Feynman LIANG Patent & Trademark Attorney	Published on June 10, 2021

In invalidity proceedings, apart from published documents such as books, magazines, patent documents as prior art, it is not uncommon petitioners will also rely on evidence of public use such as sales activity or sales promotion. However, public use in China usually has high thresholds and requires chain of evidence. Judgement standard of sales activity established as prior art can be well demonstrated in a recent case Chuangshiji v. Hengyuan.

Suzhou Hengyuan Precision CNC Equipment Co., Ltd. (hereinafter referred as “Hengyuan”) is the owner of Chinese utility model patent No. 201520396790.X. Shenzhen Chuangshiji Machinery Co., Ltd. (hereinafter referred as “Chuangshiji”) filed a petition of invalidity proceeding against Hengyuan’s patent. A group of evidence below were submitted as of sales activity constituting prior art to the patent at issue.

1. Photocopy of 3 contracts and 1 supplementary agreement between Company A and Company B regarding purchase of CNC machine tools (model: HAP-480) from Company A. Such CNC machine was claimed to have disclose technical features of the patent at issue.
2. Photocopy of 7 invoices issued by Company A
3. Written testimony of Mr. Yongdong YU as witness. Mr. Yongdong YU works in Company B and he stated in his testimony that the machine tools (model: HAP-480) sold by Company A to his Company B is the same machine tool (model: HAP-480-H1) as shown in Company A’s online store in Alibaba.com. Mr. Yu also testified that before the filing date of the patent, there were several machine tools (model: HAP-480) in his employer’s venue.
4. Notarized employment contract between Mr. Yu and Company B

Combined with other evidence, the petitioner wished to argue that sales activity of Company A’s machine tool (model: HAP-480) constitute public use and it should serve as prior art to assess patentability of Hengyuan’s patent.

Regarding the pubic use as prior art, Patent Reexamination Board made a decision that the petitioner failed to provide sufficient evidence of sales activity and therefore public use as prior art should not be established with reasons as below:
1. Sales contract, supplementary agreement and invoices are all photocopies instead of original documents.
2. Although Mrs. Yu’s written testimony and evidence of his employment relation with Company B were submitted, he is absent in the hearing proceedings

In this case, the Patent Reexamination Board presented a 4-step approach to assess whether sales activity constitutes prior art.

Step 1: Is sales activity established as supported by evidence of sales contract, payment record, delivery of product etc.?
Step 2: Is the product to which the evidence of product structure directed to correspondent to the product in the sales activity?
Step 3: Is the sales activity deemed as public use as defined in the Patent Law?
Step 4: Does the product in the sales activity affect novelty and inventive steps of the claim(s)?

In this case, when assessing “Step 1: Is sales activity established as supported by evidence of sales contract, payment record, delivery of product etc.?”, the petitioner only submitted photocopy of sales contract, supplementary agreement and invoice and failed to submit the original copy of the same. In addition, the witness only provided written testimony and fails to present in the hearing. As a result, the Board did not recognize the authenticity and legality of the evidence and therefore it was decided that the petitioner did not submit sufficient evidence to prove that the sales activity was established.

Further notes
The case above provides us some clues of the evidence requirement of sales activity as prior art. For petitioners, here below are some points to be noted in the course of business operation and evidence collection:
1. Manufacturing date
Is manufacturing date indicated on the product at issue?
It’s common for some products, e.g., beverage, to carry manufacturing date. However, printing manufacturing date may not be a norm in certain industries. In this case, other evidence would be required to prove the manufacturing date and sales date.

Even if there is manufacturing date on the product, it does not necessarily prove the date of sales activity. In the invalidity proceedings Jianting ZHANG vs. Patent Reexamination Board, the product at issue is a beverage bottle and it carried manufacturing date (August 17, 2013). But evidence indicating sales date was absent. The application date of the design patent at issue is November 13, 2013. Although it should be reasonable that the product would be available in the market within 2 months after manufacturing, Beijing High Court decided that there was still likelihood that the product was not available in the market within certain period. The Court eventually decided that sales activity of the product did not constitute prior art because there was insufficient evidence proving the sales date of the product.

2. Evidence of Sales Activity
Are there any contract, payment receipt, officially generated invoice delivering order etc. proving the sales activity? Please note that original copy of document is required in the proceedings. Internal accounting books, unofficial sales receipt, photocopies of documents alone do not sufficiently prove sales activity.

3. Linkage between the product at issue and the products in the sales activity
The product names / model number in the sales contract should be correspondent to the product name / model number in the invoice, delivery order and other documents to form a complete chain of evidence. Therefore, it is suggested to indicate complete model number in the all documents of business operation.

photo source: www.aare.edu.au