SEP from Qilu and the Fourth Ring Dispute

In 2015, Beijing Sihuan Pharmaceutical Co., Ltd. (hereinafter referred to as Sihuan Pharmaceutical) sued Qilu Pharmaceutical Co., Ltd. (hereinafter referred to as Qilu Pharmaceutical) for patent infringement in Inner Mongolia and Shandong respectively;

From the end of 2015 to 2016, Qilu Pharmaceutical filed a request for invalidation of several patents of Sihuan Pharmaceutical to the Patent Reexamination Board of the State Intellectual Property Office (hereinafter referred to as the Reexamination Board);

In January 2017, Qilu Pharmaceutical sued Sihuan Pharmaceutical to the Beijing Intellectual Property Court, claiming 4 million yuan on the grounds that Sihuan Pharmaceutical constituted monopoly and unfair competition. This case is also the first infringement case involving standard essential patents (SEP) in the pharmaceutical industry in China.

A "standard essential patent" (Standard-Essential Patents, or SEP) is a patent that is essential to the implementation of a standard. Before the patent is included in the standard, the patent license fee is restricted by competition, that is, if the license rate is too high, the licensee can develop alternative technologies or seek to obtain licenses for other alternative technologies; after the patent is included in the standard, because the production of products that meet the standard must implement the patented technology contained in the standard, the aforementioned restrictions due to competition disappear, and the patentee obtains huge market control accordingly, therefore, there are two problems:(1) patent hijacking, that is, the standard implementer has invested a lot of money for the design, production and sales of related products before the standard is formulated. After the standard is formulated, the patentee forces the standard implementer to pay high license fees due to the huge negotiation advantage and control power obtained by the irreplaceable essential patents of the standard;(2) patent license fees are superimposed, that is, when a standard is composed of multiple patents, when the patents that make up the standard belong to different rights holders, the implementation of the standard must be granted multiple times and the license fee must be paid multiple times, thus exacerbating the problems caused by patent hijacking. The combination of patent hijacking and patent licensing fees has led to a sharp increase in the cost of negotiating the necessary patent licensing of the standard, and the cost of implementing the standard has soared. Because the standard necessary patentee has great negotiation ability in licensing, most of this ability does not come from the value of its patented technology itself, but from the irrecoverable total investment paid by the participants in the whole industry in the early stage. Therefore, when the standard is formulated, if the patentee claims that its patent is essential to the application of the standard, the patent is the standard necessary patent and is subject to the restriction of FRAND licensing commitment.

The mainstream view in China once thought that the technical knowledge in mandatory standards is a kind of public resources. In 2005, my country's Standardization Management Committee publicly issued the "Regulations on National Standards Involving Patents (Interim)" (draft for comments) to uphold this understanding. Article 3 of the draft stipulates that "mandatory national standards should not contain patents, and recommended national standards do not object to the inclusion of patents in standards in principle", thus completely denying the inclusion of patented technology in national mandatory technical standards. For some reason, on January 1, 2014, when China's "Regulations on the Administration of National Standards Involving Patents (Interim)" was formally implemented, the provisions on compulsory technology patents became the following provisions:

Article 9 Where a national standard involves a patent in the process of formulation and revision, the National Professional Standardization Technical Committee or the centralized unit shall promptly require the patentee or patent applicant to make a patent implementation license statement. The declaration shall be made by the patentee or patent applicant in the following three items:

(I) the patentee or patent applicant agrees to license any organization or individual free of charge to implement its patent in the implementation of the national standard on a fair, reasonable and non-discriminatory basis;

(II) the patentee or the patent applicant agrees to license any organization or individual to implement its patent in the implementation of the national standard on a fair, reasonable and non-discriminatory basis;

(III) the patentee or the patent applicant does not agree to license the patent in the above two ways.

Article 10 In addition to mandatory national standards, if a patent implementation license declaration made by the patentee or patent applicant in accordance with the provisions of Article 9 (1) or (2) has not been obtained, the national standards shall not include provisions based on the patent.

Article 14 Mandatory national standards generally do not involve patents.

Article 15 Where it is really necessary for a mandatory national standard to involve a patent, and the patentee or patent applicant refuses to make the patent implementation license declaration specified in Item 1 or 2 of Article 9, the State Standardization Administration, the State Intellectual Property Office and relevant departments shall negotiate patent disposal measures with the patentee or patent applicant.

It can be seen that for the recommended national standard, the state clearly stipulates that the patentee must make a fair, reasonable and non-discriminatory licensing commitment to any implementer who is willing to implement the patent. However, for the mandatory national standard, there is an opening, that is, the patentee or the patent applicant refuses to make the patent implementation license statement stipulated in Item 1 or 2 of Article 9, the State Standardization Administration, the State Intellectual Property Office and relevant departments shall negotiate patent disposal measures with the patentee or patent applicant.

At present, the latest judgment of the Reexamination Board is to maintain the validity of the ZL 201110006357.7 patent of Sihuan Pharmaceutical, and the invention patents of ZL 200810093966.9 and ZL 200610103455.1 are all invalid.

According to the analysis of the appeal law, the trend of the case is obvious. First, Qilu Pharmaceutical can appeal to the higher court according to the above judgment. Second, Qilu Pharmaceutical can file a confirmation lawsuit, asking the court to confirm that Sihuan Pharmaceutical has the obligation to license the patent of Qilu Pharmaceutical on the principle of fairness, reasonableness and non-discrimination, the third is a more offensive way to sue Sihuan Pharmaceutical on the grounds of suspected monopoly and unfair competition. Its monopoly and unfair competition are reflected in the right holder of the necessary patent for the "cinepazide maleate" drug standard. Sihuan Pharmaceutical refused to negotiate patent licenses with Qilu Pharmaceutical on a fair, reasonable and non-discriminatory basis.

News source:http://www.360doc.com/content/17/0301/09/26437691_632880582.shtml

This news was re-edited and reorganized by the Huaxun team and added analytical comments.