On February 26, 2021, the Intellectual Property Court of the Supreme People’s Court released a list of top 10 technical intellectual property cases selected from all cases that the court ruled in 2020. The list covers a wide range of issues from administrative appeals to civil lawsuit and from procedures to substantive rights.
Case 1 Three cases regarding anti-suit behavior preservation against standard essential patents for wireless communications
Reference: (2019) ZGFZMZ Nos. 732, 733, and 734
Summary: In January 2018, Huawei filed a lawsuit with the Nanjing Intermediate People's Court, requesting confirmation of non-infringement against three Chinese patents of Conversant Wireless Licensing Company and confirmation of the license fee rate for standard essential patents in China. In April 2018, Conversant counteracted by filing a patent infringement lawsuit in Düsseldorf, Germany, requesting the court to order Huawei to stop infringement and compensate for losses. On September 16, 2019, the Nanjing Intermediate People's Court made the first-instance judgment and determined the license fee rate for the standard essential patents involved Huawei and its Chinese affiliates and Conversant. Conversant refused to accept the first-instance judgment and appealed to the Supreme People's Court. While the appeal had been pending at the Supreme People's Court, the German court made a first-instance judgment on August 27, 2020, which found that Huawei and its German affiliates infringed Conversant's European patents and ordered Huawei and its German affiliates to stop providing, selling, using the related mobile terminals, or importing or holding related mobile terminals for the aforesaid purposes, recalling and destroying the infringing products, etc. This judgment can be temporarily enforced after Conversant provides a guarantee of 2.4 million euros. On the same day, Huawei filed an application for anti-suit behavior preservation with the Supreme People's Court, requesting Conversant be prohibited from applying for execution of the German court's judgment until the final judgment of the Supreme People's Court is made. The Intellectual Property Court of the Supreme People's Court comprehensively considered factors including necessity, balance of profit and loss, and international comity principle, and made a behavior preservation ruling within 48 hours that Conversant shall not apply for the execution of the aforesaid German judgment before the final judgment of the Supreme People's Court. If this ruling were violated, a daily fine of RMB 1,000,000 (about USD 154,000) shall be imposed from the date of the violation and it shall be accumulated on a daily basis. Conversant filed a reconsideration request, which was later rejected by the Supreme People's Court after organizing and giving a hearing to both parties. The parties fully respected the decision and fulfilled the Supreme People's Court's ruling. They conducted active commercial negotiations, reached a global settlement agreement, ended all parallel lawsuits in multiple countries around the world, and achieved good legal effects and realized win-win social effects.
Value: The ruling on the three cases made by the Intellectual Property Court of the Supreme People's Court is the first anti-suit-natured behavior preservation ruling in the field of intellectual property by a Chinese court. The Supreme People's Court also pioneeredly applied the "daily based fine" to ensure the enforceability of the behavior preservation ruling. The ruling of the three cases clarifies the applicable conditions and considerations for an anti-suit behavior preservation injunction, explores for the establishment and improvement of China's injunction system and helps accumulate useful experience, and effectively safeguards the national interests, judicial sovereignty and legitimate rights and interests of the enterprise.
Case 2 Vanillin technology theft case with a record-high compensation
Reference: (2020) ZGFZMZ No. 1667
Summary: Jiaxing Zhonghua Chemical Co., Ltd. and Shanghai Xinchen Co., Ltd. jointly developed the process of producing vanillin by glyoxylic acid method and protected it as a technical secret. Compared with conventional processes, this technology is safe to perform, easy to operate, and has good effects. Benefitting from this technology, Jiaxing Zhonghua Chemical Company has become the largest vanillin manufacturer in the world, taking about 60% of the global market of vanillin. Jiaxing Zhonghua Chemical Company and Shanghai Xinchen Company considered that Wanglong Group Company, Wanglong Technology Company, Xifushi Wanglong Company, a person surnamed Fu, and a person surnamed Wang used their vanillin production technology without permission and infringed their technical secret, so they filed a lawsuit with the Zhejiang Higher People’s Court, requesting the court to order the defendants to stop infringement and compensate RMB 502,000,000 (about USD 77,000,000) for economic losses and reasonable expenses. The Zhejiang Higher People's Court determined that the infringement was established and ordered the defendants to stop the infringement and compensate the plaintiffs RMB 3,000,000 (about USD 4,600,000) for economic loss and RMB 500,000 (about USD 77,000) for reasonable expenses. Along with the first-instance judgment, the Zhejiang Higher People’s Court also made a behavior preservation ruling, ordering Wanglong Technology Company and Xifushi Wanglong Company to immediately stop using the technical secret, but the two companies did not stop using the technology. In addition, all parties except Wang refused to accept the first-instance judgment and appealed to the Supreme People's Court. In the second-instance, the plaintiffs Jiaxing Zhonghua Chemical Company and Shanghai Xinchen Company reduced their requested compensation amount to RMB 177,000,000 (about USD 27,000,000). The Intellectual Property Court of the Supreme People's Court, based on the relevant data of economic losses provided by the right holder(s), comprehensively considered the factors such as the huge commercial value of the technology secret, the large scale of the infringement, the long infringement time, and the fact that the defendants refused to obey the effective behavior preservation ruling, and eventually ordered Wanglong Group Company, Xifushi Wanglong Company, Fu, Wanglong Technology Company and their legal representative Wang to jointly compensate the plaintiffs RMB 159,000,000 (about USD 22,500,000) for economic losses. At the same time, the court decided to transfer the suspected criminal evidence to the public security organs (for further investigation and prosecution).
