Prior user rights defence: Burden of proof for ‘original scope’

In accordance with article 69(2) of the Patent Law and article 15 of the Interpretation on Several Issues of the Application of Laws in the Trial of Patent Infringement Cases published by the Supreme People’s Court (SPC), continuing manufacturing and use within the “original scope” is one of the elements of a prior user rights defence. Original scope means the manufacturing scale that is achieved prior to the patent application date, and the existing manufacturing scale that could be achieved using existing production equipment or based on existing production preparation, namely the “quantitative criteria”. Quantitative criteria are established to limit the patent exploitation by the prior user in terms of quantity.

“The party who makes allegations shall bear the burden of proof” is the basic principle of evidence for tort cases. In patent infringement cases, evidence is generally provided by the plaintiff, namely the patentee, to prove the patent infringement by the defendant. If the defendant asserts a prior user rights defence, the defendant should bear the burden of proof for relevant elements of the defence. In juridical practice, different handling of the allocation of the burden of proof to prove the original scope will directly affect whether the prior user rights defence is admissible or not.

Method 1: Evidence is provided first by the defendant to prove the original scope, and then by the plaintiff to prove that the activities of the defendant are outside the original scope. Under this method, the plaintiff bears the burden of proof to prove that the production is outside the original scope, and if the plaintiff is able to prove that the patent exploitation by the defendant is outside the original scope, such patent exploitation constitutes an infringement. Such method of allocation of the burden of proof is a relatively mainstream handling method in current juridical practice.

In a retrial case for Tan Qiren v Hangzhou Aupu Electrical Appliances, a dispute over patent infringement, the SPC was of the opinion that the defendant, Aupu, had provided considerable evidence to prove the original scope in the relevant case. On the contrary, since all evidence provided by Tan Qiren failed to prove that Aupu produced and sold remote control bathroom masters outside the original scope, the allegations of Tan Qiren that Aupu infringed its patent rights by producing and selling the remote control bathroom master outside the original scope was not admissible.

In the ZIKO v Changzhou Yonghe Fine Chemistry invention patent infringement case, based on the account books provided by Yonghe and its records of sale of products involved, which was conducted before 2005, the court held that the initial production capacity of Yonghe for the product involved was 20 tons per year, and there was no evidence that Yonghe produced the products outside the original scope, and thus the prior user rights defence asserted by Yonghe was admissible.

Method 2: The defendant proves that its relevant activities have not been conducted outside the original scope. Under this method, the defendant is required to prove that its relevant activities have not been conducted outside the original scope. Compared with Method 1, this method of allocation of the burden of proof makes greater demands on the defendant.

In the retrial case for Shandong Changlin Agricultural Equipment v Shandong Bailong Machinery, a dispute over utility model patent infringement, after retrial the SPC was of the opinion that the relevant evidence submitted by the defendant, Bailong, could prove that it had started mass production of allegedly infringing products before the application date, but there was no evidence to prove the scale of production of the allegedly infringing products that was achieved prior to the application date, nor prove that the allegedly infringing products continued to be manufactured or sold only within the above-mentioned scale of production after the application date, and thus the prior user rights defence asserted by Bailong was inadmissible.

In the Shanghai Gujian Lock v Shanghai Modeluke Lockset Factory case, a dispute over utility model patent infringement, the court of second instance held that there was no evidence in the case to prove the production scale of the defendant, Modeluke Lockset Factory, which was achieved prior to the application date of the patent involved in the case, and its current production scale. Therefore, the prior user rights defence asserted by the defendant was inadmissible.

Method 3: The defendant is not required to separately provide evidence to prove the original scope. After ascertaining that other elements of prior user rights defence are admissible, the court will not further conduct a special review of the original scope, and will directly rule that the prior user rights defence is admissible, and thus the defendant is not required to provide evidence to prove the original scope, or the original scope is not a required element of prior user rights defence. Such method obviously reduces the defendant’s burden of proof, compared with other methods of allocation of the burden of proof.

In the above-mentioned Gujian Lock case, the court of first instance ruled that the evidence provided by the defendant was sufficient to prove that it had produced and sold the locks for vehicles prior to the patent application date, so it had the right to continue to manufacture the locks for vehicles within the original scope. Therefore, the court of first instance dismissed the plaintiff’s allegations of infringement.

Different handling by courts of the allocation of the burden of proof to prove the original scope will affect whether the prior user rights defence is admissible or not. Based on the three methods, the current trend at trial is that the defendant who asserts a prior user rights defence should bear the burden of proof to prove the original scope; but courts have different understandings as to which parties shall bear the burden of proof to prove that an activity is conducted outside the original scope. In practice, as there is a preponderance of evidence that favours the defendant in terms of provision of production and manufacturing information, it is generally difficult for the plaintiff to challenge the original scope that is proved by the defendant.

Lian Chenghe and Wang Yaxi are partners at Yuanhe Partners

58F, Fortune Financial Center (FFC)

5 Dongsanhuan Zhonglu, Chaoyang District

Beijing 100020, China

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lianchenghe@yuanhepartners.com

wangyaxi@yuanhepartners.com