Ten Leading IP Cases of the PRC Supreme People’s Court (SPC) in Recent Years

Provided by the IP Division of the SPC, PRC

I. Patent Infringement Cases

1. Ningbo Oriental Movement Factory vs. Jiangyin Jinling Hardware Co.Ltd. for retrial for Patent infringement

This is the first case of the SPC to which the doctrine of equivalent was applied. The SPC held that:

“When determining the protection scope of patent right, neither the protection scope of patent right should be limited to the rigid literary meaning of the Claims, nor the Claims be taken as just a technical guideline which can be explained freely. The protection scope of patent right for invention and utility model contains two respects, (1) the scope determined by the indispensable technical features recorded in the Claims; and (2) the scope determined by the features equivalent to the indispensable technical features, i.e., comparing to the corresponding technical feature in the Claims, and by the basically same method, a technical feature can realize the basically same function and produce basically same effect, of which an ordinary person skilled in the art can take no creative effort to conceive. ”

2. Dalian Xin Yi Building Materials Co. Ltd. vs. Dalian Renda New Materials of Wall Factory for retrial for patent infringement

The SPC clearly denied applying the so-called “principle of superfluity establishing”. The SPC held that：

“All the technical features that the patentee wrote in the Independent Claims are the indispensable technical features, which can not be ignored; therefore, these technical features should be brought into the comparison of technical features. This Court do not agree to use the so-called “principle of superfluity establishing” recklessly. …… The public will be at a loss because of the unpredictable change of the contents of the patent. All technical features recorded in the Claims should be considered roundly and adequately, which could guarantee the stability of the legal rights, and guarantee the normal operation and the realization of the value of the patent system.”

II. Trademark Infringement Cases

3. Beijing Jiayu Oriental Co., Ltd. vs. COFCO, Nanchang Happy Sugar & Wine Co., Ltd., Qinghuangdao Hongsheng Wine Co.Ltd. for Appeal for Trademark Infringement

This is the IP case of the SPC awarded a maximum amount of damages. The SPC held that:

“In trademark infringement cases, the examination of the similarity between the accused mark and the cited mark shall be based on the possibility of confusion among consumers when using the marks concerned and/or their elements in the market. In the meanwhile, it shall depend on the special circumstances of the degree of distinction and fame of the marks concerned and/or their elements. After considering and comparing the marks concerned in terms of appearances, pronunciations, meanings, structures, colors, etc., the conclusion will then be made by synthetical analysis. ”

“Moreover, as for those registered marks with high reputation in special scope of market, more legal protection shall be given according to their reputation degree, which can sprite up winners of market competition, encourage fair competition, clear up the environment of market and prevent the unfair ride-up of others’ reputation, so as to promote the market economy develop orderly and healthily. ”

“In view of above, for the current case, the accused “Jiayu Great Wall and Device” mark owned by Jiayu Company incorporates the most distinctive parts of Chinese characters of COFCO’s cited “Great Wall brand” mark, and confusion will be easily caused among relevant public. ”

“As it was impossible to ascertain the profit gained by the accused party from per infringement product, so the Court concluded that Jiayu Company had totally gained the amount of RMB 10,614,090, which was the arithmetic product of the per profit of the COFCO’s corresponding product multiplied the sales amount of the accused infringing products. ”

The SPC finally made a judgment ordering Jiayu Company to immediately stop the infringing activities and to compensate COFCO’s damages in amount of RMB 10,614,090.

4.  YAMAHA Engine Co., Ltd. vs. Zhejiang Hua Tian Industry Co., Ltd., etc.

This is the IP case involving foreigners of the SPC with a maximum amount of damages. In this case, Jiangsu Higher Court, the original court of trial, made judgment ordering the Defendants to immediately stop the infringing activities, Hua Tian Company and another defendant to jointly compensate YAHAMA’s damages in amount of RMB 8,300,440.43.

The SPC held that：

“It was not inexpedient for YAMAHA to calculate the sales price of the accused products by the market average price of products of the same kind. Due to the obvious intention of infringement of Hua Tian Company, and considering the fact that Hua Tian Company did not provide its sufficient financial materials during the original trial or this appeal trial, the Court believed that it was justified for the original court to support YAMAHA’s petition for damages. ” The Court then made a final judgment to reject the appeal of Hua Tian Company.

III. Copyright Infringement Cases

5. Founder Group, etc. vs. Gao Shu Tianli Technology Co., Ltd., Gao Shu Tecchology Co. Ltd. for Retrial for Infringement of Copyrights of  Computer Software  

The SPC clarified issues for the legality of entrapped evidence in this case. The SPC held that：

“In civil litigations, illegal activities have been explicitly defined by laws. However, despite of these explicit illegal activities and in the light of the universality of the social relationship and the complexity of the relationship of interests, laws do not exhaustively list all the activities that might be illegal. Laws authorize the judges the jurisdictional power to determine what kind of activities is illegal according to the balance of interests and the orientation of value. Therefore, with respect to those activities from which laws does not explicitly prevent, whether they are illegal or not could mainly be determined by their substantial justification.

