Probing into Legal Effect of Patent Right in Suspension   Meng Rei   On 2 April 2005, when the 53rd Nationwide Pharmaceutics Fair (NPF) opened, the WRM Corporation filed a request with the Xiameng Intellectual Property Administration to seal on the site of the NPF exhibition hall the antibiotic of Baiding (its generic name is Piperacillin Sodium and Sulbactam Sodium for Injection) made by the Shandong Ruiyang Pharmaceutics Co., Ltd. and marketed by the Guangzhou Baiyunshan Science and Technology Co., Ltd. on the ground of infringement of its patent right for a pharmaceutical product.1 However, it is thought provoking that the WRM's claimed patent right is suspended due to dispute over the ownership of the right in it. Under the Guidelines for Examination, after a patent right is suspended, all proceedings, including the invalidation proceeding, are suspended. But no provision has been set forth in the current law and regulations on exercise of suspended patent right. This writer is going to present his views on the issue.   Impact of Patent Right Suspension on the Patent Right Per se   The patent right, relating to the Piperacillin Sodium and Sulbactam Sodium for Injection, is an invention patent of the patentee Guangzhou WRM Corporation (with the patent numbered. ZL97108942.6). The patent has only one claim: a Anti β-lactamase antibiotics complex，characterised in that it comprises Sulbactam and Piperacillin or Cefotaxime，with the Sulbactam and Piperacillin or Cefotaxime are mixed at the proportion of 0.5-2：0.5-2 to make the composite preparation. Without a dependent claim, any further amendment of the patent is out of the question. That is, once another person finds any evidence of disclosure of the said composite substance before the date of filing, the patent would definitely be invalidated.   On 19 June 2003, the Shenyang Huatai Pharmaceutics Research Co., Ltd. (Shenyang Huatai for short) filed a request with the Patent Reexamination Board (PRB) of the State Intellectual Property Office for invalidation of the patent and presented evidence to show that the said composite substance had been disclosed in publications respectively in the German Pharmaceutics Study (德国药物研究) in 1990 and the Journal of International Antibiotics (国际抗生素杂志) in 1996.   After the invalidation request was accepted, the Xiangbei WRM Corporation (a subcompany of the Guangzhou WRM Corporation) requested the PRB to suspend the invalidation proceedings on the ground of dispute between the Guangzhou WRM Corporation and the Xiangbei WRM Corporation over the ownership of the involved patent right. The PRB approved the suspension request, and the suspension would be effective until 31 August 2004. For that matter, the initiated invalidation request procedure was suspended. On 13 August 2004, the Guangzhou WRM Corporation requested an extension of the suspension on the same ground to keep the suspension of the patent under.   Then what is suspension of the patent right all about? And what effect does it have on the patent right per se? Under Rules 86-7 of the Implementing Regulations of the Patent Law, the said suspension of the patent right means that when a local intellectual property administration (or relevant competent department) or the people's court accepts a dispute over the ownership of a patent application right or a patent right, or the court decides to take preservative measure regarding a patent right,2 the Patent Office may suspend the relevant proceedings at the request of an interested party to the ownership dispute or of the court. Accordingly, in essence, a patent right is suspended because its ownership is likely to be changed. It is a system established for temporarily "freezing" a patent right to protect the interests of the authentic rightholder. Under the Guidelines for Examination, 3 the patent right suspension has broad effect, and the scope thereof refers to the following: (1) Suspension of the procedures for withdrawing an application for patent, abandoning of patent right, assignment of right, or changing of the name or title of the applicant or patentee which are directly related to the loss or transfer of right; (2) Suspension of making notification or decision which directly relates to the enforcement of the decision concerning the handling of patent dispute or the judgment or ruling, such as application deemed to have been withdrawn, termination of patent right, grant of patent right, or patent right deemed to have been abandoned; (3) Suspension of the procedures for the grant of patent right, issuance of patent certificate and announcement of the grant of the patent right; and (4) Suspension of all of the procedures of examination, reexamination or examination of request for invalidation.   As the above provision shows, the suspension due to dispute over patent right ownership is directed to the proceedings the Patent Office or the PRB is dealing with or is going to deal with. In the present case, what has been suspended is the invalidation proceedings instituted by the Shenyang Huatai. However, whether the suspension of the patent right is also related to the exercise of the patent right or relevant to a patent right infringement procedure is not expressly provided for in the current law and regulations. The series of issues brought about by the absence of express provisions along the line are to be probed into in this article.     