The Supreme People’s Court ruled in a patent infringement case that where a party manufactures the infringing products and supplies them to others for use, and further profits from purchasing and reselling products that those others produced using the said infringing products, such manufacturer shall be deemed, in addition to the manufacturing act, to have engaged in mutual utilization and cooperation with others, which constitutes “joint use” as stipulated by the Patent Law.
This article relates to a dispute over the infringement of a utility model patent. The case is introduced as follows:
Natural person X is the patentee of a utility model patent named “dumping machine” (hereinafter referred to as the patent at issue), and has granted an exclusive license to Factory A for implementation. Since January 2019, Company B has started to manufacture the accused infringing product, “the turnover machine”, and supplied to a third party, Company C, for their use. Company B also profited from reselling the intact package bags collected from Company C.
On August 23, 2019, X filed a lawsuit against Company B and Company C on the grounds that they jointly conducted such infringement acts of manufacturing and using the accused infringing product (hereinafter referred to as the “prior case”). The first-instance court issued a civil ruling to order Company B to stop manufacturing and Company C to stop using the accused infringing product; order Company B to compensate X for his economic losses of RMB 150,000 that he suffered from January 1 to May 20, 2019. This ruling was upheld by the Supreme People’s Court in the second trial of the prior case.
The effective judgment of the prior case has already determined that Company B’s manufacturing and selling of the accused infringing product constitutes infringement and has ordered Company B to compensate X for its infringement act from January to May, 2019, which amounts to RMB 150,000. Since this effective ruling only examined the compensation for the infringement act from January to May, 2019, Company B did not cease the infringement act during the trial of the prior case. Therefore, X and Factory A filed a lawsuit with the first-instance court, requesting an order for Company B to compensate X for his economic losses incurred from June 2019 to August 2020 and compensate his reasonable expenses for safeguarding his patent.
The first-instance court made a civil ruling ordering Company B to compensate X for his economic losses of RMB 450,000 incurred from June 1, 2019 to August 31, 2020.
Factory A and X, dissatisfied, appealed on the grounds that the compensation amount determined in the first instance was inappropriate.
The Supreme People’s Court made the judgment to reject the appeal and uphold the original ruling.
The effective judgement made by the Supreme People’s Court holds that the focus of this case is 1) whether Company B should bear the infringement liability during the period from June 2019 to August 2020 and 2) the amount of compensation.
In this case, the cooperation mode between Company B and Company C is that: Company B manufactures the accused infringing product and provides it to Company C for use free of charge. Company C uses the accused infringing product to collect turnover bags and sells such turnover bags back to Company B. Company C profits from selling turnover bags, and Company B earns the price difference between recycling and reselling turnover bags. Under this cooperation model, Company B and Company C mutually make use of each other and cooperate through their acts. Company B’s licensing to Company C to use the accused infringing product and Company C’s direct use of the accused infringing product constitute the “joint use” act as prescribed by the Patent Law. Based on the facts found in this case, the accused infringing products remained at Company C until August 18, 2020. As Company B manufactured the accused infringing product without the patentee’s authorization and authorized Company C to use the accused infringing product through the aforementioned cooperation model, Company B’s manufacturing and use of the product both constitute infringement, and Company B shall bear the corresponding liability for infringement. Given Company B’s manufacturing act has been determined and evaluated in the effective judgement of the prior case, according to the relevant claims made by Factory A and X, in this case, it is hereby identified that Company B’s use of the accused infringing product from June 1, 2019 to August 31, 2020 has caused losses to the patentee and that Company B should bear the corresponding liability for infringement.
In this case, Company B was responsible for manufacturing the infringing product, and Company C was to use it for free. In their cooperation, the patented product was used as a production tool without the patentee’s authorization. This case presents a clear identification of “joint use” and the corresponding liability and has a meaning of reference for similar cases.
(2023) Zui Gao Fa Zhi Min Zhong No. 1477
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