——(2020) Supreme People’s Court Final Civil Judgment No.831

The “for the purpose of production and operation” mentioned in Article 11, term 1 of the Patent Law cannot be simply equated to engaging in profit-making activities, nor can it be determined only by the institutional nature of the patent subject, but should focus on the patent implementation and comprehensively consider factors like that whether it is market activity and whether it affects the market interests of the patentee, etc. Subjects，for example, government agencies, public institutions, public welfare organizations and other entities, are mainly engaged in public management, social services, and public welfare activities, their conducts of implementing patents, participating in market activities, and that may harm the market interests of the patentee can be determined as constituting "for the purpose of production and operation."

In the dispute case of infringing invention patent rights between the appellant Jiao Ruili and the appellee, the Feed Research Institute Chinese Academy of Agricultural Sciences (hereinafter referred to as the Feed Research Institute), and Daxing District Agriculture and Rural Bureau of Beijing Municipality (hereinafter referred to as the Daxing District Agriculture Bureau), the invention patent (hereinafter referred to as the patent involved) entitled "A Chinese Medicinal Feed Additive for Enhancing Strong Cows and Its Preparation Method" with the patent number ZL031, is involved. Jiao Ruili believed that the Feed Research Institute and the Daxing District Agriculture Bureau used the method of patent involved and manufactured the patented products without permission in the 2006-2008 scientific and technological cooperation project, so a case was filed with the Beijing Intellectual Property Court (hereinafter referred to as the court of first instance) for requesting an judgment to order the Feed Research Institute and Daxing District Agricultural Bureau to stop the infringement and compensate 2,618,180 yuan for economic losses and reasonable expenses for rights protection.

The court of first instance held that the Feed Research Institute is a public institution, and Daxing District Agriculture Bureau is a government agency, neither of them had the qualifications for production and operation, and there is no evidence that their implementation of the cooperative project is for the purpose of production and operation, and the alleged infringement did not conform to the requirements of patent infringement "for the purpose of production and operation", therefore, Jiao Ruili's claims was rejected by the judgment. Jiao Ruili refused to accept it and appealed to the Supreme People's Court, claiming that the court of first instance had an error in determining that the alleged infringement did not have "purpose of production and business ".

The Supreme People's Court ruled to revoke the original judgment on November 25, 2020, and judged the Feed Research Institute compensated Jiao Ruili for economic losses of 600,000 yuan and reasonable expenses of 15,000 for rights protection, and Daxing District Agriculture Bureau assumed joint and several liabilities for 215,000 yuan of the compensation.

The second instance of the Supreme People's Court held that the Patent Law included "for the purpose of production and operation" as one of the requirements of patent infringement is aimed at reasonably balancing the interests of the patentee and the public.

When determining patent infringement, the interpretation of "for the purpose of production and operation" should focus on the specific alleged infringement, and comprehensively consider whether the act belongs to participating in market activities, whether it affects the market interests of the patentee, and other factors. It cannot be simply equated to engaging in profit-making activities, nor can it be determined solely by the institutional nature of the patent subject.

Even though government agencies, institutions and other entities have attributes such as public services and public welfare, they are not aimed at production and operation themselves. However, those implemented market activities and harmed the market interests of the patentee can still be deemed to have the requirements of "for the purpose of production and operation". In this case, the scientific and technological cooperation between the Feed Research Institute and Daxing District Agricultural Bureau aims to propel the transformation of scientific research results into productivity, guide and support the transformation and development of agriculture in Daxing District, which has certain attributes of public services and public welfare, with no direct purpose of production and operation. However, in the second phase of scientific and technological cooperation between the Feed Research Institute and Daxing District Agriculture Bureau, through the latter providing financial support and the former providing scientific and technological achievements, the model of "collaboration between district and institute + demonstration base + farmers" was formed. The natural feed additives for dairy cows produced by the Feed Research Institute and the Agriculture Bureau of Daxing District have been demonstrated and promoted in major dairy farms and livestock farms of Daxing District, achieving good results.

In accordance with statistics, in the second phase of scientific and technological cooperation, both parties have trained 10,320 (times) technicians and farmers in total, directly benefiting over 4,500 farmers and creating direct economic benefits of 114 million yuan. It is obviously that the project involved has produced certain economic benefits and directly benefited farmers.

The behaviors that manufacturing and using the patented products and methods involved in the case by the Feed Research Institute and Daxing District Agriculture Bureau will inevitably invade the possible market of Jiao Ruili’s patent involved, and damage the market interests of the patentee. Therefore, the relevant acts of the Feed Research Institute and Daxing District Agriculture Bureau are requirements of "For the purpose of production and operation".

From The Intellectual Property Court of the Supreme People’s Court

June 15th, 2021