.

1. Power of attorney

2. Certificate of legal representative

3. Business license

4. Patent certificates for the Complainant’s own patents (“Complainant’s Patents”)

5. Copy of the patent register (to prove that the patent is subsisting and that the patent annuities are paid)

6. Patent evaluation reports

7. Patent infringement analysis reports (the Alibaba platform requires the Complainant to prepare the same following Alibaba’s templates and briefly explain the infringement analysis opinions).
    

3. Patent evaluation reports
 

3. 1 What is a patent evaluation report

In accordance with the provision of Article 66 of the PRC Patent Law (2020) (“Patent Law”), a patent evaluation report is issued by the National Intellectual Property Administration (“CNIPA”) after search, analysis and evaluation of a utility model or a design as granted. The official fee for the patent evaluation report is RMB 2,400. The patent evaluation report is often issued within two months upon receipt of the application, which cannot be expedited.
 

3.2 Legal effect of the patent evaluation report
 

The patent evaluation report has an extremely limited legal effect as it is not an administrative decision, usually only for “reference” [3]. Even if a certain design patent evaluation report considers that the disputed design patent complies with the provisions of the Patent Law, anyone can still apply with the CNIPA for invalidation of the design patent and may successfully invalidate the same with strong evidence. However, the patent evaluation report is, after all, an official report issued by the CNIPA to a certain extent of reflecting the CNIPA’s opinions about the stability of the disputed design patent, which is very authoritative and credible. Therefore, the patent evaluation report is convincing to third parties such as e-commerce platforms or the public, regardless of the conclusion being positive (affirming the patent validity) or negative (denying the patent validity).
 

3. 3 Features of the patent right evaluation report and points for attention
 

1. The Patent Law currently effective stipulates only that the patentee, the interested parties (usually patent licensees) and the accused infringer can apply for and initiatively submit a patent evaluation report. On 27 November 2020, the CNIPA released a notice for public comments on the Proposed Amendments to the Detailed Rules for Implementing the Patent Law (draft for comments), according to which the applicant for the CNIPA’s patent evaluation report can be “any entity or individual”.

2. The CNIPA issues only one patent evaluation report relating to the same utility model or the same design.

3. Upon the issuance of a patent evaluation report, any entity or individual can access to or copy such patent evaluation report free of charge.

4. The conclusion drawn in the patent evaluation report can be positive or negative. Patent examiners responsible for evaluating patents are likely to omit any closest prior art/design due to restrictions on search capability and time limit, thus making a positive evaluation conclusion on a utility model or a design that should not have complied with the provisions of the Patent Law.

5. Even the evaluation conclusion is negative, the applicant should not request for withdrawal or cancellation of the patent evaluation report, nor should it request for non-disclosure of the negative evaluation conclusion.

6. If the applicant believes that the patent evaluation report contains any error that needs to be corrected, it may request for correction within two months upon receipt of the patent evaluation report, generally one time allowed.
    

4. Abuse of the design patent evaluation report by the respondent
 

The E-commerce Law also stipulates that after receiving the complaint forwarded, a vendor on e-commerce platforms (“Respondent”) may provide the Platform with a non-infringement statement which should include evidence proving that there is no infringement. In practice, the Respondent will provide the non-infringement statement for its own sake and at the same time the proof of its own design patent (“Respondent’s Patent”)[4], even the patent evaluation report that affirms the validity of the respondent’s patent.
 

In response, the Complainant will submit rebuttals to the Platform. However, the Platform often does not remove the infringing products even a claim chart in details is available, for the reasons that the Platform has fulfilled its obligation of forwarding the infringement notice and the non-infringement statement in accordance with the provisions of the E-commerce Law and it lacks the capability and power to determine whether there exists any infringement. Generally, the Platform gives a notice to the proprietor. Given that the Respondent has provided the non-infringement statement, the proprietor can make a complaint to the competent authority or file a lawsuit with the people’s court in accordance with the relevant provisions of the E-Commerce Law. At this point, the complaint comes to a deadlock. The patentee cannot achieve the purpose of removing the alleged infringing products in a short time by making a complaint.
 

It is much worse that after admitting the Respondent’s non-infringement statement, the Platform will not accept any repeated complaint relating to the same infringing products or the same design patent even if the Complainant can provide new evidence, such as the conclusion of infringement as determined in the design patent infringement analysis opinions from third-party authorities. The Platform will decide that the repeated complaint is not tenable for the reason that “the seller has submitted the valid materials against the infringement notice to prove non-infringement”.
 

5. Suggestion and future outlook
 

In order to efficiently remove the infringing products from e-commerce platforms, given the uncertainty of the patent evaluation conclusion, this article sets forth the following suggestions and future outlook.
 

1. The patent evaluation report of design patent is a must for removal of the infringing products from e-commerce platforms, although there is a risk that the patent evaluation conclusion drawn by the CNIPA is negative. Therefore, it would be better to carry out preliminary search and analysis in respect to the proposed design before applying for a patent evaluation report; if the evaluation conclusion is unfortunately negative, it is possible to promptly request for making correction.

2. If the applicant for the patent evaluation report can be “any entity and individual” under the officially published Detailed Rules for Implementing the Patent Law, in a state of deadlock as mentioned above, the Complainant may undermine the credibility of the Respondent’s non-infringement statement and increase the odds of removing the infringing products from e-commerce platforms if the Complainant can beat the Respondent to provide the CNIPA with the evaluation report about the subsequent Respondent’s Patent, together with the relevant supporting documents and, as long as the Respondent provides its own design patent as evidence, get and provide e-commerce platforms with the negative evaluation conclusion.

3. In order to help e-commerce platforms to determine infringement and defend against the Respondent’s non-infringement statement, at the time of making the complaint the Complainant can consider submitting the matter to an authoritative and impartial third-party evaluation agency for infringement analysis[5], which is better filed at the time of making the first complaint.

4. If there are a huge number of links for selling the alleged infringing products, a request for administrative investigation and punishment can be filed with the network business regulation branch of the local administration for market regulation of the place where e-commerce platforms are located.
    

   

    

   For further information, please contact:

    

   Rieko Michishita, Partner, Bird & Bird

   rieko.michishita@twobirds.com
    

[1]

Article 42 Where an intellectual property right holder believes that any of its intellectual property rights is infringed, the right holder shall have the right to notify e-commerce platform operators of removal, blocking, disconnection of links, termination of transactions or services or otherwise as necessary. The notice should contain the preliminary infringement evidence.

[2]

In accordance with the provisions of the Patent Law (2020), the patentee, the interested parties or the accused infringer can apply with the CNIPA for issuance of a patent evaluation report. The interested parties usually refer to patent licensees.

[3]

Pursuant to the Patent Examination Guidelines (2010), the patent evaluation report is evidence based on which the people’s court or the patent administration tries and resolves patent infringement disputes, primarily used to determine whether it is necessary to stay the relevant proceedings. The patent evaluation report is not an administrative decision. Neither the patentee nor the interested party may petition for administrative reconsiderations or administrative litigations.

[4]

In practice, the patent is often a design patent applied for subsequent to the date when the Respondent’s Patent is granted and clearly plagiarizes the Complainant’s prior design patent.

[5]

For example, in Hangzhou, Zhejiang Province, where Alibaba is headquartered, the Zhejiang Intellectual Property Research and Service Centre (Hangzhou representative office of the Patent Office of the CNIPA) can issue a patent infringement analysis report relating to an inventions, a utility models or a design in days or in weeks, at a price ranging from 4,000 yuan to tens of thousands yuan.