briefcases - madeleine heal - hong kong patent appeal 2015
TRANSCRIPT
Madeleine Heal
SNE Engineering Company Limited v HsinChong Construction Company Limited andChim Kee Machinery Company Limited
Madeleine Heal was instructed in a patent appeal in the Hong KongCourt of Appeal in July 2015. Acknowledged as Hong Kong’s patentcase of the year by Managing IP, it involved a patent disputebetween two construction companies working on the controversialHong Kong high-speed rail connection to mainland China.
The SNE Engineering CompanyLimited v Hsin Chong ConstructionCompany Limited and Chim Kee
Machinery Company Limited case clarifiedboth the Hong Kong law on sufficiency andthe law on Hong Kong short-term patents.
Background to registering patents inHong KongIt is possible to register two types of patentin Hong Kong: a standard patent and ashort term patent (STP). The latter is unuqueto Hong Kong.Section 129(1) of the Hong Kong PatentsOrdinance 1997 sets out rules to be appliedin determining the validity of STPs in courtproceedings. The questions that arose were: what is theburden on the patentee to prove primafacie the validity of a STP and who thereafterhas the burden to prove evidence to thecontrary?
Section 129(1)(b) requires the patentee toprovide evidence sufficient to establishprima facie the validity of the patent. SNE argued that It is not a high thresholdand is satisfied by (a) the patent being inforce (b) the patent on the face of it beingdrafted correctly (e.g. with claims) and (c)provision of a search report that complies
with s. 113(8) and Rule 72 of the Patents(General) Rules. Thereafter it is for the defendant(s) to plead(pursuant to O.103 r.21) and prove “byevidence to the contrary” any invalidatingprior art or other ground of invalidity. The trial judge found the patentee bore an“ultimate burden” of proving validity andthe Court of Appeal upheld that finding.SNE had submitted that, on a correctreading of S.129(1) there is no “ultimateburden” on the patentee. Once the patentee establishes prima faciethe validity of the patent, the defendantbears the burden of proving invalidity. The effect of finding the patentee bears an“ultimate burden” was to render s.129(1)(b)otiose. In searching for prior art, the searchexaminer is guided by the applicant’spatent’s Claims, but it is not his role to‘construe’ them. Only a court can determine the trueconstruction of a patent’s Claims after it hasbeen granted. Thereafter, at the request of the applicant,the patent is substantively examined. Thereis no duty of candour in UK, Chinese orEuropean patent law.
Steps in Hong KongThe search for prior art and the substantiveexamination of a Hong Kong applicationfor a standard patent is never conductedby a Hong Kong examiner. The Hong Kong standard patentapplication system provides only for
re-registration of patents grantedelsewhere e.g. in PRC or the UK.
Once an application for a Hong Kongstandard patent has been granted, theHong Kong Register of Patents is notedaccordingly.
SNE pointed out that neither the grant ofa standard patent under the PatentsOrdinance or its entry in the Hong KongRegister of Patents certifies a standardpatent’s validity; the successfulprosecution to registration of theunderlying UK or PRC patent and re-registration as a Hong Kong standardpatent merely earns the Hong Kongstandard patent a presumption of validity.
If upon bringing proceedings for theenforcement of a standard patent adefendant puts the validity of the patentin issue, it will be for the court todetermine its validity on a purposiveconstruction of its Claims and in light ofthe grounds of invalidity pleaded by thedefendant.
Section 129 only applies to proceedingsfor the enforcement of rights conferredunder the Ordinance in relation to an STP.For stand-alone applications to revoke anSTP under s.91, s.129 does not apply.
Further, if proceedings are brought forgroundless threats under s.89 (2) (b), theburden of proving the patent invalid is notthe patentee’s burden but the burden ofthe party seeking to restrain the threats.
The Ordinance does not impose ageneral obligation on short-termpatentees to prove their patents valid.
Once the patentee establishes primafacie the validity of the patent, thedefendant bears the burden ofproving invalidity.
Requirement for grant of a short-termpatentShort-term patents are provided for in thesame Ordinance as standard patents.Compliance with the formal requirements ofan application for a short-term patent in s. 113(1) (a) – (d) and Rule 72 will always result in thegrant of the application for a short-termpatent because a short-term patentapplication is subjected to a formalitiesexamination only – s. 117. One of the necessary formalities is provisionof a search report (s. 113(1) (d)) by aprescribed searching authority whichcomplies with s. 113(8). The search report is a safeguard thatprovides information on the prior art in theevent that validity is later put in issue beforethe court. The only difference between an applicationfor a standard patent and an STP applicationis that there is no substantive examination ofan STP application. The provision with a short-term patentapplication of a search report incidentallysatisfies two of the same three stepsundertaken in an application for a standardpatent. While the process of applying for andprosecuting to grant a short term patentapplication is undertaken entirely in HongKong and by Hong Kong examiners, againgrant of a short term patent is no guarantee ofits validity. As with a standard patent, only the court candetermine its validity after grant.