Value: This case has the largest compensation that the country's courts have awarded in technical secret infringement disputes. The Intellectual Property Court of the Supreme People's Court ruled in the case to protect the core technology of important industries in accordance with the law, effectively intensify the crackdown on malicious infringement, and clarify the joint and several liability of a legal representative of the company whose business is infringement-related. The decision to transfer the suspected criminal evidence to the public security organs in accordance with the law promotes the association between civil relief and criminal punishment, and demonstrates the court system’s clear judicial attitude of strictly protecting intellectual property rights in accordance with the law and cracking down on malicious infringement.
Case 3 Kabo technical secret case awarded punitive damages
Reference: (2019) ZGFZMZ No. 562
Summary: Guangzhou Tianci Company and Jiujiang Tianci Company claimed that a person surnamed Hua, a person surnamed Liu, Anhui Newman Company, a person surnamed Wu, a person surnamed Hu, a person surnamed Zhu and a person surnamed Peng infringed on their technical secret regarding "Kabo" manufacturing, and filed a lawsuit with the Guangzhou Intellectual Property Court, requesting the court to order the defendants to stop infringement, compensate losses and apologize. The Guangzhou Intellectual Property Court found the defendants' acts constitute techincal secret infringement and applied punitive damages of 2.5 times by taking in consideration of the intention behind and the circumstances of the infringement. Guangzhou Tianci Company, Jiujiang Tianci Company, Anhui Newman Company, Hua and Liu refused to accept the first-instance judgment and appealed to the Supreme People's Court. In the second instance, the Intellectual Property Court of the Supreme People's Court held that the alleged infringement was infringement of the technical secret involved, but the first-instance judgment did not fully consider the contribution of the technical secret involved when determining the compensation amount, and did not fully consider the infringers' wilful intent and conduct of spoliation of evidence, when determining punitive damages. Therefore, the Supreme People's Court maintained the judgment of the first-instance judgment on cessation of infringement, but increased the punitive damages to 5 times. Anhui Newman Company was sentenced to compensate Guangzhou Tianci Company and Jiujiang Tianci Company RMB 30,000,000 (about USD 4,600,000) for economic losses and RMB 400,000 (about USD 61,500) for reasonable expenses. Hua, Liu, Hu and Zhu were held joint and several liabilities for the aforementioned compensation amounts within the amount of RMB 5,000,000 (about USD 770,000), RMB 30,000,000 (about USD 4,600,000), RMB 1,000,000 (about USD 154,000) and RMB 1,000,000 (about USD 154,000) respectively.
Value: This case is the first punitive damages case made by the Supreme People's Court. The judgment of the case fully considered the wilful intent of the infringer, the conduct of spoliation of evidence, the duration of the infringement, the scale of the infringement, etc., applied punitive damages, and finally used the maximum statutory multiple (five-times) to determine the punitive damages. It clearly conveys a strong signal to strengthen the judicial protection of intellectual property rights.
