CHANG TSI
Insights
In advising foreign clients, we occasionally encounter the following situation: a foreign company enters into a technical collaboration with a Chinese company and, in the course of the project, provides its Chinese partner with technical documentation, design drawings, or even core process parameters. Sometime later, the foreign company discovers that the Chinese partner has filed patent applications in China covering that technology in its own name. Some clients then ask to request invalidation of the patent on the ground that the Chinese party misappropriated the technology in violation of the principle of good faith.
In such cases, our usual advice is that there is no need to begin with invalidation proceedings. Instead, the client should first consider bringing a patent ownership action. A recent final judgment by the Intellectual Property Tribunal of the Supreme People’s Court (SPC), (2025) Zui Gao Fa Zhi Xing Zhong No. 794, provides a clear answer on this point.
In this case, the invalidation petitioner, Mr. Yang, alleged that the patentees had misappropriated an invention he had made and used it to file the patent at issue. He requested invalidation on the ground that the patent violated Rule 11 of the Implementing Regulations of the Patent Law as revised in 2023. The China National Intellectual Property Administration (CNIPA) declined to examine this ground because the request had been filed before January 20, 2024, and the first-instance court upheld the CNIPA decision.
On appeal, the SPC held that Mr. Yang’s claim was in substance a dispute over patent ownership and inventorship arising from the origin of the technical solution. Such a dispute is civil in nature, and the party concerned may file a civil action seeking confirmation of the patent’s ownership and the true inventor, rather than seeking invalidation directly under Rule 11. The court further noted that invalidating a patent merely because the patentee engaged in bad-faith conduct such as false attribution or misappropriation lacks a legal basis and does nothing to protect the interests of the true right holder.
It follows that, as a ground for invalidation, the principle of good faith is primarily concerned with the authenticity of the inventive activity itself, that is, whether the technical solution was fabricated or falsified. Filing a patent application based on another party’s misappropriated work should instead be addressed through ownership or inventorship disputes.
Apart from the legal obstacles, invalidation is also not an ideal choice from the standpoint of the right holder’s practical interests. Once a patent is invalidated, the technical solution enters the public domain and may be freely exploited by the former partner and any other market participant. Because the technology has already been disclosed through the patent publication, it is no longer confidential, and the right holder will find it difficult to obtain patent protection for it in China.
An ownership action, by contrast, seeks to establish who owns the patent. If successful, the right holder obtains the patent and may assert it against any infringer, including the former partner. Moreover, after filing an ownership action, the right holder may request CNIPA to suspend the relevant procedures under the applicable provisions of the Implementing Regulations, preventing the other party from abandoning or assigning the patent, or otherwise disposing of it, while the litigation is pending.
That said, where the right holder has no need to exploit or maintain the patent in China, or holds prior-art evidence sufficient to defeat novelty or inventive step, invalidation proceedings may still serve as a supplementary measure alongside the ownership action.
Before the collaboration begins, foreign companies should conduct appropriate due diligence on their Chinese partners, focusing on their patent filing history and any past intellectual property disputes. As for the contractual framework, we recommend executing an NNN agreement (non-disclosure, non-use, non-circumvention) that complies with Chinese law, is governed by Chinese law, designates Chinese courts as the forum, and treats the Chinese version as the governing text. The collaboration agreement should also clearly allocate ownership of background IP and improvements, and expressly prohibit the Chinese party from filing patent applications on the technology it receives.
During the collaboration, written records should be kept of every delivery of technical materials, marked with dates and confidentiality legends. Where necessary, evidence may be secured through notarization or timestamping. These materials will be key to proving the origin of the technology in any subsequent ownership action. We also recommend monitoring the partner’s patent filings on a regular basis so that problems can be identified early.
Once a dispute arises, the right holder should give priority to filing a patent ownership action and requesting suspension of the relevant procedures, while also pursuing claims for breach of contract or trade secret misappropriation as the circumstances warrant.
This judgment further clarifies the boundaries of the good faith principle in patent invalidation proceedings and points to the proper remedy for right holders whose technology has been pre-emptively patented by others. For foreign companies engaged in technical collaboration in China, prevention before the fact and remedies after the fact are equally important.
