A Comparative Study Of The Exhaustion Doctrine Of Process Patents

With the transition from the industrial age to the information age,methods and processes,which often produce only data or information,are becoming more and more important in the high-tech industry represented by the field of communication technology..The exhaustion doctrine is related to the cross-border flow of process patents and the improvement of social welfare.In the field of digital communication and computer technology,whether the process patents right is exhausted due to the sale of related products or equipment is related to the recovery of countless research and development costs invested by the patentee and the corresponding benefits.However,China has no specific regulations.Many small and medium-sized technology enterprises in China are unable to compete with large multinational enterprises such as Apple,which refuse to pay licensing fees under the pretext of Exhaustion Doctrine and rely on long patent litigation to obtain low-cost or even free process patentss.The clear regulations here are conducive to reducing the trial time,which benefits for reducing the loss of patentees,and even reducing disputes over the exhaustion of the process patents.In 2018,the final judgment in the case of Iwncomm v.Sony concluded that " process patents does not exist in exhaustion doctrine”,causing much controversy in terms of whether and under what conditions theexhaustion doctrine is exhausted.The author inquired about the existing international conventions and regional trade agreements related to patent protection and found that they were neutral on the exhaustion of process patents.On the one hand,different countries hold different attitudes towards this issue and it is difficult to reach an agreement.For the process patents circulating in the international scope,the fees paid by the users to the patentees are the tax paid by the user's citizens to the patentee's citizens.Thus a powerful patent country expands the rights of its patentees while a weak patent country wants to limit the rights of the patentee.On the other hand,the process patents of traditional industry is only another expression of product patent and does not show its irreplaceable nature in the early years.At the same time,the author inquired about the patent laws of the United States,the European Union,Japan,South Korea,Germany,France,the Netherlands,Switzerland,Sweden,Italy,Russia,Poland,Canada,Australia,Brazil,India,Malaysia,Indonesia,Thailand,the Philippines and South Africa,and did not obtain any reference provisions.Therefore,the author defines patent powers according to the number of patent applications,market competitiveness(the number of valid patents),overseas share(the number of overseas applications),national innovation(the number of patents applied per unit of GDP),and enterprise core competitiveness(the number of top 50 enterprises in the world before patent application).The author selects United States,Germany and Japan and South Korea from These countries depending on the number of patent applications in the fields of digital communication technology and electronic computer technology,which are dominated by process patents.What's more,United States and Germany are the countries of origin of the Exhaustion Doctrine principle.According to laws and cases on the exhaustion of process patents of these countries,this paper analyzes whether there is a convergence of practical rules and whether the rules conform to the core principles of the current effective international treaties involving patent protection.Regarding whether the process patents is exhausted,the United States has experienced a change from that process patents are not exhaustedand can only be regulated by implied permission,to that process patents can be exhausted,and to that process patents can only be exhausted and cannot be regulated by implied permission.Germany has experienced the change that the process patents are not exhausted to be exhausted under specific conditions.Japan and South Korea have experienced the change that the process patents are not exhausted to be exhausted.Regarding the conditions for the exhaustion of the process patents,the United States supports that when the sold equipment substantially embodies the process patents and has no non-infringing use,or the process patents can be changed into the product patents and can be used for non-infringing use,the process patents are exhausted.Germany's point has changed from "the claim of the product patent completely falls into the claim of the process patent" to that the sold equipment or product itself has a patent,which can substantially embody the process patents,and has no non-infringing use.Japan requires the sold equipment or products to have patents which can substantially embody the process patents.South Korea requires that the core elements of the process patents are included in the patents of the sold equipment or products,which is not used for infringement purposes.Regarding the effect of exhaustion of process patents,the United States has changed from domestic relative exhaustion to international absolute exhaustion in 2017.Germany's view on the regional effect of exhaustion of process patents changed from domestic exhaustion to interregional exhaustion.Until recently,due to the high price of patented products,Germany began to support international exhaustion.Meanwhile,Germany support absolute exhaustion——the restriction of patentee could not produce the effect of patent law.Japan's view on the regional effect of the exhaustion of process patents has changed from national exhaustion to international exhaustion.Japan supports absolute exhaustion because the patentee is not allowed to claim relief from the court on the grounds of infringement of patent rights on the basis of agreed restrictions in Japan.The above-mentioned patent powers have formed a convergence of practical rules in exhaustion of process patents: when the sold patented product or equipment can substantially embody the process patents using the product or equipment,and the product or equipment has no other non-infringing uses,the process patents will beexhausted with the sale of the product or equipment.The above-mentioned practice rules are gradually converging,and compared with the traditional patent "strong protection" of patent powers,the converging rules reduce the protection standards for process patents.On the one hand,non-governmental organizations aiming to curb the blind expansion of patentees' rights are constantly being born.At the same time,international treaties related to the international protection of patent rights all emphasize the principle of balancing the protection of patentees' rights with the promotion of circulation and the maintenance of social welfare,and urge all countries to measure the standards set by the exhaustion doctrine for restricting patent rights.On the other hand,in technical fields such as digital communication and computer technology,which mainly use process patents,no country has an absolute advantage to arbitrarily expand the patent right to obtain as many fees as possible paid by the user to the patentees,or is understood as the tax paid by the citizen of the user country to the citizen of the patentee country.The positions of various patent powers are similar.It is necessary not only to prevent process patents from being exhausted due to the sale of products or equipment that are less relevant to them,so as to ensure that the process patentees can obtain sufficient income after investing in research and development to stimulate innovation enthusiasm,but also to prevent the excessively high exhaustion standards in the use of process patents which gives double profits to other country's process patentees and damages the interests of their own patent users.The current convergence of applicable rules for the exhaustion of process patents rights has to some extent balanced the need to protect the private interests of the patentees and to enhance social welfare.It not only makes the process patents rights exhausted,but also restricts the exhaustion standard to prevent the process patents from being exhausted when products or equipment are sold under any circumstances.If the future relevant international treaties on the protection of intellectual property rights make further provisions on process patents or exhaustion doctrine,the above countries with the dominant number of process patents will have more say,and their convergence rules will easily provide centripetal force for international rules.China's existing exhaustion doctrine rules are applicable to the traditionalindustry,and not applicable for process patents.Under the overall trend of "strong protection" of patents in other countries,the "weak protection" orientation embodied in the easy exhaustion of process patents,may result in the patentees not being able to obtain reasonable economic returns,and may reduce the scale of investment in process patents used in the new digital economy,thus depriving China of the opportunity to develop the new digital economy.At the same time,it is necessary for China to refer to this practice trend in order to improve the protection standard of process patents.Although China is one of the emerging advantages in the new economic fields such as digital communication in the information age,most process patentees are small and medium-sized enterprises with limited risk tolerance.Without specific provisions on the exhaustion of process patents rights,they can only be continuously consumed in the policies implemented by multinational giants such as Apple,which use exhaustion doctrine as an excuse to refuse to pay patent fees and use legal procedures for technical delays.Under the name of exhaustion doctrine,legitimate use is actually an infringement of process patents,resulting in the inability of patentees to recover expected benefits and reducing innovation enthusiasm.Therefore,it is necessary for China to learn from the above-mentioned practice trend to perfect its own exhaustion rules of process patents,which is conducive to the development of new digital economy such as digital communication and computer technology,and also conducive to jointly occupying the right to speak with other patent powers on the common practice of international rules of exhaustion of process patents that may be formed in the future.