The patent system aims to clarify the boundary of rights and grant rights holders lawful exclusivity, thus promoting technological innovation and the commercialisation of tech advances and industrial designs, and encouraging sustained innovation. In practice, however, unauthorised use of others’ patents is fairly common. Many patent owners, after unsuccessful negotiations and faced with infringement, have little choice but to pursue legal action to protect their legitimate intellectual property rights.
However, in patent litigation, a longstanding problem that hinders the field is the disconnect between the stability of patent validity and the legal process. For example, according to statistics published by the China National Intellectual Property Administration (CNIPA) in recent years, about 50% of patents are declared entirely invalid in decisions issued on requests for invalidation.
Senior Counsel,
Head of IP Dispute Resolution
Hui Zhong Law Firm
Tel: +86 185 1930 1027
E-mail: suzhifu@huizhonglaw.com
This shows that even if a rights holder spends years litigating and ultimately wins, the patent may still be invalidated in a separate process, rendering prior efforts and investment futile. Therefore, for patent owners and litigators, rights protection should be approached holistically by co-ordinating infringement proceedings with invalidation proceedings to avoid having a win in the infringement case undermined at the last moment.
The infringement and invalidation dispute between NetEase Youdao and iFlytek over the “dictionary pen” design patent is a representative case in this area. This complex matter was led and handled by the author’s team. Despite the patent in question being declared invalid at first instance, we adopted an effective litigation strategy at the appeal stage and helped the client turn the case around.
Core conflicts
From 2017, NetEase Youdao began developing its Youdao dictionary pen smart hardware products and, from 2019 onwards, launched four successive generations. During this period, NetEase Youdao filed multiple design patent applications and obtained grants.
The resulting product line included four generations of Youdao Dictionary Pen devices corresponding to the granted design patents, achieving strong commercial success. In particular, the third-generation Youdao Dictionary Pen long held a leading position in dictionary pen sales rankings.
Believing that iFlytek had, without authorisation, manufactured and sold dictionary pens incorporating the same design as its third-generation Youdao Dictionary Pen, NetEase Youdao filed proceedings in February 2021 before the Beijing Intellectual Property Court, alleging infringement of the product’s design patent. After hearing the case, the court found infringement and upheld in full the RMB5 million (USD724,000) damages claim.
In parallel, iFlytek filed an invalidation petition against the disputed patent, relying on the design patent for NetEase Youdao’s second-generation dictionary pen as the comparator design. Although the disputed patent in suit was upheld as valid in the CNIPA’s invalidation proceedings, the first-instance court in the subsequent administrative litigation over the invalidation decision held that the patent should be declared invalid.
At that point, NetEase Youdao’s rights protection efforts became highly uncertain. The key design patent underpinning a commercially successful product line was at real risk of being invalidated as a result of the legal action.
Litigation strategies
At a critical stage, the Hui Zhong IP team led by the author stepped in as NetEase Youdao’s counsel for the second-instance proceedings. First, the team developed an overall strategy and carefully co-ordinated the progress of the two sets of proceedings, prioritising the invalidation litigation and the preservation of the patent’s validity.
Second, to persuade the court effectively in the invalidation case, in addition to the usual work, the team prepared a tailored case-law research report, systematically summarising the adjudicative approach in standout earlier decisions and demonstrating to the panel the first-instance judgment’s errors in its understanding and application of the relevant legal principles.
Third, the team produced visual materials, presenting comprehensive multi-angle comparison views between the patent and the closest comparator design, together with prior designs, to accurately highlight the innovative design features and their impact on the overall visual impression.
Furthermore, the team carried out comprehensive factual investigations and adduced evidence on how ordinary consumers perceive the products embodying the patent and the closest prior design. It explained to the panel that the ordinary observer – the evaluative subject for design patents – possesses a higher level of knowledge and perceptual ability than an average consumer.
If average consumers were not confused, an ordinary observer would not consider the two designs to be substantially indistinguishable. These steps persuaded the court, after which the Supreme People’s Court facilitated mediation between the parties. On that basis, both sides made concessions, and the dispute was settled.
Case impact
The case involved two leading companies in China’s AI-driven education sector and attracted significant attention across the industry. In particular, when the patent owner was in a comparatively disadvantageous position, counsel worked closely with the client to deliver robust and well-grounded professional submissions, while the judge patiently facilitated mediation.
This ultimately enabled both parties to make rational decisions and reach an amicable settlement. The settlement terms also reflected clear recognition of the value of IP, successfully transforming a highly adversarial dispute – one that could have resulted in losses on both sides – into an effective route for realising IP value. It stands as a sound example of using litigation to facilitate IP transactions.
The CNIPA’s official newspaper, China Intellectual Property News, devoted a full-page feature to the case. Its demonstrative impact has prompted a positive response within the industry and provides a valuable reference for resolving similar disputes and converting IP value into practical gains.
Su Zhifu is senior counsel and the head of IP dispute resolution at Hui Zhong Law Firm. He can be contacted by phone at +86 185 1930 1027 and by email at suzhifu@huizhonglaw.com
