—The Declaratory Judgment of Non-Infringement
In contemporary commercial practice, enterprises frequently often find themselves in a situation where, during the course of ordinary business operations, they receive a cease-and-desist letter or an infringement notice alleging unauthorized use of a patented technology. Such communications present a strategic dilemma. A response disputing the allegations may be met with silence. Alternatively, discontinuing production, withdrawing products from the market, or destroying inventory would not only result in the loss of prior investments but also the forfeiture of market share. Remaining passive while awaiting litigation perpetuates a state of legal uncertainty, which could deter investors and delay decisions by commercial partners.
Under such circumstances, the aggrieved party is not compelled to adopt a passive stance. Chinese law provides a proactive legal instrument: the declaratory judgment of non-infringement (action for declaration of non-infringement).
I. Definition of Declaratory Judgment of Non-Infringement (Action for Declaration of Non-Infringement)
A declaratory judgment of non-infringement is an affirmative legal remedy available to a party that has been threatened with infringement allegations, but has not been sued by the patentee. By initiating such an action, the alleged infringer may petition the court to issue a binding determination on whether its activities constitute infringement.
A favorable judgment serves not only to eliminate legal ambiguity regarding the party’s conduct, but also to preclude further harassment by the patentee. This allows commercial operations to resume without disruption.
II. Procedural Prerequisites for Filing
The initiation of a declaratory judgment action is subject to specific procedural conditions. A party cannot file immediately upon receiving an infringement allegation. Under applicable legal standards, the following requirements must be satisfied:
1. Receipt of an Infringement Warning: The patentee must have explicitly asserted infringement through a formal communication, such as a cease-and-desist letter or an email, addressed to the alleged infringer or their investors.
2. Issuance of a Written Demand: The recipient must formally respond in writing to reject the infringement allegation and demand that, the patentee either initiate legal proceedings within one month or withdraw the warning.
3. Inaction by the Patentee: If the patentee fails to either file a lawsuit within one month of receiving the demand (or within two months from the date the demand was dispatched) or retract the warning, the recipient may then bring a declaratory judgment action.
For the court to accept the matter, compliance with all three conditions is necessary.
III. Illustrative Case Law
To illustrate more clearly, we now turn to two representative cases from the Supreme People's Court.
Case 1: Individual X v. Shanghai and Changsha Companies – (2024) Zui Gao Fa Zhi Min Zhong No. 1190 (Supreme People’s Court (2024) Supreme Court IP Final No. 1190)
X, the legal representative of a Nanchang-based patentee, sent infringement notices to investors of two companies based in Shanghai and Changsha via corporate email. The purpose was to exert pressure on the competitors by influencing their investors.
Counsel for the recipient companies formally demanded retraction of the notices and clarified the facts.
X did not respond within two months. The recipient companies subsequently initiated a declaratory judgment action.
The court ruled that the recipients had standing to take legal action to eliminate the uncertainty affecting their business operations. The patentee and X later conceded that the products in question were not covered by the original notices, and withdrew the infringement analysis. The court granted a declaratory judgment of non-infringement.
Case 2: Jiangsu Company v. Beijing Company – (2023) Zui Gao Fa Zhi Min Zhong No. 1561 (Supreme People’s Court (2023) Supreme Court IP Final No. 1561)
A Beijing-based patentee sent infringement notices to the distributor of a Jiangsu-based company. The distributor delisted, blocked, and discontinued sales of the allegedly infringing products. Although the Jiangsu company did not directly receive the notices, its sales were still adversely affected.
The court ruled that an entity whose commercial interests are impacted by such communications qualifies as an “interested party” with standing to bring a declaratory judgment action, regardless of whether it was the direct addressee of the notices. The court determined that the Jiangsu company’s products did not infringe the patent in question.
IV. Recoverability of Legal Expenses
A frequently encountered question is whether attorney’s fees incurred in a declaratory judgment action are recoverable from the patentee. According to current case law, the general answer is no.
According to recent guidance from the Supreme People’s Court, the primary purpose of a declaratory judgment of non-infringement is to resolve legal uncertainty, rather than to claim compensation.
While earlier decisions (e.g., (2021) Supreme Court IP Final No. 1362) occasionally permitted the recovery of reasonable expenses, the Court’s position has since coalesced against such claims. Recent rulings (e.g., (2022) Supreme Court IP Final No. 1009 and (2023) Supreme Court IP Final No. 1561) have consistently declined to grant attorney’s fees or other reasonable expenses in declaratory judgment actions.
If the patentee’s conduct extends beyond mere notice to include abuse of rights, defamation, or acts of unfair competition, the aggrieved party may consider filing a separate action for unfair competition, in which claims for damages and legal expenses are more likely to be sustained.
For more detailed information, please refer to our article "Plaintiff's claim for compensation for reasonable expenses in a declaratory judgment action for patent non-infringement is not supported. "
V. Emerging Administrative Remedies
Judicial proceedings are not the only avenue for relief. Pursuant to policies introduced by the China National Intellectual Property Administration (CNIPA) in 2025, administrative mechanisms are being developed. An aggrieved party may request an advisory opinion from the relevant administrative authority regarding infringement. Although the precedential weight of such opinions differs from that of a court judgment, this administrative channel may offer a more expeditious means of resolving disputes and encouraging rational commercial conduct.
Conclusion
Patents should not be deployed as instruments to intimidate or bully competitors. Under Chinese law, an alleged infringer has the right to take proactive legal measures when confronted with unreasonable patent allegations.
In light of the foregoing, the following approach is recommended.
1. Preserve all relevant evidence, including warning correspondence.
2. Issue a formal written demand imposing a deadline for litigation or retraction.
3. Upon expiration of the statutory period, initiate a declaratory judgment action.
Within the framework of the rule of law, commercial entities are entitled to protect their legitimate rights and interests through rational and lawful means.
This article is for informational purposes and does not constitute legal advice. For case-specific guidance, consultation with qualified legal counsel is recommended.
Contact: patent@afdip.com; bhtdlaw@bhtdlaw.com
