Table of Contents

1. Anti-suit Injunction Issued in Three Cases Concerning Standard Essential Patents on Wireless Communication

2. Case on High-amount Compensation for Vanillin Technical Secret Misappropriation

3. Case on Punitive Damages on Carbomer Technical Secret Misappropriation

4. Case on Computer Software NX Copyright Infringement

5. Cases on Protection of Selfie Stick Utility Model Patent

6. Case on Invalidation of Secondary Lithium-ion Battery Invention Patent

7. Overlapping Civil and Administrative Cases on Method of Access Portal Website Patent

8. Case on Infringement on Integrated Circuit Layout Design of Lithium-ion Battery Protection Chip

9. Case on Reverse Act Preservation against Tmall.com

10. Case on Monopoly of Bricks & Tiles Association

[Disclaimer: below is a brief English introduction of the selected SPC judgments of the technology-related IP cases heard by the IPC in 2020. In case of any discrepancy between the original judgments in Chinese and its English summary, the original judgments in Chinese shall prevail. For the full version of these judgments in Chinese, please visit China Judgments Online, i.e. wenshu.kfyzwh.com]

Case Introduction

1. Anti-suit Injunction Issued in Three Cases Concerning Standard Essential Patents on Wireless Communication

Case Number: (2019) SPC IP Civil Final 732 / 733 / 734

Case Facts

In January 2018, Huawei filed a case with Nanjing Intermediate People's Court, requesting judicial declaration that Huawei had not infringed three of Conversant's Chinese patents and also requesting judicial determination on royalty rates of the standard essential patents (SEPs) in China. To counteract Huawei's lawsuit, Conversant filed a patent infringement lawsuit in the court of Düsseldorf, Germany in April 2018, requesting the German court to order Huawei to cease the alleged infringement and compensate for alleged losses. On September 16th, 2019 Nanjing Intermediate People's Court rendered its first instance judgment, determining the royalty rates of Conversant's SEPs involved in the case for Huawei plus its Chinese affiliates. Conversant appealed against the first instance judgment to the SPC. On August 27th, 2020 when the appellant case was still in the litigation process at the SPC, the German court rendered its first instance judgment according to which Huawei and its German affiliates had infringed Conversant's European patents, and Huawei plus its German affiliates should cease to provide, sell, use, import, or hold relevant mobile terminals for the afore-mentioned purposes, and should destroy or recall the infringing products. The German court judgment could have been enforced in advance since Conversant provided a monetary security in the amount of €2.4 million. On the same day, Huawei applied to the SPC for an injunction, requesting that Conversant be prohibited from applying for enforcement of the German court judgment prior to the rendering of the SPC's final judgment. On the basis of the doctrine of international judicial practice and in light of the balancing factors such as necessity, profits and losses, the Intellectual Property Court (the IPC) of the SPC, without any delay, issued an anti-suit injunction within 48 hours, ordering that Conversant should not apply for enforcement of the said German court judgment prior to the rendering of the SPC's final judgment, in violation of which, a daily fine of RMB one million should be imposed on Conversant and such fine shall accrue on a daily basis if the violation continues. Conversant petitioned against the anti-suit injunction. The petition was then rejected by the IPC after a court hearing. While fully respecting and implementing the ruling on anti-suit injunction afterwards, the parties to the cases held business negotiations in an active manner and then reached a global package-settlement agreement ending all transnational parallel litigations over the globe. It is fair to say that the anti-suit injunction ruling in this case has achieved sound effects from both legal and social perspectives.

Case Significance

In these three lawsuits, the IPC for the first time issued its anti-suit injunction in the field of intellectual property and took the daily-fine measure to ensure the enforcement of such injunction. The IPC in these three cases pointed out the conditions and factors to be considered for issuing anti-suit injunction which by its nature falls within the category of act preservation. The judicial practice of the IPC in these cases may also help improve China's anti-suit injunction mechanism and protect the legitimate rights and interests of the parties.