When the patent right was suspended, the WRM was still active in exercising the patent right. It published its Lawyer's Statement in the profession media, sent lawyer's letter to the alleged infringing enterprise, requesting it to cease the relevant activity, and expressly stated: "if they make the products, we'll bring an action in the court, and seal their factory".4 In particular, there occurred the sealing of the pharmaceutics at the NPF as mentioned at the beginning of this article, which shows that the WRM's Lawyer's Statement is by no means just bluffing. Then, can a suspected patent right be exercised without restriction?   The most essential way for a patentee to exercise his/its patent right is to prohibit others' from exploiting his/its patent, that is, exercising the exclusive or prohibitive right. Article 11 of the Patent Law provides: "no entity or individual may, without the authorisation of the patentee, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, and use, offer to sell, sell or import the product directly obtained by the patented process, for production or business purposes". According to Article 57 of the Patent Law, if another person violates the above provision to exploit a patent without the authorisation of the patentee, he/it is deemed to have infringed the patent right of the patentee. The patentee or any interested party may institute legal proceedings in the people's court, or request the administrative authority for patent affairs to handle the matter. These law provisions show that the patent right is a jus in re, with its characteristics similar to those of the real right. After a patent right is granted, anyone is obliged not to infringe it. Therefore, in general, suspension of the patent right has no direct effect on the scope of the prohibitive right in the patent. When a patent right is suspended, the public in general is still obliged not to infringe the patent right. Once a patent infringement arises, however, the obligation of infringement arises between the infringer and the infringee. According to the obligation-right relativity doctrine, the obligee should be first determined. And, the reason for suspension of the patent right is exactly what is at issue in the dispute between the rightholders. Undoubtedly, suspension of the patent right is inevitable to have fundamental impact on the exercise of the patent right.   The legal effect of patent right suspension is defined only in the Guidelines for Examination. Since the Guidelines for Examination set forth requirements of the nature associated with the operational rules governing the patent examination, they can only suspend the proceedings within the competence of the patent administrative department and relating to patent examination. The current laws and regulations have not set forth express provisions on whether the effect of suspension can be extended to patent infringement lawsuit. It is exactly for this reason that the Xiameng Intellectual Property Administration sealed the products on the site of the NPF on the very day on which the NPF opened. But this writer believes that the legal effect of the patent right suspension should be extended to the exercise of the patent right, that is, during the suspension' whether the patent infringement lawsuit being instituted in the court or request made for handling, by the administrative authority, of an patent infringement, the patentee has no right to exercise the suspended patent right for the following reasons:   First, extending the suspension effect to the exercise of the patent right helps maintain the balance of the interests of the patentee concerned and the public at large, and tolerance toward a patentee's exercising a suspended right is not procedurally due.   The aim of the Chinese patent law is to encourage invention-creations, promote popularisation of science and technology, and protect the public's fair use of technologies.   The invalidation proceedings have been established within the patent system exactly out of the consideration to balance the patentees' interests and the public interests, and to prevent infringement of the public interests by exercise of the patent right that is unduly granted. However, during the suspension of a patent right, since the hearing of invalidation request is suspended under the law, and an invalidation request filed during the suspension cannot be dealt with for the time being. In this situation, if the patentee is still in a position to accuse another person under no restrictions, and the accused has no lawful means to fight back, this is inevitable to cause serious procedural injustice.   A principle the patent laws of the most countries follow is the consistence of the patent examination and patent protection, i.e. both in substantive examination and procedure aspects, the same principles and standards should be applied. Therefore, the principle applicable in the stage of examination should also be applicable to that of the patent protection.   