In an infringement case, the Supreme People's Court established: For a method patent directed to the use of a device, an accused infringer who assembles and tests that device is highly likely to have practiced the patented method during those activities. If this likelihood is sufficiently plausible to be arguable at the jurisdictional objection stage, then the assembly and testing location can properly serve as the basis for jurisdiction in an infringement action.
This article discusses a dispute over infringement of a method patent. The facts are briefly summarized as follows.
Company A is the patentee of an invention patent titled “Polishing Pad Dressing Method.” Company A filed a lawsuit with the first instance court, alleging that the patented method had been embedded into a relevant polishing machines, and that Company B, without authorization, had manufactured, used, offered for sale, and sold those polishing machines, thereby infringing Company A’s patent and causing significant economic damage.
During the period for filing a statement of defense, Company B raised a jurisdictional objection, arguing that the place of infringement was Beijing, not Tianjin. Company B claimed that the polishing machines were manufactured in Beijing but, due to their excessive size and weight, were disassembled into three major modules, shipped separately, and then reassembled on site at the customer’s facility, Tianjin Company C. Because Company A did not name the user, Company C in Tianjin, as a defendant, Company B argued that the first instance court lacked jurisdiction and requested that the case be transferred to the Beijing Intellectual Property Court for hearing.
The first instance court issued a civil ruling that accepted Company B’s jurisdictional objection and ordered the case transferred to the Beijing Intellectual Property Court. The court explained its reasoning as follows. Under patent law, the act of manufacturing means producing a product that contains every technical features listed in the patent claim. In this case, Company B admitted that after shipping the product to Company C in Tianjin, it did carry out installation and testing. However, Company B also argued that the complete machine had already been fully produced and tested at its processing facility in Beijing. The machine was only disassembled into modules for transport because of its large size and heavy weight. The evidence submitted by Company A only showed that the accused product has been sold to Company C in Tianjin. It did not show what happened during the manufacturing process. As for the installation and testing activities in Tianjin, Company B offered a reasonable explanation for why they were necessary. Based on the evidence available, the court could not prove that those installation and testing steps were actually part of the manufacturing process, meaning the process of creating a product that has all the claimed technical features. Therefore, the court found no basis to conclude that the alleged manufacturing had taken place in Tianjin.
Company A appealed. The Supreme People’s Court issued a civil ruling revoking the issued decision and holding that the first instance court had jurisdiction.
The effective ruling stated: For a method patent directed to the use of a device, an accused infringer who assembles and tests that device is highly likely to have practiced the patented method during those activities. If this likelihood is sufficiently plausible to be arguable at the jurisdictional objection stage (which is a very early stage of litigation proceedings where the court has not yet examined the substance of the case), then the assembly and testing location can properly serve as the basis for jurisdiction in an infringement action.
In this case, Company B's own prospectus stated that the polishing machines "must be installed and tested on the customer's production line." Company B also admitted that "because the polishing machines are too large and heavy, they were disassembled into three major modules and shipped to Company C in Tianjin for assembly." This shows that Company B shipped the disassembled machines to Tianjin Company C for assembly, and the machine only became a complete finished product after assembly.
The court found that Company B's assembly and testing activities were closely linked to its prior manufacturing efforts and is in fact a continuation of the manufacturing process. Accordingly, the final assembly location in Tianjin could be treated as the place of manufacturing.
Because there was a high probability that Company B used the patented method while assembling and testing the machines in Tianjin, this fact alone was enough to make the claim worth debating at the jurisdictional objection stage (i.e. the very early stage of litigation proceedings). The place where the machine was assembled and tested is the place that legally ties this case to a specific jurisdiction. Therefore, the first instance court, as the court where the alleged infringing acts took place, has jurisdiction over this case.
The Supreme People’s Court further clarified: As long as there is a high probability that the accused infringer carried out the patented method during the assembly and testing of the equipment, and as long as that probability meets the arguable threshold required at the jurisdictional objection stage, the assembly and testing location can become a lawful basis for jurisdiction.
This rule is especially important for industries like semiconductors and high end equipment manufacturing. These industries rely on large precision machines that must be finally assembled and tested at the customer’s site. Under this rule, infringers can no longer avoid jurisdiction by using technical tricks such as splitting a machine into parts, transporting those parts separately, and then assembling them remotely. At the same time, the rule opens a convenient door for method patent holders to bring lawsuits at the procedural level. It offers profound insights for intellectual property practitioners.
(2024) Zui Gao Fa Zhi Min Xia Zhong No. 136
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