2. Case on High-amount Compensation for Vanillin Technical Secret Misappropriation

Case Number: (2020) SPC IP Civil Final 1667

Case Facts

Jiaxing Zhonghua Chemical Co., Ltd. (Hereinafter referred to as Zhonghua Chemical) and Shanghai Xinchen New-tech Co., Ltd. (Hereinafter referred to as Xinchen New-tech) jointly developed a process for producing vanillin by using the glyoxylic acid method and have been protecting it as their technical secret. The process is safe to implement, easy to operate, and has good effects. It has significant advantages over traditional processes. With this process, Zhonghua Chemical became the world's largest vanillin manufacturer, and captured approximately 60% of the global vanillin market. Holding that Wang Long Group, Wang Long Tech, SFC Wang Long, Fu, and Wang infringed their right to technical secret by unauthorized use of their vanillin production process, Zhonghua Chemical and Xinchen High-tech brought an action at the Zhejiang High People's Court, requesting the court to order the above-mentioned defendants to cease the misappropriation and compensate RMB502 million for economic losses and reasonable expenses. Zhejiang High People’s Court ascertained the fact of technical secret misappropriation, and therefore ordered the defendants to cease the misappropriation and compensate RMB three million for economic losses and RMB500,000 for reasonable expenses as incurred by seeking remedy. In addition to the first-instance judgment, Zhejiang High People's Court also issued an injunction, ordering Wang Long Tech and SFC Wang Long to cease the usage of the technical secret in question for producing vanillin. However, Wang Long Tech and SFC Wang Long did not follow such injunction. All parties to the case except Wang refused to accept the judgment and appealed to the SPC. In the court of second instance, Zhonghua Chemical and Xinchen Tech reduced their claims for compensation to RMB177 Million. According to the economic analysis report in connection with the economic losses as provided by the right holders and by taking into consideration such factors as the enormous commercial value of the technical secret in question, the large scale and long duration of the misappropriation, refusal to follow the injunction, and the abominable nature of the defendants’ actions, the SPC reversed the original judgment and ordered that Wang Long Group, CFS Wang Long, Fu, Wang Long Tech and its legal representative Wang, shall be jointly and severally liable for compensating the technical secret holders RMB159 Million. Furthermore, the Supreme People's Court also decided to transfer the evidence concerning the suspected criminal practices to the police.

Case Significance

The compensation amount in this case is the highest among trade secret misappropriation cases tried by Chinese courts so far. By rendering judgment on the case, the IPC protected the core technologies in an important industry in accordance with law, intensified the crackdown on malicious misappropriation, and defined the joint and several liabilities of the legal representatives of the business entities whose survival is primarily based on trade secret misappropriation. By transferring the evidence of the suspected criminal practices to the police, the court promoted the combination of remedies through both civil damages compensation and criminal penalties, and hence demonstrated the people’s court’s clear judicial attitude in strictly protecting intellectual property rights in accordance with law and cracking down on malicious IP infringements.

3. Case on Punitive Damages on Carbomer Technical Secret Misappropriation

Case Number: (2019) SPC IP Civil Final 562

Case Facts

Guangzhou Tinci Materials Technology Co., Ltd. (Hereinafter referred to as Guangzhou Tinci) and Jiujiang Tinci Materials Technology Co., Ltd. (Hereinafter referred to as Jiujiang Tinci) filed a lawsuit in the Guangzhou Intellectual Property Court, Claiming that Hua, Liu, Anhui Newman, Wu, Hu, Zhu, and Peng misappropriated their technical secret for the process of carbomer manufacturing, and requesting that the alleged infringers cease alleged infringements, compensate for their losses, and make public apology. The Guangzhou Intellectual Property Court adjudicated that the alleged infringers had constituted misappropriation of the technical secret involved, and imposed 2.5-times punitive damages given their subjective intent and specific circumstances of the misappropriation. Guangzhou Tinci and Jiujiang Tinci as well as Anhui Newman, Hua, and Liu appealed against first- instance judgment to SPC. The IPC affirmed the ruling of the first instance that the alleged infringers had constituted misappropriation of the technical secret involved, but in determining punitive damages, the IPC enhanced the punitive multiple of damages of the first instance judgment with the contribution of the technical secret to the profit of infringers, infringers' malice and obstruction of evidence submission in full consideration. Therefore, the IPC imposed the ceiling of statutory punitive damages by 5 times, ruling that Anhui Newman compensate Guangzhou Tinci and Jiujiang Tinci RMB30 million for the economic losses and RMB400,000 for reasonable expenses as incurred by seeking remedy, with Hua, Liu, Hu, and Zhu bearing joint and several liabilities up to RMB five million, RMB30 million, RMB one million, and RMB one million, respectively for the aforementioned compensation.

