Determination of Reasonable Expenses in Patent Infringement Litigation in China

When facing patent infringement, the right holder typically consider filing an infringement lawsuit to stop the infringement and claim compensation. To do so, the right holder need to collect evidence related to the infringement and the damages caused by the infringement beforehand, based on which infringement lawsuit will be filed.. The entire process of enforcing their rights usually costs the right holder significant expenses. In this regard, the Patent Law and relevant regulations specify that the reasonable expenses incurred by the right holder to stop the infringement should be borne by the infringer.

To explain the specific expenses and burden of proof related to the reasonable expenses incurred by the right holder to stop infringement, this article ,beginning with  relevant legal provisions, provides examples to illustrate the factors considered by courts when determining reasonable expenses (especially for significant amounts).

1. Relevant regulations

According to the provisions of the Patent Law, the compensation amount for infringing a patent should include the reasonable expenses incurred by the right holder to stop the infringement. The Supreme People's Court's relevant judicial interpretations specifically state that when a right holder claims reasonable expenses paid to stop the infringement, the court can calculate them separately in addition to the compensation amount based on the actual losses suffered by the right holder, the profits earned by the infringer, or multiple of the patent licensing fee or punitive compensation as stipulated.

Furthermore, the High People's Court of Beijing Municipality (“Beijing High Court) has also stipulated that when determining the amount of reasonable expenses, the authenticity and relevance of evidence such as contracts, invoices, payment receipts, etc., as well as the reasonableness and necessity of the corresponding expenses, should be considered comprehensively. They have separately listed the reasonable expenses that the defendant should compensate the plaintiff for in order to stop the accused infringing activities.

The Supreme People's Court of P.R.C. (“Supreme Court”) has also pointed out that in intellectual property infringement litigation, if the defendant presents evidence that the plaintiff's lawsuit is of a legally prescribed  abuse of rights and causes damage to their legitimate interests, the court will support the defendant's  compensation claim for reasonable expenses incurred due to the litigation, such as attorney fees, travel expenses, accommodation expenses, etc., in accordance with the law. The defendant may also separately file a counterclaim requesting the plaintiff to compensate for the aforementioned reasonable expenses.

Furthermore, the Supreme Court has specified in its judicial interpretation on trademarks that reasonable expenses incurred to prevent trademark infringement include the reasonable costs of the right holder or their authorized agents conducting investigations and collecting evidence of the infringement. The court, based on the parties' litigation requests and the specific circumstances of the case, may include attorney fees that comply with regulations set by relevant national departments within the scope of compensation. The Beijing High Court has established provisions regarding reasonable expenses to prevent copyright infringement, including: (1) attorney fees; (2) notary fees and other investigation and evidence collection costs; (3) audit fees; (4) travel expenses; (5) litigation document printing fees; (6) other reasonable expenses paid by the plaintiff to stop infringement.

However, for patent infringement lawsuits filed by the right holder, the current Patent Law and judicial interpretations do not clearly specify the specific types and scope of reasonable expenses. In judicial practice, similar judgment criteria as mentioned above are typically adopted.

2. Case study

The following provides specific case examples to illustrate the factors that courts consider when determining reasonable expenses (especially for significant amounts).

Case 1

Edan Precise Instruments Co., Ltd. vs. Shenzhen Mindray Bio-Medical Electronics Co.,Ltd. patent infringement dispute [(2014) Yue Gao Fa Min San Zhong Zi No. 878, 879, 935, 936, 937, 938, 1033]

From the judgment, it can be seen that regarding the reasonable expenses for enforcement, the following points are considered:
In the first instance, Mindray submitted an invoice showing that they had paid a total of 780,000 yuan in attorney fees for the 24 cases between Mindray and Edan. However, Mindray failed to present corresponding evidence such as contracts to prove the breakdown of attorney fees for each case. Consequently, the court apportioned the total amount of 780,000 yuan evenly across the 24 cases, resulting in attorney fees of 32,500 yuan per case and a total attorney fee of 227,500 yuan for these seven cases. Upon investigation, it was found that Mindray's notarized purchases of the seven accused infringing products were priced at 16,000 yuan, 12,000 yuan, 12,000 yuan, 18,000 yuan, 15,000 yuan, 8,000 yuan, and 23,000 yuan respectively. However, since Mindray purchased two (each one unit) of the aforementioned seven products for both the seven cases and the trade secret infringement case and the court has already supported the expenses claim related to the purchase of these two products in the trade secret case, there is no need to calculate them again here. As a result, the total cost of Mindray's purchase of the accused infringing products amounts to 70,000 yuan. The notary fees involved in these seven cases have already been supported in the trade secret infringement case, and there is no need to calculate them again here. The court has determined that Mindray's reasonable enforcement expenses paid for these seven cases amount to a total of 297,500 yuan.
Based on this, the court takes into comprehensive consideration Mindray's claims in another case regarding the "ECG algorithm" trade secret and the present case involving the invention patent for the "electronic non-invasive blood pressure measuring device," as well as the nature, duration, consequences, and profits earned by Edan’s infringement. Additionally, the court considers the reasonable expenses paid by Mindray, including notary fees, attorney fees, and the costs related to purchasing the accused infringing products. As a result, the court determines that Edan should compensate Mindray with an economic loss of 10 million yuan and reasonable enforcement expenses of 297,500 yuan, amounting to a total of 10,297,500 yuan.

