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The Rise of the Sophisticated Chinese Patent Infringer

2020-03-26 root in The rise of the sophisticated Chinese patent infringer A recent trend we've seen during patent enfo
A recent trend we've seen during patent enforcement is the rise of Chinese patent-savvy counterfeiters.

The rise of the sophisticated Chinese patent infringer

A recent trend we've seen during patent enforcement is the rise of Chinese patent-savvy counterfeiters. Not only do these infringers reverse engineer and sell well-known products originated from the U.S. or Europe, they also try to register patents in China on these products claiming the innovations as their own. Given design and utility model patents don't go through substantive examination, it's possible for many hot selling Western products to be patent registered in China by copycats before they've even been sold on the Chinese market. While in theory such "patents" could be cancelled via an invalidation proceeding via the product being publicly sold or used prior to the copycat filing (under an "absolute novelty" bar) in practice, there can be many challenges with invalidating such patents. As a result, some crafty Chinese infringers have been able to leverage their patent portfolios both as a tool for initiating enforcement against the original inventor and as a bargaining chip for cross licensing and settlement talks.


In this article, I will explain some of the reasons why invalidating a "copycat patent" in China is often not as straightforward as one would imagine and provide some recommended best practices to defend against the rise of crafty copycat patent filers.


Complications of cancelling a copycat patent

When relying on the public sale or use bar of an existing Western product to invalidate the copycat's registration, it's often difficult to gather sufficient evidence to map to the counterfeiter's claims. For example , public advertisements like a time-stamped YouTube video or an original trade show brochure while usually sufficient to invalidate a design patent often do not contain enough technical detail and/ or depth to cover the claims of a utility model or invention patent. In addition, if using a foreign purchase order to satisfy public sale bar, it can often be challenging to satisfy Chinese evidentiary requirements for authentication e.g. a receipt might not have the serial number of the actual product that was sold.


Given the difficulties with relying on public sale or use, it's often easier to invalidate copycat patents with the applicant's own priority patent which has disclosed the invention. Nonetheless, this approach is not without hurdles. One issue with using a foreign priority patent is it may not disclose the copied product in as much detail and/or nuance as what's claimed (or disclosed) in the copycat's registration. That is, when drafting a foreign priority patent, there tends is often greater emphasis given to the key innovative features of the technology instead of the (sometimes perceived) insignificant details of the product to be commercialized. For example, minute details about outer appearance or internal structure of the product are usually left out. In contrast, such "nuts and bolts" minutia of the product is often fully described in the counterfeiter's registration because the counterfeiter has drafted their patent based exactly on the actual (reverse engineered) product to be sold. Therefore, we've seen cases where the copycat's registered claims mirror the product sold so closely that it becomes difficult to invalidate based on the original foreign priority patent especially when the foreign patent emphasizes the key technical innovations rather than every basic and essential detail of the product to be sold.


Another challenge when invalidating a copycat's registration is when what's claimed in the copycat's patent isn't a direct copy of the product, but instead, slight modifications of the product. That is, the sophisticated copycat has copied the essence of the existing product, but has made some minor, sometimes ornamental variations and has filed many patents on these variations. In such cases, if these variations aren't disclosed or described with adequate detail in the foreign priority document, it may be difficult to use the foreign priority document to invalidate the Chinese registration. In such cases, we may need to rely on non-prior art based defects for invalidation such as indefinite/ ambiguous language, lack of enablement in the description, or the like.


Best practices

Given some of the difficulties identified above, it's imperative to consider allocating budget and resources towards drafting and prosecuting your priority applications from the point of view of enforcement against sophisticated copycats. From a drafting point of view, this means strategically drafting priority applications to emphasize not only the innovative features of the invention, but also minute and essential details related to the (predicted) final version(s) of the product to be commercialized. In addition, it's recommended to brainstorm with the inventor, in-house counsel and/or your Chinese counsel regarding specific aspects or embodiments of the invention that are likely be copied and ensure such embodiments are properly included in the parent filing. Such strategic drafting of the priority filing increases the likelihood invalidating Chinese registrations whose claims mirror copied products to-a-tee.


With respect to strategic prosecution, this includes not only pursuing a set of claims with the broadest possible coverage from a technical point of view (an especially common habit for U.S. practitioners), but to also pursue narrower claims that capture essential details of the finished product. Just like outside China, such a result can be achieved during the prosecution of the parent application or through filing of one or multiple divisionals (note that unlike the U.S., China does not allow for a "cascading divisonals" approach i.e. in China, any and all divisonals must be filed within two months from date of receiving Notification of Grant of the parent application). Like the United States, the downside of pursuing narrow coverage (pertaining to only versions of the commercialized product) is the claims are likely easier to design around and there may be more features of the claims to be mapped to establish infringement. However, for enforcement against Chinese goods that have copied Western products to-a-tee, a claim that approximates the counterfeit can often be easier to enforce because it's easier to identify and explain the similarity between the claims and the copied product to a judge. On the other hand, while broader claims covering key features/advantages of the invention should be pursued as they are harder to design around it is sometimes easier for a sophisticated infringer to point out clear distinctions between the copied product and a broader set of claims since broader claims may not align precisely with the product. In addition, while broader claims might be intentionally drafted as ambiguous or roundabout, it may cause a Chinese judge during claim construction to invoke aspects/embodiments of the specification due to perceived vagueness of language thereby causing the claims to be construed more narrowly than intended. Therefore, to combat sophisticated copycats we would recommend pursuing coverage on not only the broadest possible claims, but to also consider ones that map well to versions of the predicted product to be sold.


Lastly, an essential component of strategic drafting and prosecution for a) enforcing against copycat products and b) invalidating Chinese patents covering such products, is ensuring predictable and simple design-arounds are included in the relied upon foreign disclosure and properly claimed. Many Chinese copycats are now sophisticated enough to understand IP and thus, will purposely not copy every aspect of the product. Instead, they may make very minor and/ or obvious modifications and register patents on these modified technology or designs. This strategy allows them to potentially avoid litigation and also argue that their registered patents are technical improvements (however slight) over the goods they've copied. Such registered design arounds may also serve as defense should our infringement theory rest under a Doctrine of Equivalence argument. Therefore, it's imperative to predict and evaluate simple "design arounds" a Chinese counterfeiter could attempt and to disclose and claim such modifications in the priority patent.


In summary, there is a growing trend of crafty patent infringers that not only reverse engineer and sell products originally conceived in the West but also attempt to register patents on such products in China. While in theory these patents (if Utility Model or Design don't go through substantive review at SIPO) can be invalidated using the foreign prior sale or use bar, satisfying Chinese evidentiary requirements for authenticating foreign public sale or use can be difficult in practice. Therefore, it is recommended to rely on the applicant's own foreign patents for both cancelling the copycat registrations and for enforcing against the counterfeit goods. However, this approach as it's currently implemented is not without some challenges. Typically foreign patents are drafted with detail and emphasis (understandably) on the innovative features and advantages of the technology rather than the basics and mechanics contained in the product(s) to be commercialized. This poses a challenge when enforcing against copycat goods and invalidating registered patents that cover existing goods with precise detail. Ultimately, more effective offensive and defensive measures against sophisticated Chinese infringers will require a shift in how foreign priority documents are currently drafted and prosecuted overseas.

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