Case 4 NX computer software copyright infringement case
Reference: (2020) ZGFZMZ No. 155
Summary: Siemens Software Co., Ltd., the copyright owner of NX series software, filed a lawsuit with the Guangzhou Intellectual Property Court on the grounds that Wolfer Company used the software involved in the case for product designing and manufacturing without permission, which constituted infringement. According to Siemens Software Company's petition, the Guangzhou Intellectual Property Court went to Wolfer Company for evidence preservation. During the period, the Guangzhou Intellectual Property Court served a preservation ruling, elaborating the preservation measures to be taken and the legal consequences of refusing to cooperate with the preservation. Upon on-site checking, 26 computers were found in Wolfer Company’s design office and the Guangzhou Intellectual Property Court preserved 17 computers and found that 9 of them were installed with the software involved. Wolfer Company took sudden countermeasures to obstruct the evidence preservation by refusing to turn on some computers, cutting off power, snatching court cameras and preventing the court staff from leaving, which forced the preservation work to be terminated. The Guangzhou Intellectual Property Court ordered Wolfer Company to stop infringement and compensate Siemens Software Company RMB 500,000 (about USD 77,000) for economic losses and RMB 100,000 (about USD 15,400) reasonable expenses for right protection in accordance with the statutory compensation limit. The Intellectual Property Court of the Supreme People's Court comprehensively considered the quantity of items involved in the infringement, the price of the software involved, and the circumstances that Wolfer Company obstructed the court's evidence preservation without justifiable reasons, and thus ordered Wolfer Company to compensate Siemens Software Company RMB 2,610,000 (about USD 170,000) for economic losses and RMB 100,000 (about USD 15,400) reasonable expenses for right protection.
Value: This case demonstrates that foreign entities' legal rights and interests are equally protected in accordance with the law, clarifies the consequences of the litigation participants obstructing evidence preservation and that the conduct of the accused infringer in litigation is considered in determining damages. The decision in this case increases the punishment for the party who obstructs the evidence preservation and is of great significance in guiding the parties to litigate in good faith.
Case 5 Bundle enforcement of a selfie-stick utility model patent
Reference: (2020) ZGFZMZ Nos. 357 & 376
Summary: Yuandesheng Company is the patentee of the utility model patent named An Integrated Self Device and has filed a few patent infringement lawsuits against manufacturers and sellers nationwide. In the case of Yuandesheng Company v. Pinchuang Company, the Guangzhou Intellectual Property Court found Pinchuang Company a manufacturer of the infringing product and that it continued to manufacture and sell the infringing product when there had been existing cases found that its manufacturing and selling conducts constituted infringement. Considering that manufacturing is at the initial stage of an infringement and that Pinchuang Company’s intent of the infringement and repeated infringment, the court ordered Pinchuang Company to stop infringement and compensate Yuandesheng Company for RMB 1,000,000 (about USD 154,000). Pinchuang Company appealed to the Supreme People's Court. The Intellectual Property Court of the Supreme People's Court rejected the appeal and upheld the original judgment. In the case of Yuandesheng Company v. Chenxi Communication Department, the Yinchuan Intermediate People's Court found that Chenxi Communication Department’s selling conducts of the infringing product constituted infringement of the patent right involved. Considering that Yuandesheng Company did not submit evidence regarding the amount of infringement damages, and the facts that the price of the infringing product is low and the profit is thin, and that Chenxi Communication Department is an individual industrial and commercial household and its business scale is small, which led to the determination that there is evidence to prove that the infringement losses were below the lower limit of the statutory compensation amount, The court therefore ordered Chenxi Communication Department to compensate Yuandesheng Company RMB 2,000 (about USD 308) for economic losses. Yuandesheng Company refused to accept the result and appealed to the Supreme People's Court. The Intellectual Property Court of the Supreme People's Court rejected the appeal and upheld the original judgment.
Value: The Intellectual Property Court of the Supreme People's Court demonstrates, in the bundle enforcement cases regarding selfie-stick and lighter, its efforts on actively promoting enforcement against traceable infringement sources and managing of appropriate headstream litigation participants. Where the infringing party is a manufacturer who is at the first step of an infringement, punishment should be increased and patentees are encouraged to directly trace the source of infringing products and enforce their rights against the manufacturing conducts. Where the infringing party is a retailer or a user, their liability should be determining in accordance with the law, the facts and the evidence; if the damage exceeds the upper limit of statutory compensation or is under than the lower limit of statutory compensation, the amount of compensation may be determined above the upper limit or below the lower limit.
Case 6 Secondary lithium ion battery invention patent invalidation case
Reference: (2020) ZGFZXZ Nos. 406 & 407
Summary: The two administrative disputes were between a person surnamed Ren and a person surnamed Sun and Apple Shanghai Company, Apple Beijing Company and the National Intellectual Property Administration (CNIPA) over invalidation of an invention patent titled Secondary Lithium Ion Battery, Battery Pack, and Its Protection Circuit and Electronic Device. Ren and Sun are the patentees and Apple Shanghai Company and Apple Beijing Company petitioned to invalidate the patent, and the CNIPA declared the claims 1-12 and 14 of the patent valid. In the first instance, the Beijing Intellectual Property Court held that all claims of the patent should be invalid because they were not supported by the specification, and thus ordered the CNIPA to make a new decision. Ren and Sun appealed to the Supreme People's Court. The Supreme People's Court held in the second instance that the patent involved could be supported by the specification and the judgment was changed to declare the patent valid.
