On 21 December 2023, with the publishment of four newly promulgated patent regulations/rules including Implementation Regulation for the Patent Law of the People’s Republic of China (“PRC Patent Implementation Regulation”) on the website of China’s Intellectual Property Administration (“CNIPA”), the application system of the principle of good faith under China’s patent law was initially completed.
According to Article 20 of PRC Patent Law, both the application for a patent and the exercise of patent rights must abide by the principle of good faith, and the exercise of patent rights must not harm the interests of the public or others, nor eliminate or restrict competition. This method of directly introducing the principle of good faith into patent law is similar to that in Germany. Section 124 of the German Patent Act stipulates a duty of truthfulness, which is, in proceedings before the German Patent and Trademark Office, the Federal Patent Court and the Federal Court, both parties shall make comprehensive and truthful statements about the facts and circumstances. However, the method is different to that of the United States, which is an inequitable conduct doctrine based on a duty of disclosure, candor, and goods following section 2001, chapter 2000 in the Manual of Patent Examining Procedure issued by the United States Patent and Trademark Office (“USPTO”) in February 2023. The inequitable conduct doctrine gradually formed through judicial precedents in the United States is the legal basis for U.S. courts to rule that patents are unenforceable. A violation of the duty of candor and good faith by making untrue statements of important facts or failing to disclose important information to deceive or mislead the USPTO constitutes inequitable conduct (See Molins PLC v. Textron, Inc., 48 F. 3d 1172, 1178 (Fed. Cor. 1995).
Regarding when the principle of good faith applies, Germany stipulates that the duty of truthfulness is based on the requirements of the patent office examiner or judge to fully and truly describe the prior art known to them. According to China’s newly promulgated patent regulation/rules, starting from 20 January 2024, CNIPA shall examine whether a patent application violates Article 11 of PRC Patent Implementation Regulation in the proceedings of preliminary examination and substantive examination; and an invalidation action against a patent right, including the patent rights granted before the amendment of the PRC Patent Law, can be taken under the ground of violation of the Article 11. For patent rights that violate the principle of good faith, CNIPA may directly invoke the Article 11 to reject or invalidate the patent right ex officio. Following the 37 Code of Federal Regulations 1.56, anyone associated with a patent application and prosecution shall have a duty to disclose information material to patentability. In contrast, Article 11 of the PRC Implementation Regulation stipulates one of the obligations to abide by the principle of good faith is to file a patent application based on real invention and creation activities, and without fraud. Furthermore, China listed the following eight situations that violate this obligation, most of which are deceptive:1. The contents of the inventions and creations in multiple patent applications are the same or are formed by a simple combination of the features and elements of different inventions and creations.2. The proposed patent application fabricates, forges or alters the content, experimental data or technical effects of the invention, or plagiarizes, simply replaces or cobbles together existing technology or existing designs.3. The content of the invention and creation in a proposed patent application is mainly generated randomly using computer technology.4. The inventions and creations of a proposed patent application are inconsistent with technical improvement or design common sense, or have deteriorated, piled up, or unnecessarily narrowed the scope of protection.5. The applicant has submitted multiple patent applications without actual R&D activities and cannot provide a reasonable explanation.6. Filing multiple patent applications that are substantially related to specific entities, individuals or addresses maliciously in a scattered manner, successively or in different places.7. Transferring or assigning patent application rights for improper purposes, or falsely changing the inventor or designer.8. Other abnormal patent application behaviors that violate the principle of good faith and disrupt the normal order of patent work.
Regarding the consequences of violating the principle of good faith, in its judgment, Zierfalten BGH [1965] GRUR 231, the German Federal Supreme Court stated that the determining factor of patentability is whether the patent meets all the requirements stipulated in the law, excluding the subjective state of mind of the patentee. This means that a breach of the duty of truthfulness in Germany does not necessarily lead to patent invalidity. In the United States, the patent rights obtained through inequitable conduct should be invalid (see GS Cleantech Corporation v. Adkins Energy LLC). Meanwhile, the accused infringer in a patent infringement lawsuit can use inequitable conduct as a defense. If the court finds that the inequitable conduct is established, not only the patent involved in the case will not be enforceable, but other related patents not involved in the case may also be determined to be unenforceable (see Lummus Indus, Inc v. D.M.& E. Corp., 862 F.2d 267, 274 (Fed. Cir. 1988)). According to the current patent regulation/rules of China, Article 11 of the PRC Implementation Regulation can be cited in patent invalidation proceedings. Still, it cannot be used as a defense for the defendant in patent infringement litigation.
Finally, China set a duty of not providing false materials, or concealing facts to the patentee during the implementation period of open license and provides administrative liability for violations of Article 11 of the PRC Implementation Regulation with a warning and/or a fine of up to RMB 100,000.
In conclusion, by drawing on the practical experience of other countries, including the United States and Germany, China applies the principle of good faith to regulate abnormal patent applications with malicious intention and malicious exercise of patent rights in the proceedings of patent examination and invalidation. However, a defendant in a patent infringement lawsuit cannot raise a defense based on a breach of the principle of good faith.