For the current case, through the way of notarization, Founder has not only obtained evidence showing the whole process that Gao Shu installed the pirate copy of Founder’s computer software, but also has obtained evidence showing that Gao Shu sold pirate software to its other clients, and evidence or evidence clue on Gao Shu’s infringing activities of the same kind. The intention of Founder to obtain the above evidence is of justification. And these activities did not harm the public interests or other’s legal rights and interests as well.

In addition, the infringing activities against copyrights of computer software feature high degree of concealment. It is also difficult to obtain related evidence. The entrapped evidence approach in this case is thus helpful to resolve the above problems. It also has effects on deterring and restricting such infringing activities, which meets the spirit of laws to legally protect the intellectual property.”

IV. Unfair Competition Cases

6. Wuxi Xiang Sheng Medical Co., Ltd. vs. Haiying Group for appeal for Infringement of Trade Secret.

This case concerns the principle and methods to determine infringement of trade secret. The SPC held that：

“Among the 12 technologies raised by Haiying Group (the appellee in this second instance and the plaintiff in first instance), 9 of which were in the line with legal conditions of trade secret and shall constitute trade secret. The three appellants, Mo Shanyu, Wu Rongbai and Gu Aiyuan once were the staffs of Haiying Group in charge of the B ultrasonic probe and host technology. They thus shall be obligated to keep these trade secrets which they had grasped due to their working positions. However, without the authorization of Haiying Group, they illegally allowed Xiang Sheng to use 4 of the 9 secret technologies, which constituted unfair competition. And Xiang Sheng’s activities of using the 4 technologies constituted unfair competition too. The 4 appellees shall bear the joint liabilities for their activities. ”

V. Intellectual Property Contract Cases

7. Guangzhou International Oversea Chinese Investment Company (Investment Company) vs. Jiangsu Changiiang Filming Co. Ltd. (Changjiang Company)

The SPC decided the validity of the agreement concerning the 10 times compensation liability of the damages in this case. The SPC held that：

“The profit allocation agreement provided that Changjiang Company should bear the 10 times compensation liability of the damages, which didn’t violate the mandatory law. Meanwhile, given that the situations of the filming nowadays, it was difficult for the Investment Company to prove the missing or cheating figures of profit, thus the 10 times compensation liability was only based on the missing or cheating figures of profit that had already been proved, while the actual missing or cheating figures may be more than these. So the agreement was fair for both parties, and didn’t violate the principles of the compensation liability for breach of the contract. Therefore ,the clause concerning the 10 times compensation liability of the damages was valid and should be taken as the basis of the Changjiang Company’s liability for missing or cheating the figures of profit. ”

8. Xiamen Dayang Handiwork Co. Ltd. (Dayang Company) vs. Xiamen Huanghe Technology and Trading Co. Ltd.

The SPC ruled the validity of the agreement concerning the technology licensor to provide the necessary special equipments in this case. The SPC held that：

“According to Article 329 of the PRC Contract Law, the acts ‘illegally monopolizing technology and blocking the development of technology’, refer to the acts that forcing the licensees to accept unreasonable additional conditions, such as purchasing the unnecessary technologies, services, equipments, products and personnel, and the acts irrationally restricts the licensees from purchasing raw materials, elements or equipments, etc from different origins freely. The clause of the patent license contract providing that the necessary special equipments should be provided by the licensor didn’t violate laws and regulations. The appellant, DaYang Company, claimed that the equipments were imposed by the appellee but failed to provide evidences to support the claim.”

VI. Patent & Trademark Validity Cases

9. Xu Wenqing vs. the Patent Reexamination Board (PRB) and Xing Pengwan

In this case, the SPC rectified the principle of hearing for patent invalidation procedure which stipulated by the Patent Examination Guidelines. The SPC held that:

“The principle of hearing provides the parties an appropriate opportunity to explain and claim for their concrete facts, grounds and evidence in the administrative procedure. Especially for the facts, grounds and evidence that are used as the basis for the decision against either of the parties, the parties should be given the opportunity to explain and claim.”

“when judging if the claims is based on the specifications, the focus should be on whether the technical solutions which every claim require to protect, could be acquired by an ordinary person skilled in the art directly from the specifications or summarized by such person, and whether the claims have surpassed the scope of the specifications.”

10. Trademark Review and Adjudication Board (TRAB) vs. Sichuan Hua Shu Animal Medicine Co., Ltd.  

This case is concerning the interpretation of the meaning of “agent or representative” in the Article 15 of the PRC Trademark Law. The Article 15 provides that:

“Where any agent or representative registers, in its or his own name, the trademark of a person for whom it or he acts as the agent or representative without authorization therefrom, and the latter raises opposition, the trademark shall be rejected for registration and prohibited from use. ”

After the first instance trail of the Beijing No.1 Intermediate Court and the second instance of the Beijing High Court, the SPC has decided to retry this case in March, 2007, upon the party’s application, but has not made a judgment yet.