Value: These cases clarify the criteria for determining whether a claim with two or more different numerical ranges jointly limiting the scope of protection can be supported by the specification. If, within the scope of the specification and the drawings, the corresponding relationship between the two or more numerical ranges can be determined and allows a person skilled in the art to be able to reasonably determine the scope of patent protection, the claim shall be considered to be supported by the specification. This clarification is of great significance to guard the patent system for stimulating innovation and promoting the development of emerging industries.
Case 7 A civil and administrative crossover of patent litigations for the method of accessing portal websites
Reference: (2020) ZGFZXZ No.282 and (2019) ZGFZXZ No. 725
Summary: Dunjun Company is the patentee of the invention patent titled A Method for Easy Access to the portal website of a network service provider. Dunjun Company believes that, without permission, Weimeng Company manufactures and sells and Guanfeng Company sells products falling within the scope of its patent, and filed a lawsuit with the Quanzhou Intermediate People's Court. The Quanzhou Intermediate People's Court found that the alleged infringing products fell into the scope of patent protection involved and Guanfeng Company's legal source defense was tenable, and issued the first-instance judgment to order Weimeng Company and Guanfeng Company immediately to stop infringement; Weimeng Company to compensate Dunjun Company RMB 10,000,000 (about USD 1,540,000) for economic losses. Weimeng Company appealed to the Supreme People's Court. Before Dunjun Company filed a lawsuit against the Quanzhou Intermediate People's Court, the National Intellectual Property Administration made a decision upon the invalidation request of Weimeng Company for the patent right involved and declared the patent valid. After the court of first instance made a first-instance judgment on the civil infringement case filed by Dunjun Company, Weimeng Company filed an administrative lawsuit against the above invalidation decision and then appealed to the Supreme People's Court because it refused to accept the first-instance judgment of the administrative lawsuit. The Intellectual Property Court of the Supreme People's Court coordinated the trials of the above-mentioned administrative and civil appeal cases involving the same patent, and made an administrative second-instance judgment on December 23, 2020 maintaining the validity of the patent right involved, and a civil second-instance judgment on December 30 determining that the alleged infringing conducts constituted infringement and upheld the first-instance judgment on stopping infringement and compensating RMB 10,000,000 (about USD 1,540,000).
Value: In these two cases, the Intellectual Property Court of the Supreme People's Court gave full play to its institutional advantage of concurrently trying civil and administrative appeal cases regarding technical intellectual property rights, effectively solved the problem of "one case having to await for another case" when a crossover between the administrative patent validation confirmation procedure and civil infringement procedure is involved, and the problem of procedure idling or delaying caused by the customary arrangement "dismiss first and accept later and separately", as well as the problem of possible inconsistent interpretation of claims. It realizes a seamless connection and coordination of the hearing of the administrative patent validity confirmation case and the civil infringement case and promotes the substantive and comprehensive treatment to patent disputes.
Case 8 Lithium battery protection chip integrated circuit layout design infringement case
Reference: (2019) ZGFZMZ No. 490
Summary: Saixin Company applied On April 22, 2012 for registration of the integrated circuit layout design titled Single-chip Negative Electrode Lithium Battery Protection Chip with Integrated Controller and Switch Tube. The integrated circuit layout design is still in force. Saixin Company claims that the chips copied and sold without permission by Yusheng Company, a person surnamed Hu et al., are essentially the same as the the integrated circuit layout design involved, which constitutes infringement of the exclusive right of the integrated circuit layout design. Therefore, it sued to the Shenzhen Intermediate People's Court and requested the court to order the defendants to stop infringement and compensate RMB 1,000,000 (about USD 154,000) for the loss and reasonable expenses for protecting the rights. The Shenzhen Intermediate People's Court held that the infringing chip was essentially the same as the original part of the layout design involved, which constituted infringement, and ordered Yusheng Company to compensate Saixin Company RMB 500,000 (about USD 77,000) for economic losses, infringers Hu, Huang and Huang to bear joint and several liabilities for the above compensation. Yusheng Company, Hu, Huang and Huang appealed to the Supreme People's Court. The Intellectual Property Court of the Supreme People's Court, after hearing the case, rejected the appeal and upheld the original judgment.
Value: This case is the first appeal case of infringement of the exclusive right of integrated circuit layout-design accepted by the Supreme People's Court. The judgment of this case clarifies the nature of the registration of an integrated circuit layout design and the basic principles of determining originality of an integrated circuit layout design. It protects the interests of the right owner of integrated circuit layout design in accordance with the law, and has the guiding significance for regulating the innovation and development of the integrated circuit industry.