Case Significance

This is the first case that the IPC applied punitive damages. In this case, the IPC imposed the ceiling of statutory punitive damages by 5 times with such factors as subjective malice, obstruction of evidence submission, duration and scale of the alleged infringement, etc. all taken into account. The judgment sends a strong message that China will continue to strengthen judicial protection of intellectual property.

4. Case on Computer Software NX Copyright Infringement

Case Number: (2020) SPC IP Civil Final 155

Case Facts

Siemens PLM Software, the copyright owner of NX software, filed a lawsuit with the Guangzhou Intellectual Property Court on the grounds that Wolfer's unauthorized use of the involved software in product design and manufacturing constituted an infringement. In response to the application of Siemens PLM Software, the Guangzhou Intellectual Property Court visited Wolfer for evidence preservation. Prior to that, the Guangzhou Intellectual Property Court issued a preservation ruling, detailing the preservation measures to be taken and the legal consequences of refusing to cooperate with respect to the preservation. According to the on-site inventory, there were 26 computers in Wolfer's design office. After the Guangzhou Intellectual Property Court preserved 17 computers, 9 of which were founded to be installed with the software involved, Wolfer’s representatives suddenly refused to turn on some of the computers, cut off the power, in an attempt to obstruct the preservation of evidence. The preservation work was thus forced to be suspended. The Guangzhou Intellectual Property Court ruled that Wolfer cease the infringement and compensate Siemens PLM Software RMB 500,000 for economic loss and RMB 100,000 for reasonable expenses as per the ceiling of statutory compensation. After comprehensively considering factors such as the scale of infringement by Wolfer, the cost of the software involved, and Wolfer's unjustifiable obstruction of the court's evidence preservation, the IPC of the SPC reversed the original judgment and ordered Wolfer to compensate Siemens PLM Software RMB 2.61 million for economic loss and RMB 100,000 for reasonable expenses.

Case Significance

In this case, the court equally protected the lawful rights and interests of the foreign-related entity in accordance with the law, clarified the consequences of litigation participants obstructing evidence preservation, and took the alleged infringer's behavior during the litigation into consideration when determining damages. The ruling in this case to impose heavier penalties on the parties who interfered with evidence preservation has important significance in guiding litigants to behave with integrity in litigation.

