The Intellectual Property Court of the PRC Supreme People's Court recently ordered restoration of the sales link of a product on Tmall.com, a popular online shopping platform in China.

The order was made within 26 hours after the court receiving the application, which was the first act preservation related to restoration of sales link on e-commerce platform made by the top court.

The dispute was over infringement of a utility model patent among Yongkang Lianyue Industry and Trade Co., Ltd, et al. (Appellants), Cixi Bosheng Plastic Product Co., Ltd. (Respondents), and Zhejiang Tmall Network Co., Ltd. et al. (Defendants in the first instance).

Bosheng, the patentee of the involved utility model patent, sued Lianyue, Tmall, et al. alleging that Lianyue et al. constitute patent infringement by producing, selling, offering to sell patented products and Tmall should be liable for contributory infringement.

The court of first instance ordered Lianyue et al. to stop infringement and compensate Bosheng 3.16 million yuan ($477,792) for damages. Tmall was ordered to remove the sales link of Lianyue’s infringing product immediately.

Lianyue then appealed to the SPC and the case was handled by its IP Court.

On the second instance, the patent at issue was declared invalid by the China National Intellectual Property Administration, which will lead to another administrative litigation by Bosheng.

With the "Double Eleven (i.e. Nov. 11, or referred to as Single's Day, a day for on-line shopping)" right around the corner, Lianyue filed an application on act preservation to the top court on Nov. 5, requesting a quick order within 48 hours for restoration of the sales link.

The SPC IP Court contacted all parties immediately upon receiving the application, collected and sent all related materials through the Internet and scheduled an online hearing the next morning.

The collegiate bench reviewed such issues as whether Lianyue had the right to apply for the said injunction, the rationality of Tmall's measures to stop online IP infringement, the necessity for an injunction and the amount of guarantee.

The final order was made within 26 hours after receiving the application.

According to the Court, Tmall was ordered to immediately restore the sales link of Lianyue's product on its e-commerce platform to preserve the benefit of the Nov. 11 sale. Meanwhile, Liangyue's 6.32 million yuan of it's Alipay account balance was ordered to be frozen as guarantee, and the half of its revenue from sales of the disputed products since the unblocking must stay at the account if such amount exceeds the aforesaid 6.32 million yuan.

The court considered the interests of the three parties, the patentee, the online service provider, and the online seller, while the patent is unstable. The fund freezing decision was made to protect the interests of Bosheng, so as to cover any possible damages caused by restoration of the link, and the interests of the online seller to avoid future operating difficulties.

The quick order won affirmation of all parties involved in the case and will be observed by lower courts as guidance for similar cases.

Presiding Judge announcing the court order [Photo/kfyzwh.com]

Hearing the motion on injunction to unblock sales link [Photo/kfyzwh.com]