In a second-instance judgment on an invention-patent infringement dispute, the Supreme People’s Court re-examined the manufacturer and manufacturing act of a combined system (i.e. the allegedly infringing product) composed of multiple components supplied by different entities and the different components were installed and connected after entering the user's site. The second-instance judgment corrected the first-instance judgment of identifying the user as the manufacturer of the allegedly infringing product. The final judgement held that the user, who did not actually influence, dominate or control the allegedly infringing technical scheme, shall not be identified as the manufacturer of the allegedly infringing product. On the contrary, the party that, although did not manufacture the allegedly infringing product in its entirety, but manufactured or provided the core components of the allegedly infringing product and actively dominated or determined the final formation of the allegedly infringing technical scheme, was the actual manufacturer of the allegedly infringing product. Such party’s acts constituted the act of “manufacturing” within the meaning of the Patent Law, and shall bear the corresponding liability as the manufacturer.
Company A, the patentee of the patent at issue, believed that that the allegedly infringing product used by Company B infringed upon the patent at issue. Company C, by manufacturing, selling, and offering to sell the allegedly infringing product, also infringed upon its patent. Therefore, Company A filed an infringement lawsuit with the court.
The allegedly infringing product was a refrigeration system assembled from three distinct components A, B, and C. The various components were purchased by Company B from different suppliers, and then each component supplier completed the assembly on-site at Company B and handed over the final product to Company B for its use. Wherein, component X was the core component, which was manufactured, sold, and offered to sell by Company C, component Y was required to be used in conjunction with component X, and meanwhile, Company C introduced the supplier of component Z to Company B.
Upon examination, the first-instance court held that the technical scheme of the allegedly infringing product fell within the protection scope of claim 1. On identifying the manufacturer of the allegedly infringing product, the first-instance court held that “what the patent protects was the overall technical scheme, not individual components, therefore, the manufacturer of the allegedly infringing product shall be determined by reference to the manufacturer of the entire apparatus, rather than the manufacturers of individual components.” The court also pointed out that Company B, as the owner of the allegedly infringing product, purchased components of the allegedly infringing product from different companies respectively and organized the suppliers of these components or other constructors to ultimately complete the assembly of the infringing product, which shall be deemed as manufacturing act. Company B has manufactured and used the allegedly infringing product, which constituted infringement. Company A's claim against Company C was not supported. At the same time, the first-instance court, taking into account that ordering the dismantling of the allegedly infringing product would result in a waste of social resources, only ordered Company B to pay patent royalties. Both Company A and Company B were dissatisfied with the first-instance judgment and filed appeals.
The Supreme People's Court corrected, in its second-instance proceedings, the determination made by the first-instance court regarding the manufacturer of the allegedly infringing product. The second-instance court held that the technical scheme to be protected in claim 1 of the patent primarily consisted of three components X, Y and Z. Among them, components Y and Z were common components in the allegedly infringing product, and the technical scheme to be protected in claim 1 did not specifically define components Y or Z per se. Component X, however, was the core component fulfilling the inventive purpose of the patent at issue.
Based on the evidence and facts presented in the case, it can be determined that Company C provided Company B with components X and Y' (corresponding to component Y in claim 1, and it was required to be used in conjunction with component X) including the core component, along with the matching assembly of these two components. Company C also reserved a connection port with component Z in component X, and introduced the supplier of component Z to Company B.
Company C played a leading role in the formation of the allegedly infringing technical scheme, and shall be directly liable for the infringement arising from the manufacture of the allegedly infringing product. Company B, as the user of the allegedly infringing product, did not participate in the development of the allegedly infringing technical scheme and did not engage in manufacturing as defined under patent law, thus shall not be liable for manufacturing the allegedly infringing product.
Therefore, the second-instance court overturned the first-instance judgment, ordering Company C to cease manufacturing and selling products infringing upon the invention patent at issue and to bear liability for infringement damages.
The guiding significance of the above second-instance judgment lies in clarifying who is to be regarded as the manufacturer of the allegedly infringing product for an overall product assembled from multiple components supplied by different entities. The second-instance court corrected the first-instance court's determination that the user of the allegedly infringing act was to be deemed as the manufacturer. After a comprehensive consideration of the evidence presented by all parties, the second-instance court revised the judgment to determine that the party who manufactured or provided the core components of the allegedly infringing product and actively dominated or determined the allegedly infringing technical scheme shall be deemed as the manufacturer of the allegedly infringing product. This clarifies the examination standard and also serves as a useful reference for determining the liabilities of different entities that supply components of the allegedly infringing product. Moreover, for a combined product (especially a large-scale product not suitable for dismantling after assembly), targeting the manufacturing act of core components, rather than the actual user of the combined product, can more effectively prohibit infringement and protect the lawful rights and interests of patent holders.
(2023) Zui Gao Fa Zhi Min Zhong No. 373
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