Burden of proof Subject to the short term patenteeovercoming a necessary preliminaryevidentiary hurdle, a defendant wishing todefend an allegation of infringement byputting the validity of the short term patent inissue must plead and prove invalidity as itwould in the case of a standard patent.The only difference is that the short-termpatentee must first establish the presumptionof validity, whereas the presumption is raisedautomatically in the case of a standard patent(and in an application for revocation of a shortterm patent by another party).S.129 (1) (a) provides that there is nopresumption of the validity of a short-termpatent in proceedings for the enforcement ofrights conferred by the Ordinance. S.129 (1)(b) read together with s. 80(1) (e)) requires a
short-term patentee to seek a declarationof validity and provide evidenceestablishing prima facie the validity of thepatent. Sub-sections 51(9) and (10) of theOrdinance read together provide that theRegister shall be prima facie evidence ofanything required to be registered and acertificate signed by the Registrar shall beprima facie evidence of the matters socertified. Entry of a STP on the Register is primafacie evidence that the STP application
complied with the s.113(1)(b)requirements for a description, claimsand (if included) drawings; and with thes.113(1)(d) requirement that a searchreport was obtained from a prescribedsearching authority. The certificate itself establishes primafacie the validity of the short-term patent.SNE argued that s. 129(1) (b) then shiftsthe burden to the defendant to plead andprove “evidence to the contrary” in itsParticulars of Objection (pursuant O.103r.21). The case proceeds thereafter in preciselythe same way as a standard patent actioni.e. the burden of proving invalidity (by“evidence to the contrary”) is thedefendant’s burden. If the defendantproves at trial “evidence to the contrary”as provided by s. 129(1)(b), the fact thatthe short term patent has been granted isof no account – s. 129(1)(a) i.e. thepresumption of validity is negated.The trial judge misinterpreted s.129 andimpermissibly reversed the burden ofproof to require the short-term patenteeto prove that the patent was notinvalid.
SNE submitted that his error coloured thelearned judge’s analysis of the case and allof his conclusions of law on validity. He did not require the Respondents todischarge their burden of proof i.e. therewas no “evidence to the contrary”. They had failed to plead any prior art asinvalidating the patent before trial. Their expert, who was required to giveevidence of the “state of the art”, did notrefer to any prior art as invalidating thepatent either. In para 203 of the judgment, the judgestated correctly the burden of proof ofvalidity of a standard patent. He said:
“It is trite law that it is for the party whochallenges the validity of a standard patentto bear the onus of proving invalidity.”The judge stated in para 204 of thejudgment that s.129(1) of the Ordinancereverses the usual burden of proof in thecase of proceedings seeking to enforce ashort term patent, requiring the short termpatentee to bear the “burden of provingthe validity (thereof)”. That statement overlooked the provision ins. 129(1) (b) for the patentee to establishthe validity of the patent by evidencesufficient to establish the presumption ofvalidity (i.e. “prima facie the validity”). Evidence sufficient to establish prima faciethe validity of the patent shall, in theabsence of evidence to the contrary besufficient proof of such validity.
The Ordinance does not impose ageneral obligation on short-termpatentees to prove their patents valid.
“It is trite law that it is for the party whochallenges the validity of a standardpatent to bear the onus of provinginvalidity.”
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The learned judge conflated his readinginto s. 129 (1)(b) of the words ‘prima facieevidence’ (words which are not there)with the subsection’s requirement thatthe patentee provide evidence sufficientto establish ‘prima facie the validity’ ofthe patent, as is apparent from the finalsentence of para 209 of the judgment:
“In my judgment, if the alleged infringerhas not put forward evidence to thecontrary, for example evidencechallenging the novelty of the patent,then the patent is prima facie valid.”
That sentence of the judgment would havebeen correct if it had omitted the words“prima facie”. If the defendant does not proveevidence to the contrary, the patent is valid.
ConclusionThe trial judge rejected that extreme position. He held that in order that a patentee mayknow the case he has to meet at trial onvalidity a defendant must be required toplead grounds of invalidity.The Court of Appeal made a distinctionbetween a legal and evidential burden of
proof of validity, finding that s.129(1)(a)imposed a legal burden and s. 129(1)(b)“dealing with the way in which that burdencan be discharged.” That is an unjustified and onerous burdenand fails to give fair protection to thepatentee. The effect of s. 129(1)(a) is only todispense with the presumption of validityin STP cases (a presumption which arisesautomatically in the case of standardpatents).
Madeleine’s practice covers all aspects of commercial and intellectual property lawincluding patents, trade marks, copyright, designs, passing off, media/entertainment, sport,privacy, broadcasting, confidential information, trade secrets, conflict of laws and reputationmanagement. She also handles commercial cases with cross border, technical andintellectual property elements and is instructed, often in urgent circumstances, to makeapplications for interim relief including injunctions.Madeleine appears regularly in the High Court, Court of Appeal, Commercial Court, PatentsCourt, Intellectual Property Enterprise Court, Administrative Court and UK IntellectualProperty Office predominantly in Intellectual Property and Commercial matters, but also inmatters relating to Media, Entertainment and Sport.Chambers & Partners and Legal 500 say:INTELLECTUAL PROPERTY
“As a result of her wealth of experience in this area, she has answers at her fingertips.” MEDIA AND ENTERTAINMENT
“She builds up an encyclopaedic knowledge of her cases and clients like her for her pragmaticapproach.”Legal 500 2015INTELLECTUAL PROPERTY
“She is clever, has a refreshingly different take on things and engages well with the client. Sheis knowledgeable and responsive.”Chambers UK Bar 2016