5. Cases on Protection of Selfie Stick Utility Model Patent

Case Number: (2020) SPC IP Civil Final 357 and 376

Case Facts

Winners' Sun Plastic Electronics (Shenzhen) Co., Ltd. (Hereinafter referred to as Winners' Sun) is the patentee of the utility model titled integrated selfie device. It filed a batch of lawsuits against manufacturers and sellers nationwide, for patent protection. In the case between Winners' Sun and Zhongshan Pinchuang Plastic Products Co., Ltd. (Hereinafter referred to as Pinchuang), the Guangzhou Intellectual Property Court affirmed that Pinchuang was a manufacturer of infringing products, and that it continued manufacturing and selling infringing products despite the fact that its manufacturing and sales activities were found to constitute infringement in a prior case. Considering the infringing nature of the source of the manufacturing and the circumstances of Pinchuang's intentional and repeated infringement, the court ordered Pinchuang to cease infringement and compensate Winners' Sun RMB 1 million. Unsatisfied with the order, Pinchuang appealed to the SPC. After the trial, the IPC of the SPC rejected the appeal and affirmed the original judgment. In the case Winners' Sun v. Chenxi Tongxunbu, the Yinchuan Intermediate People’s Court found that Chenxi Tongxunbu’s act of selling infringing products constituted an infringement of the involved patent. Given that Winners' Sun did not submit evidence to prove the amount of damages caused by the infringement, that the accused infringing products were sold with low prices and low profits, and the fact that Chenxi Tongxunbu is a small-scale individual business, the case fell under the circumstance that there is evidence proving the damages caused by the infringement were less than the statutory minimum compensation. Therefore, the court at its discretion ordered Chenxi Tongxunbu to compensate Winners' Sun RMB 2,000. Unsatisfied with the order, Winners' Sun appealed to the SPC. After the trial, the IPC of the SPC rejected the appeal and affirmed the original judgment.

Case Significance

In response to the batch of right protection cases involving selfie stick and lighter, the IPC actively promoted the protection of rights and governance against the infringement source. In case of manufacturers as source of infringement, the court imposed heavier punishment on infringement, and encouraged patentees to protect their rights by tracking the infringement to the source, i.e. the manufacturers of the infringing products. In case of retailers and users of alleged infringing products, the court defined their responsibilities based on facts and law, and determined the compensation amount above the upper limit or below the lower limit if the damages are proven to be higher than the upper limit or lower than the lower limit of statutory compensation.

6. Case on Invalidation of Secondary Lithium-ion Battery Invention Patent

Case Number: (2020) SPC IP Admin. Final 406 and 407

Case Facts

The administrative dispute over invalidation of invention patent among Ren, Sun, Apple Shanghai, Apple Beijing, and China National Intellectual Property Administration (CNIPA) was related to an invention patent titled Secondary lithium-ion battery or battery pack, its protective circuit and electronic device. Sun and Ren are the patentees; Apple Shanghai and Apple Beijing applied for declaring the patent invalid; the CNIPA maintained the validity of the patent based on claims 1-12 and 14. The Beijing Intellectual Property Court held in the first instance that as the claims could not be supported by the specification, the involved patent should be invalidated. Hence, it ordered the CNIPA to re-examine the patent. Ren and Sun appealed to the SPC. The SPC overruled the judgment of the first instance and held that the involved patent can be supported by the specification, and thus ruled to maintain the validity of the patent.

Case Significance

The significance of this case lies in that it clarified the criteria on whether the claims to define the scope of protection with two or more different numerical ranges can be supported by the specification. If the correspondence between the two or more numerical ranges can be determined according to the specification and the accompanying drawings, so that those skilled in the art can reasonably determine the scope of patent protection, the claims should be considered supported by the specification. The clarification of this rule is of immense significance in safeguarding the patent system, encouraging innovation, and promoting the development of emerging industries.

