Given the high cost of patent infringement litigation, in-house counsel are increasingly considering the relatively cheaper route of administrative enforcement. This article shows how administrative enforcement works and considers its advantages and disadvantages and, perhaps most importantly, the situations in which it should, and should not, be relied on.
How patent administrative enforcement works
1. Filing complaint
The patentee lodges a complaint with a local intellectual property administrative authority. The authority examines the case file, considering whether it has jurisdiction over the case, and whether the patentee has proved both its own right and the infringement, etc.
2. Accepting complaint
If the administrative authority decides to accept the case, it serves the complaint on the alleged infringer, assigns a panel to hear the case and schedules a hearing date.
Usually, there will be only one hearing and it will take no more than one day. During the hearing, the parties exchange evidence, compare the allegedly infringing technology with the subject matter of the patent and debate the facts and merits. Before, during or after the hearing, the authority will push for a quick settlement.
4. Issuing order
If, after a hearing on the merits, the administrative authority finds infringement, it issues an order requiring the infringer to stop infringing. If the order takes effect (i.e., neither party appeals) and the infringer fails to comply within the specified timeline, the patentee is entitled to request the local court to enforce the order.
Advantages of administrative enforcement
1. It is cheaper.
Typical patent infringement litigation will be much more expensive than administrative enforcement. The main reasons are: (i) administrative enforcement is used for simple cases; (ii) local intellectual property administration officials do not usually go into great detail or consider complicated issues when hearing cases; (iii) a large percentage of patent administrative cases are concluded with a mediation agreement, rather than a ruling, which means that full disclosure of the facts and/or thorough analysis of the merits is often not necessary.
2. It is quicker.
Most administrative cases take only two to six months. The caseload of most local intellectual property administrations is lighter than that of the courts; also the authorities are more energetic in pushing settlement.
3. It can be a useful means of collecting evidence.
The patent administrative authority in Guangdong province, for example, has the power to inspect the premises of the accused infringer, and seize infringing products, equipment and related books of account. This could be very helpful for patentees who are having difficulty proving the existence, or scale of infringement.
Disadvantages of administrative enforcement
1. Very strict requirements concerning jurisdiction
Legally, administrative authorities have jurisdiction in relation to both infringements that occur within their geographical area, and infringements that are committed by persons or entities domiciled within their area. In practice, however, they accept cases only where the infringer is domiciled within their area.
2. Burden of evidence collection is much the same as for litigation
Except in some areas, where local law empowers the authorities to inspect and seize, the burden on patentees to collect evidence is almost as heavy in administrative enforcement as it is in litigation. Patentees are required to fulfill all the formality requirements, prove the status of the infringed rights, and have the evidence of infringement notarized.
3. No damages will be awarded
If patentees want to claim damages, or seek to recover legal expenses, they should not choose the administrative route. Even though there is a possibility of recovering some money via the mediation process presided over by administrative authorities, the amount is usually very low and probably insufficient to cover costs.
4. Lower level of professionalism and experience of administrative officials
This means that the administrative process is not suitable for complicated cases. If a case involves complex legal issues or technical problems, it is probably beyond the capacity of the officials of administrative authorities: the patentee can hardly expect a reliable decision.
5. More uncertainty with the process
The administrative procedure is not as mature and developed as judicial procedure. There are many areas of uncertainty, such as the legal effect of a mediation agreement following mediation presided over by the authority. This is not clear. There is a risk that such agreements will not be able to be enforced.
6. Less certain result
The decision of an administrative authority is subject to judicial review. If the accused infringer refuses to accept the administrative decision, he is entitled to appeal to the court. In this case, the administrative procedure will have been an extra expense for the patentee.
When administrative enforcement should be relied on
Given the many disadvantages of administrative enforcement, it should be relied on only in certain cases. When restricted to those cases, however, it can be a valuable weapon in an overall patent enforcement strategy.
Administrative action is recommended in the following circumstances.
1. The patentee has no interest in obtaining damages. The only objective is to stop the infringement and get a quick decision.
2. The subject technology and the issues involved are simple and straightforward. If complicated cases are filed with administrative authorities, there are three possible outcomes: the authority will (i) delay the process; (ii) push for settlement; or (iii) figure out some way of simplifying the issues e.g. by engaging some verification agent to do the infringement analysis and then simply adopting the agent’s opinions. None of these outcomes will benefit the patentee.
3. The subject patent has already been tested, i.e. its validity and enforceability has been confirmed in other cases. This would give the administrative authority much more confidence in enforcing the patent rights.
4. The accused infringer is not very aggressive or the infringing product is not important for the infringer. There is a higher possibility in these cases that a quick and easy solution will be able to be achieved. In recent years, administrative authorities have been very concerned that they may be sued by either party. Where there is a major conflict between the parties, the authority may consider the risk of being sued is higher and, as a result, be hesitant to issue a decision. Where the infringer is unlikely to fight, however, administrative action is likely to achieve the desired result quickly and inexpensively.
5. The accused infringer is located in a province where raid action against patent infringement is possible; for example, in Guangdong Province, raid action alone often has a deterrent effect on infringers and helps patentees collect valuable evidence.
In conclusion, administrative enforcement does have certain advantages, such as obtaining quick, low cost, results. It is, however, appropriate only for certain cases. Patentees should examine carefully the circumstances of each case and take care to choose the right route for enforcement.