If the effect of suspension is not extended to the patent protection, the patentee concerned may still bring an infringement action when he/it clearly knows that his/its right is being in question; the patentee can cause an invalidation procedure to be suspended by creating ownership dispute when the defendant files a request for invalidation. As a result, the defendant is unable to question the patent in the lawsuit, and for this reason, he/it is deprived of the right to receive relief, causing inequality in the civil procedural right between the plaintiff and defendant, and violating the doctrine of equality between interested parties. This procedural arrangement would make it easy for patentees to abuse their patent rights. Accordingly, the obvious conclusion to be drawn is that the scope of legal effect of the patent right suspension will certainly be extended to the patent infringement procedure.   Second, it is impossible to determine relevant infringement of a suspended patent right.   One of the pre-conditions for a patentee to exercise the prohibitive right is "absence of authorisation from the patentee". Only an act to exploit a patent without the patentee's authorisation is possibly to be determined as an act of infringement.   However, if decision is made and penalty imposed in respect of patent right suspension as caused by dispute over its ownership only out of the consideration of the patentee's authorisation, it is likely to prejudice the interests of the true rightholders, and, as well deprive the alleged infringer of his/its right to request patent license from the true rightholder.   Therefore, before an ownership dispute is resolved, who is the patentee is yet to be decided, let alone whether to get the authorisation; hence, it is impossible to decide on the infringement. In the judicial practice, the court or an administrative authority, running into patent infringement lawsuit or a case of administrative investigation and handling, should suspend its hearing or administrative investigation and handling according to the relevant law provisions when it learns that the patent right on which the lawsuit is based has been suspended due to ownership dispute, and resolve the case after the an ownership dispute is resolved5.   Solution   Extending the effect of patent right suspension to all patent examination and enforcement proceedings, including all the Patent Office and PRB proceedings and all patent lawsuit should be an ideal solution to the question. By way of amending the Patent Law and its Implementing Regulations, the express provisions may be formulated on the scope of application of the suspension procedure. In the absence of express law provisions today in this regard, this writer makes suggests as to the following:   1. Using the patent register to limit patentees, litigation right   The pre-condition for bringing an patent infringement action is that the litigant must furnish proof of right to show that he/it is the patentee or an interested party. However, the current practice of using the patent certificate as the proof of the patent right is not suitable because the patent certificate only shows the legal state of the patent right at the time of grant, but cannot prove whether the plaintiff is still the owner of the patent right at issue, or whether any defects exist with the patent right at issue. According to the Patent Law, the patent register records the current legal status of the patent application or the patent right, and is the basis of the right proof. When a plaintiff is going to sue someone on the ground of patent infringement, he/it should apply to the SIPO for consultation with the patent register. If the patent register shows that the patent right is suspended, the court should refuse to accept the case according to the provision of Article 108 of the Civil Procedure Law on the ground that the plaintiff cannot prove the infringement of his/its right.   The patent register is also an effective weapon for a defendant to protect his/its own rights and interests. If a plaintiff sues someone for patent infringement, the patent right is not suspended, and it is after the court puts the case on file for trial, then, the defendant may present the court the register of the patent, and apply to the court for suspending the trial.   It is specially worth reminding that regarding evidence a plaintiff should submit to prove the authenticity and validity of his/its right when he/it brings an patent infringement lawsuit, the Chinese laws do not expressly provide that the patent register be used as the proof to show the existence of the right concerned. It is customary in the judicial practice to use the patent certificate or proof of patent annuity payment as the evidence to show the existence of the right. For this writer, this practice results from the effect of the Supreme Peoples Court's relevant judicial interpretations. Article 4 of the Several Provisions of the Supreme People's Court for the Application of Law to Ceasing Infringement of Patent Right before Instituting Legal Proceedings expressly provides that the documents the patentee should submit to prove the authenticity and validity of his/it patent right include the patent certificate and proof of patent annuity payment. If the patentee has submitted the patent certificate and proof of patent annuity payment, or the proof of payment of the patent annuity of the year in which the lawsuit is instituted, the plaintiff is determined to be qualified to sue. This practice has become the conventional thought, and has caused such strange cases to happen in which the plaintiff is not entitled to sue, but wins in the patent infringement lawsuit,6 which shows the absence of universal realisation and application of the important function of the patent register to prove the validity of the patent right.   