Procter & Gamble fends off an unreasonable patent lawsuit in China

The Shanghai IP Court has dismissed Luo Yunjun and Sea Mild (Shanghai) Technology’s complaint of patent infringement against Procter & Gamble based on a patent invalidation decision made by the China National IP Administration’s (CNIPA). The pair brought an administrative proceeding, challenging the CNIPA invalidation decision before the Beijing IP Court, but to no avail. They did not appeal the decision of the Beijing IP Court and the case has been closed.

Background

Luo Yunjun and Sea Mild (Shanghai) Technology are the patentees of Chinese patent ZL200910140391.6 titled ‘a portable cleaning item and manufacturing method thereof’. The patentees filed a civil litigation against Procter & Gamble Guangzhou Ltd before the Shanghai IP Court on 26 June 2019, asserting that it infringed the patent by importing and selling a laundry detergent pouch product in China. The patentee requested injunction and indemnification of Rmb100 million for damages and reasonable expenses incurred for stopping the infringement. After receiving the complaint served by court, Procter & Gamble filed an invalidation petition against the patent before the CNIPA, which invalidated all claims of the patent on 20 January 2020.

Facts

The case centres on the obviousness assessment of the patent, especially that of Claim 1, on the basis of reasonable claim construction.

Claim 1 of the patent reads:

“a portable cleaning item, comprising a wrapping capsule and a detergent, wherein the detergent is placed within the wrapping capsule, wherein the wrapping capsule comprises a film layer and an oil/grease layer that is coated on one surface of the film layer, and thus when the wrapping capsule is in contact with water, the wrapping capsule is dissoluble in water, so that the detergent in the capsule can be used for cleaning.”

The key feature of this invention lies on “an oil/grease layer” coated on the surface of the film layer of the detergent capsule. The hydrophobic nature of oil/grease enables the capsule’s coating to block external moisture and protect the film layer from reacting with this, thereby solving the technical problem that absorption of moisture from the air will lead to the decomposition and rupture of the capsule.

In the patent invalidation proceeding, Procter & Gamble submitted several pieces of prior art evidence, which disclosed the technical solutions in the coating agent on the surface of a detergent capsule. The closest prior art disclosed almost all the technical features of Claim 1, except that the prior art adopted wax rather than oil/grease as the moisture barrier agent. In addition, Procter & Gamble submitted common-knowledge evidence to prove that both oil/grease and wax are conventional waterproofing materials before the filing date of the patent. With such teaching by prior arts, it is easy for those skilled in the art to choose oil/grease instead of wax as the moisture barrier agent and coat it on the surface of a detergent capsule so as to obtain this patent. The patent claims are therefore obvious.

Luo Yunjun argued that the oil/grease used in the patent is both hydrophobic and hydrophilic. The film layer is protected by the oil/grease layer from reacting with moisture but also dissolves easily in water without residue. The coating has a different waterproof function from wax, so those skilled in the art would not be motivated by the prior art to coat the surface of a detergent capsule with oil or grease.

The CNIPA found Procter & Gamble’s common-knowledge evidence admissible, dismissed Luo Yunjun and Sea Mild Technology’s argument, which contravenes common knowledge, and declared all claims of the patent to be invalid.

Procter & Gamble’s is one of the first developers of the laundry detergent pouch. Investing heavily in R&D in related technology for more than 20 years, the company has a substantial number of patents in this field. The first laundry detergent pouch product that Procter & Gamble launched in Europe dates back to the early 2000s, far earlier than the filing date of the patent at issue. Luo Yunjun and Sea Mild Technology chose Procter & Gamble as the target of its infringement proceeding, based on a low-quality patent, and claimed damages of Rmb100 million without producing any evidence. In response to the unreasonable assertion, Procter & Gamble opted to challenge the validity of the patent rather than settle with the patentee.

Comment

Multinationals are increasingly becoming the targets of unreasonable patent assertion in China. Some opportunist patentees assert low-quality patents against them with the aim of cashing in on unsubstantiated accusations. Without a ‘loser pays’ rule against the plaintiff in China, the unsuccessful party is not required to reimburse the winning defendant's legal expenses, including attorneys' fees, making the cost of unreasonable patent assertion quite low. Conversely, multinationals have a lot at stake (eg, business, goodwill and credibility), should the court grant an injunction against it. In reality, it is not unusual for corporations to choose settlement in exchange for the patentee’s withdrawal of lawsuit.

The newly amended Patent Law, which came into effect on 1 June 2021, provides remedial approach against bad-faith assertions. The law explicitly forbids patent abuse: "patent rights shall not be abused to harm the public interest or the legitimate rights and interests of others". In March, the CNIPA also issued measures to regulate patent filing activities to stop bad-faith filing. Multinationals with more weapons in their arsenal may emerge unscathed when being sued with unreasonable assertions.