7. Case on Related Civil and Administrative Cases on Method of Access Portal Website Patent

Case Number: (2020) SPC IP Admin. Final 282, (2019) SPC IP Civil Final 725

Case Facts

Shenzhen Dunjun Technology Co., Ltd. (Hereinafter referred to as Dunjun) is the patentee of the invention patent titled Method of easy to access portal web site of network service provider. Dunjun sued Shenzhen Wayos Technology Co., Ltd. (Hereinafter referred to as Wayos) for unauthorized manufacturing and selling, and Quanzhou Guanfeng Network Technology Co. Ltd. (Hereinafter referred to as Guanfeng) for unauthorized selling, under the protection scope of the involved patent. The Quanzhou Intermediate People’s Court found in the first instance that the alleged infringing products fell under the protection scope of the involved patent, and that Guanfeng's defense of lawful source was established. Thus, the Court issued the first instance judgment that Wayos and Guanfeng should immediately cease the infringement and that Wayos should compensate Dunjun RMB 10 million for its economic loss. Wayos appealed to the SPC. Before Dunjun's lawsuit, the China National Intellectual Property Administration (CNIPA) decided to review the patent in response to Wayos’s request for declaring the involved patent to be invalid; however, the CNIPA maintained the validity of the patent. After the court of first instance gave its judgment on the civil infringement case filed by Dunjun, Wayos filed an administrative lawsuit against the above-mentioned invalidity review decision. Later, as it was dissatisfied with the first instance judgment of the administrative lawsuit, it appealed to the SPC. The IPC of the SPC coordinated the trial of both, the administrative and civil appeals involving the same patent. The IPC issued the second instance administrative judgment on December 23, maintaining the validity of the involved patent, and issued the second instance civil judgment on December 30, confirming infringement and upheld the first instance judgment that ordered Wayos and Guanfeng to immediately cease the infringement and compensate RMB 10 million.

Case Significance

In the trial of the two cases, the IPC comprehensively leveraged the institutional advantages of the unified trial of intellectual property civil and administrative appeal cases concerning technology, effectively reducing idle procedures and delays caused by the customary practice of separating civil litigation and the affiliated administrative one. This also ensured the judgment standards and avoided inconsistencies in interpretation of claims when the administrative procedures for patent affirmation and civil procedures for infringement overlap, achieving seamless connection and result coordination between the patent affirmation administrative case and the patent infringement civil case, and contributing to the substantive and packaged settlement of patent disputes.

8. Case on Lithium-ion Battery Protection Chip Integrated Circuit Layout Design Infringement

Case Number: (2019) SPC IP Civil Final 490

Case Facts

Suzhou Xysemi Electronic Technology Co., Ltd. (Hereinafter referred to as Xysemi) applied for the registration of the integrated circuit layout design titled Single-chip negative electrode protection lithium-ion battery protection chip for integrated controllers and switch tubes on April 22nd, 2012 and has owned the exclusive right to such a layout design since then. Xysemi claimed that Shenzhen Yusheng Technology Co., Ltd. (Hereinafter referred to as Yusheng) and Hu et al. copied and sold chips with an integrated circuit layout design that was essentially the same as that of Xysemi without permission, which constituted an infringement of its exclusive right to its integrated circuit layout design. Xysemi filed a suit in the Shenzhen Intermediate People's Court, requesting the court to order the alleged infringers to cease the infringement and compensate RMB 1 million for its loss and reasonable right protection costs. The Shenzhen Intermediate People's Court held that the integrated circuit layout design of the alleged infringing chip was essentially the same as the original part of the involved layout design and constituted an infringement. Thus, it ordered Yusheng to compensate Xysemi RMB 500,000 for its economic loss, and ordered Hu, Huang Xdong and Huang Xliang to be held jointly and severally liable for the above compensation. Yusheng, Hu, Huang Xdong, and Huang Xliang refused to accept the judgment and appealed to the Supreme People's Court. After the trial, the IPC of the SPC rejected the appeal and affirmed the original judgment.

Case Significance

This is the first appeal case concerning infringement of the exclusive right to integrated circuit layout design accepted by the SPC. The judgment clarified the nature of the registration of the integrated circuit layout design and the general principles on the judgment of the originality of integrated circuit layout design and protected the interests of the right holder of the integrated circuit layout design in accordance with law. The case plays a guiding role in regulating the innovation-driven development of the integrated circuit industry.

