Bring in the experts

The number of intellectual property cases handled by Chinese courts is growing by the year and patent litigation is no exception, with both Chinese and foreign businesses having become more confident about litigating their patents in court. To be on the winning side one must have a good understanding of the system, implement a robust patent filing strategy and make full use of the protection mechanisms China has to offer. Above all, successful patent litigation requires being well prepared and, in China especially, this means collecting strong and straightforward evidence showing infringement.

Chinese judicial appraisal centres can play a key role in this regard. Such centres are regulated and approved by the judicial authority above the provincial level to provide ‘expert evaluations’ on technical issues. These include technical opinions on patent infringement (or non-infringement). Judicial appraisal centres may be appointed by a court in the course of litigation or be engaged by a party during the preparation of its case. Although non-binding, their reports have strong evidential weight and rebutting their content and conclusions will prove more difficult than challenging a lawyer-made infringement analysis.

Judicial appraisal centres are well known by Chinese IP practitioners but appear to be largely unknown by their foreign counterparts. This article therefore outlines the basic principles that organise the system and highlights the role such centres can play in the pre-litigation phase of a patent infringement case.

The right centre

The first step when engaging a judicial appraisal centre is to select the right one, based on its reputation, skills in the technical sector at stake, and pricing and timing in which the task can be completed. A centre may issue a report on patent infringement even if it is not based where the alleged infringement has occurred but parties should consider favouring centres that make it easy to have direct communication and face-to-face discussions.

Once the centre is selected, an agreement will be executed and the party engaging the centre will provide it with the necessary material to conduct the analysis. This will usually include the Chinese patent at stake, a sample of the alleged infringing product and a clear identification of the claim(s) to be analysed. This can be complemented by any information the engaging party deems relevant, including an infringement analysis drafted in-house, guidelines to assess the infringing character of the target product and anything relevant to the understanding of the patented technology.

"The process to assess patent infringement will mainly consist of a comparative analysis and panel discussions that will eventually lead to the issuance of the appraisal opinion."

To strengthen the evidential value of the report, parties should provide the centre with a product that was purchased from the alleged infringer under witness of a public notary. This will make it more difficult for the alleged infringer to challenge the validity of the report by arguing that the analysed sample did not originate from it.

A panel of experts will then be appointed, comprising qualified appraisers and led by one of them. All must formally warrant their impartiality and the absence of conflicts of interest.

The process to assess patent infringement will mainly consist of a comparative analysis and panel discussions that will eventually lead to the issuance of the appraisal opinion. If deemed necessary, the panel may undertake discussions with the engaging party to obtain additional information and understand any technical issue that arises in the course of the appraisal process.

Contents of the report

When the judicial appraisal report is issued it will usually outline the analysis made by the panel, with a recap of the technical features of the patent claim(s) and target product at stake, followed by a comparative analysis presented in a table and clear conclusions on the infringement (or non-infringement).

The report must also contain certain information, including the name of the engaging party, and a list of the materials evaluated and the employed technical means. Finally, the report will contain the signature and the seal of the centre and panel members, as well as a set of annexes made of the analysed patent, pictures of the target product, the judicial appraisal licence and the judicial appraiser practising certificates of the panel members.

Applicable regulations impose confidentiality obligations on the centre and panel members, according to which no trade secrets protecting, or information about, the appraisal work can be disclosed to third parties without the prior authorisation of the engaging party. In addition, an agreement will be concluded with the centre which may impose additional confidentiality obligations.

Judicial appraisal reports are therefore confidential and remain so until the engaging party decides to use them and disclose their content and conclusions. In other words, a negative report obtained when preparing a patent case can be set aside without risk of being disclosed to the potential target.

Patent litigation is by nature highly technical, and relying on expert opinions is almost always the rule. In China judicial appraisal centres can play a central role, both in the course of litigation or during the pre-litigation phase, and their reports may help to assess the strength of one’s position and influence the strategy moving forward (settlement or litigation).

As a patent owner, a report confirming infringement will constitute a central piece of evidence to be filed with the court. It may also help to bring an alleged infringer to the negotiation table before going to court or be used to dissuade third parties from entering into a business relationship with an alleged infringer (although one must be careful not to be guilty of defamation and disparagement by doing so).

A report by a judicial appraisal centre may finally prove useful for an alleged infringer in the build-up to patent litigation and help to provide reliable evidence of non-infringement. With a growing number of foreign businesses being the target of patent infringement actions, having strong evidence of non-infringement backed by a judicial appraisal report could prove decisive in avoiding business operations in China being disrupted by an ill-founded patent infringement action.

Valentin de le Court is a counsel at  HFG Law & Intellectual Property, based in China. His practice focuses on contentious and non-contentious IP matters, with a particular focus on patent and trademark litigation and China-related IP strategies. He can be contacted at: vdelecourt@hfgip.com