Chinese company turned the tables on a Japanese company regarding a patent invalidation case

The three-year patent dispute between Shandong Fuhang New Energy Environmental Co., Ltd (hereinafter referred to as “Fuhang Company”). and Central Japan Ecotec Co., Ltd. (hereinafter referred to as “Ecotec Company”) has come to an end. The National Intellectual Property Office announced that all claims of Ecotec Company for infringement of invention patent rights are invalid.

It is said that the process of Fuhang Company's victory was relatively tortuous. Dalian Intermediate People's Court determined that the infringement was established in the first instance judgment and ordered Fuhang Company to stop the infringement and compensate for the losses. Later, Fuhang company filed an invalidation request to the National Intellectual Property Office to invalidate the patent of Ecotec Company, and the invalidation request failed for the first time. It was not until Fuhang Company brought this case to the Intellectual Property Court of the Supreme People's Court for the trail of second instance, it finally achieved a winning result.

"The victory of this case has won the initiative for the company in terms of intellectual property rights." Xu Xinming, the chief lawyer of China Intellectual Property Lawyers and the researcher of the Intellectual Property Research Center of China University of Political Science and Law said to the journalist that the victory was extremely difficult during the "China Trade News" interview.

Missing the Best Time

First invalidation failed

Ecotec Company owns an invention patent named as "Organic Waste Fermentation Treatment Device" (hereinafter referred to as “Disputed Patent”). The application date of the Disputed Patent is September 25, 2009, and the authorization announcement date is August 28, 2013. Fuhang Company's business mainly focuses on the development and manufacture of new energy sludge treatment equipment, intelligent high-temperature aerobic fermentation equipment and other products. It has more than 100 patents. It is a national high-tech enterprise and its technology is at the leading domestic level.

On March 21, 2018, Ecotec Company sued Fuhang Company to Dalian Intermediate People’s Court on the ground that the intelligent high-temperature fermentation equipment produced and sold by Shandong Fuhang Company infringed its patent rights and requested Fuhang Company to stop the infringement and compensate for losses. Intelligent high-temperature fermentation equipment (hereinafter referred to as the “Disputed Product”)is an important product produced by Fuhang Company and occupies big market share. Once the Disputed Product is found to infringe the patent rights of Ecotec Company by the court, heavy economic losses will be caused to Fuhang Company and the market of the Disputed Product will be badly affected. Moreover, other related companies in mainland China market will also be sued for infringement.
In the month when Ecotec Company sued Fuhang Company, Fuhang Company received a notice of responding of the suit, but it has not made any actions for a long time. It was not until six months later, two days before the court hearing, that Fuhang Company found Xu Xinming's team hurriedly, hoping Xu Xinming's team to help it to represent the case, participate in the court trial of the case, and file an invalidation request to National Intellectual Property Office for the Disputed Patent.

"After studying the case, we found that the alleged infringing product produced by Fuhang Company has fallen into the scope of protection of the patent involved, and infringement is almost inevitable. So we decided to represent Fuhang Company to invalidate the patent involved. " Xu Xinming said.

The court trial was about to start and the time was tight. In order to obtain the invalidation decision of the Disputed Patent before the first instance judgment, Xu Xinming immediately initiated the prior art search of the Disputed Patent and filed an invalidation request to the National Intellectual Property Office within a relatively short period of time.

The Disputed Patent has 10 claims in total. The purpose of the invention is to provide a simple structure to avoid cost increase, and to reliably and efficiently ferment and dry organic waste.

"After a preliminary search of the prior art and an analysis of the Disputed Patent, we found that compared with the prior art, the main difference between the Disputed Patent and the prior art is that the distance between adjacent vents gradually gets narrow from the base end to the front end of the mixing blade.” Xu Xinming said, although the above-mentioned distinguishing characteristics could almost be regarded as common knowledge, still it was not easy to prove it. Until the one-month period for supplementary evidence expires, the above-mentioned distinguishing technical characteristics was still not found and the contrastive document of enlightenment of the corresponding technologies was also not provided.

Later on, the National Intellectual Property Office made an invalidation decision and maintained the validity of the Disputed Patent.

Break technical limitations

Turn the tables

Soon after the failure of the first invalidation, Dalian Intermediate People's Court ruled that Fuhang Company's production and sales of Disputed Product constituted infringement. Fuhang Company subsequently appealed to the Intellectual Property Court of the Supreme People's Court to earn time to file a second invalidation request against the Disputed Patent.

Xu Xinming insisted that, the function of the design that from the base end to the front end of the mixing blade, the interval between adjacent vent holes gradually becomes narrow is to achieve uniform ventilation. This distinguishing feature works independently, and its structural settings, functional effects and other technical means do not have synergistic effect. So Xu Xinming required his team to break through the limitations of the applied technology field and expand the scope of existing technology to search around the technical problems actually solved by patents. Following this line of thinking, after unremitting efforts, Xu Xinming's finally found patent documents that disclose relevant technical enlightenment.

On August 31, 2020, Fuhang Company filed the second invalidation request for the Disputed Patent. On December 29, 2020, National Intellectual Property Office held an oral hearing. Fuhang Company and Xu Xinming's team participated in the hearing. On January 14, 2021, the National Intellectual Property Office made an examination decision on the request for invalidation, declaring all the patent rights involved in the case to be invalid.

At this time, the second-instance trial of the case has ended, and the Intellectual Property Court of the Supreme People's Court was about to pronounce a verdict. The invalidation decision pulled the plug. Ecotec Company would have to withdraw the infringement lawsuit against Fuhang Company. Otherwise, The Intellectual Property Tribunal of the Supreme People's Court would rule to dismiss the prosecution.

" Ecotec Company still has the opportunity to file an administrative lawsuit with the Beijing Intellectual Property Court for invalidation decisions. However, considering the reasons for the invalidation request and the cited prior art evidence, the possibility of reversal through litigation is very slim. This invalidation not only enables Fuhang Company to continue to produce and sell related products, but also clear obstacles for the development of the entire industry." Xu Xinming said.

“A considerable number of foreign companies often conduct patent layout before launching products to the domestic market. These patents held by foreign entities may not necessarily be high-quality patents, but they do form a patent trap which makes domestic companies difficult to develop the market. If you are careless, you will fall into a passive situation." Xu Xinming said, “Once a patent holder from foreign countries initiates an infringement lawsuit based on such patent, the domestic defendant company must muster the courage and confidence to start the invalidation procedure attacking the patent in the first place.  We need to learn a lesson from this case, which is to always take precautions in order to remain invincible in the fierce market competition.