9. Case on Reverse Act Preservation against Tmall.com

Case Number: (2020) SPC IP Civil Final 993

Case Facts

Cixi Bosheng Plastic Products Co., Ltd. (Hereinafter referred to as Bosheng) is the patentee of the utility model titled flat mop cleaning tool with novel barrel structure. Believing that the mops sold by Yongkang Lianyue Industry and Trade Co., Ltd. (Hereinafter referred to as Lianyue) on Tmall.com constituted an infringement of its patent, it filed a lawsuit in the Ningbo Intermediate People’s Court. The Ningbo Intermediate People’s Court found that the infringement was established and ordered Tmall to immediately delete and disconnect the sales link of the alleged infringing product. Subsequently, Tmall deleted the relevant link. Lianyue, et al. appealed to the SPC. During the procedures of the second instance, the involved patent was declared invalid by the CNIPA. Lianyue then filed an application for act preservation to the Supreme People’s Court, requesting that Tmall be ordered to immediately restore Lianyue's product sales link on Tmall.com. Upon receiving the application, the IPC of the SPC made a ruling within 26 hours and supported its preservation application by adopting both fixed and dynamic guarantee funds method. After the act preservation ruling was made, the parties reached an amicable settlement.

Case Significance

This is the first case where the SPC made a reverse act preservation ruling. Through high quality and efficient judgment, particularly the application of dynamic guarantee funds, the IPC balanced the interests of the patentee, the accused infringer, and the e-commerce platform operator. After the ruling, Lianyue was able to carry out normal online operations during the Double Eleven sales festival, thereby avoiding irreparable damage to its interests. Furthermore, with the dynamic guarantee funds calculated based on turnover, the court fully guaranteed that the interests of the patentee Bosheng would not be harmed due to any mistaken act preservation.

10. Case on the Monopoly of Bricks & Tiles Association

Case Number: (2020)SPC IP Civil Final 1382

Case Facts

Zhang claimed that he joined the Yibin Bricks & Tiles Association (Hereinafter referred to as the Association) and signed the Production Suspension and Rectification Contract after being threatened by the founders of the Association, i.e., Yibin Wuqiao Building Materials Industry Co. Ltd. (Hereinafter referred to as Wuqiao), Yibin Sihe Building Materials Co., Ltd. (Hereinafter referred to as Sihe), and Cao, et al., and was forced to suspend production because of the contract. The Association and its founders signed the above-mentioned contract extensively, forcing some brick and tile businesses in Yibin to suspend production, to increase the price of bricks and tiles and thus gain improper interests by reducing the supply of bricks and tiles. However, the Association and the brick and tile businesses that maintaining production no longer continued to pay according to the agreement after paying only a small amount of money for production suspension support. Their behavior excluded Zhang from fair competition and constituted a violation of the anti-monopoly law. Therefore, Zhang filed a lawsuit in the Chengdu Intermediate People’s Court, requesting the court to order the Association, Wuqiao, Sihe, and Cao et al. to be jointly and severally liable for compensating RMB 336,000 for his economic loss and RMB 80,000 for reasonable expenditure on right protection. Holding that the accused act constituted a violation of the anti-monopoly law and infringed on Zhang’s rights and interests, the Chengdu Intermediate People's Court made the decision that Wuqiao, Sihe, Cao, and the Association are jointly and severally liable for compensating RMB 336,000 for his economic loss and RMB 5,000 for reasonable expenditure on right protection. Wuqiao, Cao, and the Association refused to accept the result, and appealed to the SPC. The IPC of the SPC held in the second instance that Zhang, who voluntarily participated in the involved horizontal monopoly agreement and, as one of the implementers, claimed for compensation from other implementers for his so-called loss caused by the implementation of the monopoly agreement, was essentially asking for sharing monopolistic benefits and was not the intended remedy target regulated by the anti-monopoly law. Accordingly, the court revoked the original decision and dismissed all of Zhang's claims.

Case Significance

In this case, the court defined the purpose and direction of civil relief in case of monopoly, clarified that a voluntary implementer of a horizontal monopoly agreement is not a intended remedy target regulated by the monopoly law, and held that the horizontal monopoly agreement implementer's request for compensation from other implementers for his so-called loss caused by the implementation of the monopoly agreement, is essentially seeking for a share of monopolistic benefits. The decision is of great significance for cracking down on horizontal monopolistic practices in accordance with law and maintaining a fair competition order.