Case 9 E-commerce platform Tmall-involved reverse behavior preservation case
Reference: (2020) ZGFZMZ No. 993
Summary: Bosheng Company is the patentee of the utility model patent titled Flat Mop Cleaning Tool with New Barrel Structure. It believed that the mop sold by Lianyue Company on Tmall.com constitutes an infringement of its patent right and filed a lawsuit with the Ningbo Intermediate People's Court. Ningbo Intermediate People's Court found the infringement established, and ordered Tmall to immediately delete and disconnect the sales links of the alleged infringing products. Subsequently, Tmall deleted the relevant links. Lianyue Company and others appealed to the Supreme People's Court. During the second instance procedure, the patent involved was declared invalid by the National Intellectual Property Administration. Lianyue Company then filed an application for behavior preservation with the Supreme People's Court, requesting the court to order Tmall to immediately restore the product sales links of Lianyue Company on Tmall,com. After receiving the application, the Intellectual Property Court of the Supreme People's Court made a ruling within 26 hours and supported the preservation application by requiring a guarantee in form of "fixed + dynamic (sales-based)" deposit. After the behavior preservation ruling is made, the parties reach a settlement.
Value: This is the first case on reverse behavior preservation made by the Supreme People's Court. The Intellectual Property Court of the Supreme People's Court well balanced the interests of the patentee, the alleged infringer and the operator of the e-commerce platform (Tmall.com) through a high-quality and efficient judgment, especially the application of a dynamic guarantee. After the ruling has been made, Lianyue Company was able to carry out online operations as normal at the specific sales timing of "Double Eleven" (the Singles’ Day shopping festival) to avoid irreparable damage to its interests. At the same time, adopting a dynamic guarantee deposit calculated based on Lianyue Company’s sales also protected the interests of the patentee Bosheng Company from not being infringed due to mistaken reverse behavior preservation.
Case 10 Bricks and tiles association monopoly case
Reference: (2020) ZGFZMZ No. 1382
Summary: a person surnamed Zhang claimed that he joined the Yibin Brick and Tile Association under the coercion of the founders of the Association namely Wuqiao Company, Sihe Company and a person surnamed Cao, and signed a Stop Production and Rectification Contract which forced him to stop production. The Yibin Brick and Tile Association and its founders have been extensively signing the above contracts and forced some brick and tile enterprises in Yibin to stop production to reduce the supply of bricks and tiles and bring out a price increase of brick and tile and thus win improper benefits. Moreover, the Yibin Brick and Tile Association and some brick and tile enterprises that still maintained production only paid a small amount of the support fees and did not pay further as agreed. Their conducts precluded Zhang from participating in competition and constituted a violation of the Anti-monopoly Law. Zhang sued to the Chengdu Intermediate People's Court and requested the court to order Yibin Brick & Tile Association, Wuqiao Company, Sihe Company and Cao and others to jointly compensate RMB 336,000 (about USD 52,000) for economic losses and RMB 80,000 (about USD 12,300) for reasonable expenses for right protection. The Chengdu Intermediate People's Court held that the sued behavior constituted a violation of the Anti-monopoly Law and infringed on the rights and interests of Zhang, and thus ordered Wuqiao Company, Sihe Company, Cao and the Brick and Tile Association to jointly compensate RMB 336,000 (about USD 52,000) for economic losses and RMB 5,000 (about USD 770) for reasonable expenses for right protection. Wuqiao Company, Cao and the Brick and Tile Association appealed to the Supreme People's Court. In the second instance, the Intellectual Property Court of the Supreme People's Court held that Zhang voluntarily participated in the horizontal monopoly agreement in this case, and as one of the implementers claimed that other implementers of the horizontal monopoly agreement compensate for the so-called economic losses caused by the implementation of the monopoly agreement. In essence, it was a request to divide the monopoly interests, which was not the object of relief intended by the Anti-monopoly Law. As a result, the original judgment was revoked and all of Zheng’s claims were rejected.
Value: The case clarifies the purpose and orientation of civil remedy for monopoly and that a voluntary implementer of a horizontal monopoly agreement is not an object of remedy intended by the Anti-monopoly Law, and makes it clear that it is in nature dividing monopoly benefits where a implementer of horizontal monopoly agreements demands compensation from other implementers for the so-called losses caused by the implementation of monopoly agreements. It has great significance in combating horizontal monopoly acts and maintaining a fair competition order in accordance with the law.
Translating from the official publication in Chinese http://www.court.gov.cn/zixun-xiangqing-288071.html
