[Shanghai Legal Daily] How Can a Patent Be Remedied ifMaliciously Waived? Shanghai Intellectual Property Court Concluded the First Case Involving Confirmed Malicious Waiver of Patent Right and Compensation for Damages

January 16, 2018  Shanghai Legal Daily  A06: Court Trial

Reporter: Hu Diefei; Correspondent: Chen Yingying

Recently, Shanghai Intellectual Property Court concluded the first case involving confirmed malicious waiver of patent right and compensation for damages, and made a judicial judgment on whether relevant legal rights and interests are infringed when the patent ceases to exist as a result of malicious waiver.

Subsequent dispute caused by dispute over patent ownership

This is a subsequent dispute caused by a common dispute over patent ownership.

In November 2012, the defendant applied for a utility model patent entitled "phase sequence protection relay circuit for electric auger bulk feed conveying equipment", which was invented by someone surnamed Hu, a company's legal representative, and was authorized in May 2013.

In October 2014, the plaintiff sued the defendant and its legal representative, Hu, to Shanghai No.1 Intermediate People's Court for the reason that Hu had access to the plaintiff's R&D achievements and related technical materials when he was working for the plaintiff, the technical solution stated in the claims of the above patent was completely consistent with the internal technical drawings designed by plaintiff's employee surnamed Wang, and therefore, Wang shall be the inventor of the above patent and such patent shall belong to the plaintiff. In July 2015, Shanghai No.1 Intermediate People's Court decided that Wang was the inventor of the above patent, which was a service invention created in the execution of employment tasks, the patent should belong to the plaintiff and all the plaintiff's claims were supported. After the verdict, the defendant didn't appeal and the verdict took effect.

Patent application was rejected due to malicious waiver of patent right

However, the plaintiff got in trouble when applying to the State Intellectual Property Office (SIPO) for changing the bibliographic data on the owner and inventor of the patent, as SIPO approved after examination the defendant's application for waiver of the said patent filed during the trial of the patent ownership dispute, and therefore the patent involved had been extinct due to "voluntary waiver of the owner". SIPO deemed that according to the regulations, the plaintiff should provide effective legal documents to prove the patent was maliciously waived by a non-true owner. However, the said verdict simply determined the patent ownership without stating whether the defendant waived the patent maliciously. Hence, the plaintiff's request to revoke the defendant's waiver of the patent was rejected.

For this reason, the plaintiff sued to Shanghai Intellectual Property Courtafter hisrequestto revoke the defendant’s waiver of the patent was rejected, requesting confirmation of the defendant's malicious waiver of the utility model patent entitled "phase sequence protection relay circuit for electric auger bulk feed conveying equipment", and compensation for the charges incurred to apply for restoring the patent, commission of the patent agency and litigation agency fee for this case totaling 12,000 yuan.

The defendant argued that he was still the owner of the patent when waiving it before the verdict of the patent ownership dispute was made, and the patent was waived for justified reason that it wasn't inventive.   

Confirmation of defendant's malicious waiver of the patent

After the trial, Shanghai Intellectual Property Court held that the plaintiff's claim in this case was in essence to compensate for its economic losses arising from the defendant's malicious waiver of the patent. The dispute is focused on whether the defendant's waiver of the patent has infringed on the plaintiff's legitimate rights and interests and whether the defendant should compensate for the losses claimed by the plaintiff.

The court held that the defendant's voluntary waiver of the patent involved during the trial of the patent ownership dispute had directly resulted in the plaintiff's failure to obtain the patent after the verdict of the said dispute came into effect, and trouble in applying to SIPO for restoration of the revoked patent. This was why this lawsuit was filed. Now that there existsthe act element, damages element and causal relationship element based on which the infringement is judged, it's crucial to determine whether the defendant has subjective fault in voluntarily waiving the patent. After comprehensive evaluation, it's found that the defendant had no justified reason to waive the patent during the trial of patent ownership dispute. It is subjectively malicious and obviously faulty, and such act had infringed upon the plaintiff's legitimate right and interest. According to relevant provisions of the Tort Liability Law of the People's Republic of China, the plaintiff's claim for compensation for relevant expenses could be supported since they were incurred as a result of the defendant's waiver of the patent and they have actually been paid within reasonable limits.

The case is meaningful in that the "malice" in a malicious waiver was confirmed and a judicial judgment on whether relevant legal rights and interests are infringed when the patent ceases to exist as a result of malicious waiver was made.