2. The patent right suspension effect should be extended to the counting of the prescription for instituting legal proceedings   Article 62 of the Patent Law provides that prescription for instituting legal proceedings concerning the infringement of patent right is two years counted from the date on which the patentee or any interested party obtains or should have obtained knowledge of the infringing act. If it is specified that the effect of patent right suspension is extended to patent infringement dispute, the issue would surely be involves of counting of prescription for instituting legal proceedings. An alleged patent right infringer is not accused for the time being because exercise of the patent right is restricted during the suspension of the patent right. However, this does not mean that the patent right can be infringed at will. Once the ownership dispute is resolved, no matter who wins the case, the suspended patent right will be brought back to its normal state. The patentee may also bring action against the act of infringement committed during the suspension. This shows that during the suspension of a patent right, the counting of patent right should also be suspended, otherwise, it is unfair to the rightholder. But it should be noted that suspension of the prescription for instituting legal proceedings should not be construed as discontinuity of the prescription for instituting legal proceedings. Before the patent right is suspended, the time when the rightholder and interested part knows or should have known about the infringement of his/its right should be counted as the time of the prescription for instituting legal proceedings.   3. The Supreme People's Court makes provisions on the patent right suspension effect in the form of judicial interpretation or ad-hoc judicial replies   Extension of the patent right suspension effect to all patent examination proceedings and judicial procedure is significant to stop patentees from abuse of their right to sue. In the absence of express law provisions in this regard, however, this writer suggests that the Supreme People's Court make provisions on the patent right suspension effect in the form of judicial interpretation or ad-hoc judicial replies for the time being: explicating that (1) the patent register is to be used as part of the necessary evidence to prove a plaintiff's entitlement to sue; (2) the defendant of patent infringement lawsuit may request suspension of the suit on the basis of the fact that the involved patent right is now in ownership dispute, and the court should suspend the hearing at the request; and (3) the patent infringement lawsuit be transferred to the court dealing with the patent right ownership dispute, to make sure that the two cases of ownership dispute and patent right infringement are handled by the same court. For this practice is conducive to the judicial uniformity in trial of patent-related cases.   The author: Patent Attorney and Attorney-at-law of the Beijing Lumeng Intellectual Property Agency Co., Ltd.   1 The patent infringement dispute between the WRM Corporation and Guangzhou Baiyunshan Science and Technology Co., Ltd. has been reported by the media. See the Article, Discovering Fight for Pharmaceutical Patent in the Non-Patent Infringement Lawsuit carried in the Information Time News (信息时报), on 29 June 2005; and the article "Biotectic Patents; Several Infringers' Products Sealed carried on the website, www.pharmtec.org on 17 May 2005.   2 The ownership dispute and judicial preservation are both likely to cause suspension of the patent right. This article only deals with suspension caused by the former.   3 See Section 7-7.5, Chapter Seven of Part V of the Guidelines for Examination.   4 It is stated in the First Financial Times (第一财经时报) on 26 June 2005 that "the WRM's patent is invalid, and 11 pharmaceutical manufactures sue against the infringement accusation".   5 The effect of suspension should also be extended to "cases in which non-infringement is determined". To this writer's knowledge, the Guangzhou and Jinan Intermediate People's Courts have accepted two cases to determine non-infringement of the WRM's invention patent ZL 97108942.6. However, since it is not clear who is holder of the suspended patent right, the courts cannot determine who the defendant is. Therefore, this writer believes that the courts may not accept the cases under Article 108 of the Civil Procedure Law, or accept the case and suspend their trial until the ownership dispute is resolved.   6 In February 2003, in the case in which the Haohaizi Group sues the Zhongshan Baobaohao Daily Goods Co., Ltd. for infringement of utility model patent 97243172.1. Although the patent register shows that the patentee is not the Haohaizi Group, nor has it become the licensee of the patent, nor did it provide the patent register at the time to bring the action, the two-instance courts decided on the infringement by the Zhongshan Baobaohao Daily Goods Co., Ltd.