Can patent owner intentionally abandon valuable patent in dispute?

If you can’t get it, destroy it: Can the original right holder intentionally abandon valuable patent during patent ownership disputes?

Patent rights are limited-term rights to monopolize the market after national administrative review. One of the conditions for the effective existence of this right is the continuous payment of patent annual fees. “Good faith” is the basic principle of market activities and civil law. It requires civil subjects to abide by their promises in civil activities, maintain the moral order of the market, and pursue their own interests without harming the interests of others and the interests of society.

Personnel mobility and intellectual property ownership disputes

With the development of the market economy, personnel mobility has become a normal phenomenon. However, personnel mobility will also take away the technology and other intellectual property rights of the original employer. There are many intellectual property rights disputes in my country caused by resignation or cooperative research and development. After the ownership dispute occurs, the original holder or original registrant of the right sometimes takes actions such as not paying the annual patent fee or intentionally abandon valuable patent rights, which makes the rights invalid. These actions actually infringe the property rights of the actual right holder and will face compensation.

Case Analysis: Damages for Failure to Perform Good Faith Management Obligations (intentionally abandon valuable patent) during Patent Ownership Disputes

(2019) Intellectual Property Court Civil Final Appeal No. 424 of The Supreme People’s Court of P.R.C. (SPC) discloses a case of “damages for failure to perform good faith management obligations during patent ownership disputes”. The basic facts of the case are: the patent involved in the case completed by the inventor (the original defendant) is the original plaintiff’s work invention, and the applicant of the patent involved in the case (the registered patent owner when the patent was authorized) is a certain research institute and a certain company. The application date is September 28, 2009, and the authorization date is May 30, 2012. After the patent application was discovered by the plaintiff, the patent application right ownership dispute lawsuit was filed in 2010 and 2011 respectively. While the second lawsuit was in progress, a certain research institute and a certain company, as the registered patent owner, failed to pay the second annual fee after the patent was authorized, resulting in the termination and invalidation of the patent right in the case on September 28, 2012.

Court ruling and legal thinking

For this reason, the first instance court and SPC both ruled that a certain research institute and a certain company should make economic compensation to the plaintiff. SPC believes that: during the patent ownership dispute, if the registered patent owner deliberately fails to pay the patent annual fee (intentionally abandon valuable patent) , resulting in the termination of the patent right, so that the actual right holder cannot obtain the patent right, this actually causes property losses to the patent owner and is an infringement of the actual right holder’s property, and compensation should be given.

However, in this case, the SPC recognized the compensation amount of 500,000 yuan (including economic losses and reasonable expenses) in the first instance judgment, and supported the first instance judgment on the grounds that “neither party provided evidence to prove the market price of the patent right in question when it was terminated and invalidated” and “the plaintiff also had certain faults”. Perhaps the plaintiff’s loss due to the loss of the patent right of the work invention and the technology becoming public technology will be much greater than 500,000 yuan, but we can only analyze the issues we need to pay attention to from such cases.

China’s intellectual property protection level may need to be further improved, otherwise it will not be able to curb dishonest behavior and establish a market order of integrity; in addition, as the plaintiff (actual right holder), it is indeed necessary to actively pay attention to the legal status of intellectual property rights when disputes over ownership occur, or take other effective measures.

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