Summary:
In this case, the court considered the attorney fees, notary fees, costs related to purchasing the accused infringing products, and other supporting evidence related to the reasonable expenses based on the submitted invoices. However, the court did not duplicate the calculation for the expenses that have already been supported in other cases. And it is important to note that the calculation of reasonable expenses is separate from the calculation of economic losses.

Case 2

Sony Mobile Communications (China) Co., Ltd. vs. Xi'an China IWNCOMM Co., Ltd. patent infringement dispute [(2017) Jing Min Zhong No. 454]

From the judgment, it can be seen that regarding the reasonable expenses for enforcement, the following points are considered:
1. Costs related to purchasing the accused infringing products. IWNCOMM has purchased 13 accused infringing SONY phones under notarization, with a total amount of 22,054 yuan.
2. Notary fees. IWNCOMM applied for a total of 5 notarizations from Beijing Fangyuan Notary Public Office, with a total amount of 31,840 yuan.
3. Fees for infringement product testing. The State Radio Monitoring Center Testing Center conducted tests to verify whether the L50t, XM50t, S55t, and L39H models of mobile phones have WAPI functionality, charging a total fee of 20,000 yuan.
4. Translation fees. The total amount is 300 yuan.
5. Attorney fees. IWNCOMM paid a total of 400,000 yuan of attorney fee for initiating this lawsuit.
The aforementioned costs related to purchasing the infringing products, notary fees, fee for infringement product testing, translation fees, and attorney fees amount to a total of 474,194 yuan, which are fully supported by the court.
These facts are supported by the invoices and the legal services contract submitted by IWNCOMM.

Summary:
In this case, the court considered the reasonable expenses for enforcement, such as the costs related to purchasing the infringing products, notary fees, fees for infringement product testing, translation fees, and attorney fees, based on the invoices and the legal services contract.

Case 3

Beijing Watchdata Co. Ltd. vs. Hengbao Co. Ltd. invention patent infringement dispute [(2015) Jing Zhi Min Chu No. 441]

Regarding reasonable expenses for enforcement, the plaintiff has provided the following evidence for verification:
1. "Litigation (Arbitration) Representing Agreement", which bears the signatures and seals of Watchdata and Beijing Tian Yuan Law Firm. The agreement explicitly states that it pertains to the infringement litigation with Hengbao.
2. "Attorney Fees Invoice", "2015 Attorney Fees Payment Receipt", and "Partial Notary Fee Invoice", which were all incurred during the litigation period of this case.
3. "Log Statistics Table from January to April 2016" and "Detailed List of Lawyers’ Working Hours for Watchdata Patent Litigation", which documented the working time statistics of the appointed attorneys in this case. They are verified by the "Litigation (Arbitration) Representing Agreement", and the statistical data aligns with the agreed hourly billing rates in the agreement.
Considering the above circumstances comprehensively, the court upholds that: the amount of attorney fees claimed by the plaintiff, Watchdada, in this case is reasonable and the court supported their claim. The notary fees of 2,300 yuan paid by the plaintiff, Watchdata, is also objective and genuine. Now, the plaintiff, Watchdata, requests the consolidation of this notary fees with the attorney fees, claiming a total of 1 million yuan as reasonable  expenses for enforcement, the reasons provided are sufficient, and therefore, full support should be granted.

Summary:
In this case, the court, based on multiple pieces of evidence such as the representing agreement, invoices, payment receipts, statistical tables, and detailed lists, determined the reasonable expenses from various perspectives, including the professionalism, technicality, and involvement of the appointed attorneys in the case. The court also considered evidence such as the log statistics table and detailed list of working hours. As a result, it rendered a judgment fully supporting the reasonable expenses amounting to 1 million yuan.

