(By Luo Yanjie) The patented design dispute between Shuanghuan Auto and Honda Motor Co., Ltd. (the “Honda”) has been a subject of strong focus within the industry. With the review of the case in the Supreme People’s Court, it determined the patented design right enjoyed by Honda and overthrew the annulled sentences in the first and second instance, The case has been battled through the courts for eight years, and now returns to its starting point. This post will discuss the arguments adopted in a review of the sentence, and why it shall be different from those in the first and second instance.
Case summary:
Honda is the patent right holder of a patented design right over its auto products, numbered 01319523.9. Shuanghuan Auto and Xinkai Company filed an application for patent invalidation with the Patent Review and Adjudication Board (the “Board”) on December 24, 2003 and December 10, 2004, respectively. The Board jointly heard the application.
On March 7, 2006, the Board made its decision, numbered 8105, in regard to the patent invalidity application (the “No. 8105 Decision”), announcing the invalidity of the applied patent. As confirmed in the decision: compared with the No. JP1004783 patented design announcement in Japan (“Evidence 1”, note: despite the patent being registered by Honda in Japan in 1998, no novelty or priority could be established, and for this reason the Japanese patent could not be registered and protected as a patent right), the parts of the automobile are quite similar to each other with respect to their shapes and proportions; moreover they resemble each other in terms of visual shape and design style. Although one could maintain that slight differences exist between the appearance of the current patent and the product indicated in Evidence 1, such differences can only be deemed as one of partial difference. Furthermore, it can be argued that it is not adequate for consumers to differentiate them based only on appearance, while on the other hand, the similarities between the main parts of the two patents are most likely to confuse the consumers. Based on these grounds, the Board made its decision.
Dissatisfied with the Court’s decision, Honda filed a lawsuit with the Beijing No. 1 Intermediate People’s Court. The Beijing Court determined that both the patent litigated and the prior designs were exterior designs intended for a finished automobile. Furthermore, the Court reasoned that most consumers typically observe the overall appearance of cars when confronted with them in their daily lives, and therefore the current patent should be compared with those prior ones in terms of its overall impression on the relevant consumer. Therefore, although the patent differed from that in Evidence 1 in some respects, in terms of the overall appearance of the automobile, most consumers tend to pay more attention to the overall design, style, shape or proportions of the parts to the whole of the automobile. So, the existing differences were deemed unlikely to constitute an obvious visual difference in the appearance of the two relevant inventions. For these reasons, the Beijing No.1 Intermediate People’s Court upheld the decision made by the Board.
Dissatisfied with this judgment, Honda appealed. Regardless, the Beijing High People’s Court upheld the judgment handed down by the intermediate court.
Subsequently, Honda appealed for a review of the decision. The Supreme People’s Court found that the design of the automobiles found in the present patent differed from the automobile found in Evidence 1; specifically, the headlights, fog lights, front guard, grating, side windows, rear combination lamps, rear bumper, rooflines and other decorative parts. In the decision of the Board and the judgments made in the first and second instances, these differences noted by the Supreme Court were also mentioned. However, the Supreme Court also argued that the differences were very slight, and therefore these specific features were excluded from the overall appearance of the automobile. However, as a whole, comparisons were made concerning the overall shapes of the automobiles in question, and the Court thereby confirmed that the overall shape is one of the most notable and obvious aspects of a car’s visual appearance that most influence consumers. The Court held this to be true not only for the cars involved in this litigation, but for automobiles in general. The aforementioned factors led the Supreme Court to conclude that the lower courts were incorrect in their finding that the patent was valid. The Supreme Court held that the designs involved in the Shuanghuan patent were remarkably similar to that of Honda’s located in Evidence 1, and therefore the patent was invalid.
In sum, the original hearings held that the design of the Shuanghuan automobile is similar to that indicated in Evidence 1 as submitted by Honda, and then upheld the No.8105 decision made by the Board. The Supreme Court held that the laws applied in their hearings were clearly erroneous and should be corrected, and thereby the Supreme People’s Court reversed the judgment made in the first and second instances and the decision made by the Board.
Lawyer’s Comments:
It is not difficult to us to conclude that the Supreme People’s Court holds no different opinions regarding the facts revealed in the first and second instance courts, and no differences exist with the laws as applied. The only significant differences are the interpretations by the Supreme Court and courts in the first and second instances. That being said, we would like to share our analysis as follows:
I. Regarding an Explanation of the “General Consumer”
According to the Patent Examination Board Guidelines:
“When judging whether patented designs are similar or the same, it shall be assessed according to the level of perception and cognitive abilities used in comparing similar products.”
In the meantime, as for whom shall be deemed the “general consumer,” the Guidelines also explain that the general consumer carries an average “ability to understand, reason, and has common sense” and also has “average cognitive ability.” In this case, the courts in first and second instances held that the “general consumer” would only focus on the overall design style, shapes, proportions or other elements, but would not pay attention to slight changes concerning the overall shapes of patterns on the product. Despite the reviewing court not overthrowing the opinions made by the first and second court, in actual application, it deemed that the first and second instance courts made a mistake in extending the “general consumer” to the product of automobiles, instead of those related to SUV automobiles concerned in this case. In addition, the Supreme Court held that the “common sense understanding” shall mean an understanding regarding the appearance and design of the relevant products, but would not be capable of designing that product. Yet, that understanding could not be limited to a fundamental or simple understanding.
On this point, the Supreme People’s Court tends to support the opinion that the “general consumer” should be of a higher “cognitive ability,” and when hearing the patent design cases, it will determine the scope of the “general consumer” according to the features or the divisions in the consumption of the products.
II. What is the “overall observation” and “comprehensive judgment” ?
As stipulated in the Guideline, the patented design shall be judged for their similarity or sameness from the overall observation and the comprehensive judgment. As specified in the Guideline, the so called overall observation shall include all the design features of the visible parts of the product, and shall not be only the specified parts involved in the case. “Comprehensive” requires considering all the elements that would influence the overall visual effect of the product. The Supreme People’s Court further determined that despite the appearance design being considered generally, that does not meant the “parts” of the product shall not be considered, even when the two articles compared are more similar. Once the different parts are adequate in their amounts, it would be enough to be considered an overall difference. These opinions in the hearing of the first and second instance courts, both neglected the amounts of the product that are adequate to differentiate the automobiles. Based on these elements, it could reverse the decision made in the lower courts.
From the above analysis, despite the Supreme People’s Court decision to overthrow the decisions made by the first and second instance courts, to judge it as a whole, the only difference in the opinions held by the Supreme People’s Court and the first and second instance courts is whether the differences between the products could be slight. It is apparent that the Supreme People’s Court denies any slight difference in the case. In fact, whether it could be taken as the “slight difference” is a kind of subjective judgment. Even though we have seen the Supreme People’s Court withdraw decisions which show more and more protection being casted to infringement, it is undeniable that more confidence would be gained by the rights holders and foreign investors. As determined from the results here, although Honda has maintained its patent, its right protection is far from a success. The battle between the parties has not yet finished, and we will continue our focus on the case.
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