The Supreme Court concluded a dispute over the infringement of an invention patent in which some of the infringers appealed while the right holder did not. Based on the accurate manufacturer identification, the second instance ruled other accused infringers should bear joint compensation liability with the appealer.
To sell cups with the trademark “DISNEY迪士尼”, Jinhua A Company bought anti-counterfeiting labels from Guangzhou B Company and Zhejiang C Company, which are mingled in operation. Guangzhou B Company and Zhejiang C Company, after reviewing the appearance design of the product that Jinhua A Company intended to sell, issued an Authorization Letter to Jinhua A Company allowing it to sell such products on JD.com and requesting it to mark the information of Guangzhou B Company as the licensee and Zhejiang C Company as the manufacturer on the product. Meanwhile, Jinhua A Company determined the cup style with Yongkang D Company after communicating through WeChat, and Yongkang D Company manufactured and provided cups attached with the said information.
E Company, owning an invention patent named the Bolt of Beverage Containers, believed that the said cups sold by Jinhua A Company on JD.com fall into the protection scope of the invention patent and sued Jinhua A Company, Guangzhou B Company, and Zhejiang C Company to jointly compensate E Company for its economic losses and reasonable legal expenses. In the first instance, the court added Yongkang D Company as the third party in the lawsuit.
The first-instance court held that though the infringing product was marked at multiple places indicating Guangzhou B Company and Zhejiang C Company as the licensee and the manufacturers, the latter two companies are not the actual manufacturers. The “manufacturing” act prescribed by Article 11 of the Patent Law refers to the objective implementation of processing the raw material or parts into the alleged infringing products. The technical solution of the patent in question is a part of the cup lid. As the cup lid and the cup body are separable, the manufacturer of the cup lid shall be determined as the manufacturer of the alleged infringing product. The communication records submitted by Jinhua A Company only showed that others provided the cup body. Provided that the cup body cannot be confirmed to be the infringing product and that E Company has oppositions against the relevance of such evidence, it is insufficient to determine that Jinhua A Company has implemented the behavior of manufacturing the alleged infringing product. The first instance ruled Jinhua A Company to immediately stop selling or offering to sell the infringing products, to destroy the infringing products in stock, and to compensate for E Company’s economic losses and reasonable expenses. Jinhua A Company was dissatisfied and filed an appeal.
The Supreme People’s Court held in the second instance that: First, about the manufacturer identity of Guangzhou B Company and Zhejiang C Company. Although these two companies did not contact the actual manufacturer of the alleged infringing products, neither did they physically manufacture such products, they controlled the manufacture of the alleged infringing products by reviewing the product appearance and patterns and controlling the number of anti-counterfeiting labels. The information and anti-counterfeiting labels attached to the product packages, illustrations, and product qualification certificates further confirmed their manufacturer identity. The second is about the legitimate source defense by Jinhua A Company. For the purpose of selling the cup, Jinhua A Company obtained trademark authorization from others, selected producing plants, confirmed product patterns and the technical solution, and was in charge of the sales of all alleged infringing products. Therefore, Jinhua A Company served as a pivot and organizer in the whole chain of producing and selling the accused infringing products and should be determined as the manufacturer. Its legitimate source defense does not comply with the provisions of the Patent Law. The third is about the handling of this case. In this case, under the organization of Jinhua A Company, Guangzhou B Company, Zhejiang C Company, and Yongkang D Company, based on their respective tasks, cooperated seamlessly with Jinhua A Company to jointly manufacture and sell the alleged infringing products which fall into the protection scope of the patent in question. As they jointly infringed E Company’s patent, they shall bear the joint responsibility according to laws and regulations. In the second instance, Jinhua A Company’s claim that Guangzhou B Company and Zhejiang C Company should bear infringement responsibility was actually an objection to the responsibility distribution between all litigants. Although the first-instance judgment only determined Jinhua A Company to be the infringing seller and ordered it to bear the infringement responsibility alone, according to the determination of the nature of the joint infringement in this case, Jinhua A Company’s sale of the alleged infringing products is not an isolated act, but is a link in the whole manufacturing and selling infringement chain. Therefore, the infringement damages and joint liabilities shall be shared by joint infringers. Thus, the Court ruled Guangzhou B Company and Zhejiang C Company to jointly bear the infringement liability together with Jinhua A Company, which did not exceed the scope of the first-instance trial and the appeal request of the party concerned.
This case involves the identity determination of the manufacturer as prescribed by the Patent Law and the handling of the legal question that in the joint infringement, only some of the infringers appealed while the right holder did not. In this case, when all accused infringers attended the trial and only part of the joint infringers that was decided to bear the responsibility appealed, based on the accurate determination of the manufacturer of the alleged infringement products, the joint infringement nature of the case, and the appealer’s requests, the second instance directly judged other joint infringers to bear the joint responsibility, which corrected the first instance judgment, ultimately resolved the dispute and provided references for the handling of similar cases.
(2021) Zui Gao Fa Zhi Min Zhong No. 2301
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