Case 4

Cytiva Sweden AB and others vs. Bestchrom (Shanghai) Biosciences Ltd. invention patent infringement dispute [(2020) Hu Zhi Min Chu No. 11]

The plaintiff has submitted relevant receipts for partial notary fees, fees for appraisal and testing-, and costs related to purchasing sample in support of their claim for reasonable expenses and requested the court to exercise discretion in determining the attorney fees and travel expenses.

The court's opinion is as follows:
Firstly, among the reasonable expense receipts submitted by the two plaintiffs, the notary fees amount to 6,610 yuan and are related to both this case and another case. The court will apportion such fees equally between the two cases, resulting in 3,305 yuan per case.
Secondly, regarding the attorney fees and travel expenses in this case, although corresponding documents were not submitted, the four appointed attorneys of the two plaintiffs proactively participated in the filing, pre-trial conferences, and court hearings of this case. Therefore, the court will consider the following factors to determine the relevant expenses at its discretion: 1) The involved patent is an invention patent in the field of genetic engineering proteins, and the technical facts of the case are difficult and complex. 2) This case is a foreign-related case that has undergone filing and acceptance by the Shanghai Intellectual Property Court and subsequent review by the High People's Court of Shanghai Municipality, involving a more complex judicial procedure. The four appointed attorneys representing the two plaintiffs in the ongoing trial attended pre-trial conferences and formal court proceedings, presenting a substantial amount of evidence on behalf of their clients. They also prepared technical demonstration videos and PowerPoint presentations to address key points of contention. Additionally, they provided written opinions on infringement comparisons, cross-examined the defendant's evidence, and offered legal advice. Their actual workload was significant. 3) This case is related to another case as a series of cases, with the same parties involved and similar alleged infringement acts. The evidence submitted by the plaintiff in both cases, as well as the infringement comparison opinions, cross-examination opinions, and representation opinions expressed by the appointed attorneys, are essentially the same. Moreover, the pre-trial conferences and formal hearings of the two cases were combined with the consent of both parties. Therefore, when determining the workload of the plaintiff's legal representative in this case, it should be reasonably balanced with the other case. 4) The plaintiff submitted evidence multiple times, and online evidence exchange was also delayed due to the plaintiff's inability to clearly present the content of the evidence, which objectively resulted in a delay in the progress of the case proceedings. 5) When determining the attorney fees incurred by the parties in this case, consideration should also be given to the ratio between the amount claimed in the lawsuit and the amount supported by the judgment, and in this case, the amount claimed by the plaintiff has been fully supported. 6) After comprehensive consideration of the filing, court hearing and other litigation activities of this case, the potential travel expenses of the plaintiff in this case should not be excessively high. In summary, the court comprehensively considered the above factors and referred to the relevant charging standards of the legal industry, and determined that the defendant should pay 150,000 yuan to the two plaintiffs for attorney fees and travel expenses arising from the litigation in this case.

Summary:
In this case, the court has taken into consideration the notary fees, fees for appraisal and testing, as well as costs related to purchasing sample for which relevant documents have been submitted. The notary fees were apportioned among related cases. As for attorney fees and travel expenses that were not supported by corresponding documents, the court made a comprehensive assessment based on technical facts, the complexity of judicial procedures, the actual workload of the attorneys, the progress of case handling, and the ratio between the amount claimed and the amount supported by the judgment.

3. Discussion and recommendations.

Based on the currently published cases, reasonable expenses in patent infringement litigation are generally determined based on factors such as attorney fees, notary fees, costs related to purchasing the accused infringing products, testing fees for the accused infringing products and translation fees, in combine with relevant contract and documentary evidence. In the process of determination, factors such as the authenticity and relevance of evidence will be considered, as well as the professionalism, technicality, involvement of legal representatives, complexity of judicial procedures, progress of case handling, and the ratio between the amount claimed and the amount supported by the judgment. The reasonableness and necessity of corresponding expenses will also be taken into consideration.

In litigation, parties should properly preserve relevant evidence, work records, etc., and strive to substantiate the objective facts of enforcement expenses. By referring to the aforementioned aspects, they can argue and persuade the judge from three perspectives: the authenticity, relevance, and reasonableness of the expenses. The goal is to obtain the maximum support from the court in terms of reasonable expenses for enforcement.

In addition, for the expenses in other items such as sending warning letters or hiring investigation companies, there is currently no explicit determination in the judgment. If the right holder wishes to obtain support from the court, they should also argue and explain from the three perspectives mentioned above.

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