China Law Insight : China Business and Intellectual Property Lawyers & Attorneys : King & Wood Law Firm : IP, Arbitration, Litigation, Securities, Foreign Investment

 The terms "technology," "technical problem," "technical effect," and "technical feature" are clearly defined in the Patent Law, or the Regulations and the Guidelines. Further to Paragraph 1 of Article 2 of the Patent Law, Part II, Chapter 1 of the Guidelines for Patent Examination (2010 Edition by the SIPO) ("Guidelines") further provides that "'[i]nvention in the Patent Law means any new technical solution relating to a product, a process, or improvement thereof. ...technical means is generally embodied by technical features...a solution not employing technical means to solve a technical problem to obtain technical effects in conformity with natural law does not fall under the scope as set forth in Paragraph 2 of Article 2 of the PRC Patent Law..."

Therefore, the Guidelines instruct an applicant to first consider whether a solution provided by an invention is under the scope of Paragraph 2 of Article 2 of the Patent Law and further defines a technical solution as “a collection of technical means employing natural law to solve technical problems.” When analyzing this definition, the following should be considered. A "technical solution" should be construed to have employed 1) technical means, 2) solved technical problems, and 3) achieved technical effects in conformity with the law of nature. The entirety of the claim should be examined and analyzed to determine whether technical means are employed.

Case Study:

An umbrella with an ornamental umbrella head that features a transparent umbrella head with an airtight inner cavity, an anti-freezing aseptic liquid is encapsulated in the inner cavity of the umbrella head and a small free-flowing ornament is immersed in the liquid. The description discloses that the problem the invention intends to solve is to make the umbrella more alluring.

Case Analysis

Because the umbrella head has a three-dimensional and dynamic ornament, the present application employs technical means. On the surface, this patent application aims to solve the technical problem by making the umbrella more alluring. However, the present invention modifies the umbrella structure by employing the technical means of filling a transparent, airtight inner cavity in the umbrella head with liquid and a small ornament to solve the technical problem that displays the said ornament floating in the umbrella head. As a result, this modification achieves the technical effect that the ornament floating in the umbrella head visibly and aesthetically. On the other hand, the alluring appearance of the umbrella is merely a derivative of the visual effect of the technical solution and cannot conceal its feature in constituting the technical solutions. Consequently, the features specified in the claim form a technical solution.

The present application utilizes the umbrella head's structural feature as a technical feature. By exploiting the said technical feature with technical means, it solves a technical problem by displaying the small ornament flowing in the transparent umbrella head. Furthermore, the naturally achieved effect is a technical effect.

From this example, it can be determined that if technical means consists of technical features, its solved problem is generally a technical problem, and its achieved effect is generally a technical effect in conformity with the law of nature. Essentially, contents recited in most inventions in the art of machinery can generally constitute a technical solution so long as the technical means employed consists of technical features.

One opinion is that patent ownership claims should be subject to the 2-year statute of limitations principle provided by Article 135 of the Civil Law, as there are no other provisions under the Patent Law stipulating otherwise. The date should be calculated from the date of announcement for granting the patent right.

Others argue that patent ownership disputes should be deemed as disputes under patent infringement and be handled under Article 23 of the Several Provisions of the Supreme People's Court on Issues Relating to Application of Law in the Trial of Patent Disputes (Judicial Interpretation [2001] No.20) (Interpretation), which provides that, while the patent is effective and infringement continues, patent infringement actions shall not be restricted by a statute of limitations.

A third opinion holds that the patent right is an absolute right and right in rem. Therefore, it has the same judicial characteristics as jus in re in conventional civil law. Under PRC law, the provisions on statute of limitations do not apply to enforcement by action in rem. Accordingly, patent ownership disputes is not subject to the 2-year statute of limitations.

Discussion

According to legislative intent, the statute of limitations only applies to the right to petition. Other rights, such as ownership, personal right, are rights of property dominion in nature, and thus are not subjected to the statute of limitations. Therefore, statute of limitations should not apply to non-credit patent ownership disputes.

China currently rejects adverse possession, because of its inherent conflict with traditional Chinese values and social principles. If the People's Courts refuse to grant trial due to statute of limitations, the rightful patent owner may lose his patent rights, and the announced patentee will, in all practicality, obtain the patent rights. The result is nothing short of adoption of adverse possession in China and conflicts with legislative principles of the Civil Law.

A statute of limitations only deprives the plaintiff's right to file suit, but the substantive right of ownership still exists. Dismissal due to statute of limitations does not mean that the People's Court has recognized the patentee as the legitimate patent owner and neither affirms nor denies the patent ownership status granted by the SIPO. As a result, it causes a strange situation, where legal ownership of the patent is in limbo. The ambiguities in law disrupt the social and legal relations derived from the patent rights, and will hinder the actuation of patented technology.

A patent not only brings economic benefits to the patentee, but also good reputation or recognition. Therefore, patent ownership disputes inherently involve a matter of deprivation of right to good reputation or recognition. This is pertains to a personal right, which does not vanish with the expiry of the patent right. Statute of limitations is not applicable to personal rights.

In general, the purposes of a statute of limitations are: (a) to stabilize social legal relations; (b) to encourage the timely protection of rights; (c) to avoid evidentiary difficulties. However, there is no reasonable basis for applying the statute of limitations to patent ownership disputes.

Settlement of patent ownership disputes does not affect already established legal relations. Patents are, in essence, intangible knowledge or information. Neither the patent owner nor any others can control technology or design in the same way as a tangible object. Possession and transfer of patent rights are not legally enforceable without SIPO's registration and announcement procedures. If a third party obtains a patent license in good faith, his reliance interest is protected by law and won’t be affected by the rightful patent owner's claim. The rightful patent owner's claims for compensation, license fees and assignment fees are obviously the creditor's claims and subject to the statute of limitations. In short, established legal relations, as protected under the systems of public credibility and statute of limitations, will not be undermined by rectification of ownership.

The loss of evidence due to the extended lapse of time is only a theoretical presumption. Such presumption might be correct in certain cases, but not in all cases. If the plaintiff fails to meet his burden of proof, the court may apply the Right Presumption Principle. Any such plaintiff willingly risks defeat, if he does not exercise his rights timely. This basic principle of civil proceedings is not unique to the nature of a statute of limitations but inherent in litigation. Therefore, evidentiary difficulties cannot justify application of statute of limitations to patent ownership disputes.

The second opinion asserts a statute of limitation exemption for continuous infringement is applicable to patent ownership disputes. Article 23 of the Interpretations exempts patent infringements, namely, exploitation of the patent without the patentee's consent and authorization. Since the patent infringements are not patent ownership disputes, such opinion that an exemption is available is unconvincing. Furthermore, although this opinion addresses the issue of statute of limitations in duration of patent, it does not indicate whether patent ownership disputes are subject to the statute of limitations after expiration of the patent.

The third opinion asserts that patent ownership disputes are peculiar and should not be subject to the statute of limitations. This opinion is feasible in practice for it reasonably settles conflicts between jurisprudence and legal provisions through the interpretation of laws, and thus incorporate jurisprudence and judicial practice.

Conclusion
As Chinese law has not yet explicitly stipulated the application range of the statute of limitations, judges should be allowed to exercise judicial discretion on a case-by-case basis and exclude the patent ownership disputes from the provisions of Article 135 of the General Principles.

We hope that the future PRC Civil Law may provide more reasonable and detailed stipulations on this issue.