[Adjudication Gist]

In cases of disputes over infringement of patent rights, the period for calculating damages shall, in principle, be based on the patentee's claim. Where a patentee files a lawsuit based on a certain infringement fact discovered before filing the lawsuit and specifies a damages claim of a particular amount, and does not, before the conclusion of the court debate at first instance, expressly raise a damages claim for infringing acts that continue to occur or may continue to occur during the litigation, the people's court will generally not adjudicate the issue of damages for the period of the litigation.

[Keywords]

Civil; infringement of invention patent right; period for calculating damages

[Basic Facts]

A Swiss company (hereinafter "the Swiss Company") is the patentee of the invention patent No. 0010****.7 titled "Azo Dyes and Preparation Method and Use Thereof" (hereinafter the patent in suit). The protection period of the patent in suit expired on March 10, 2020. The Swiss Company filed the present lawsuit on June 18, 2015, requesting the court to order that: Zhejiang A Group Company, Zhejiang B Chemical Co., Ltd., and Shanghai C Industrial Co., Ltd. (the three companies being affiliated companies, hereinafter collectively "the three affiliated companies") and Beijing D Technology Co., Ltd. immediately cease the infringing acts, and that the three affiliated companies jointly and severally compensate the Swiss Company for economic losses of RMB 230 million and reasonable rights-enforcement expenses of RMB 1 million, among other claims.

The court ascertained through trial: On September 29, 2007, the Swiss Company, based on the patent in suit, filed a lawsuit with the Shanghai No. 1 Intermediate People's Court, claiming that the dye products of the models XX Super Black G and XX Super Black R manufactured and sold by Shanghai C Industrial Co., Ltd. fell within the protection scope of original claims 1-7 and 9 of the patent in suit, and requesting the court to order Shanghai C Industrial Co., Ltd. to cease the infringement and compensate for economic losses (that case hereinafter referred to as "the prior case"). On May 3, 2013, the Shanghai No. 1 Intermediate People's Court rendered the first-instance civil judgment of the prior case, finding that the technical features contained in the accused infringing products of the models XX Super Black 280 and XX Super Black 281 in the prior case were identical to the technical features of original claims 1-7 and 9 of the Swiss Company's patent and had fallen within the protection scope of the Swiss Company's patent right, and accordingly ordered Shanghai C Industrial Co., Ltd. to immediately cease infringing the patent in suit as of the date the judgment took effect and to compensate the Swiss Company for economic losses of RMB 400,000. After the first-instance judgment of the prior case was rendered, Shanghai C Industrial Co., Ltd., dissatisfied, appealed. On January 15, 2015, the Shanghai High People's Court (the court of first instance of the present case and the court of second instance of the prior case) rendered the second-instance civil judgment of the prior case: dismissing the appeal and affirming the original judgment. During the period from July 1, 2013 to July 7, 2015, the Swiss Company obtained evidence through notarized preservation on multiple occasions, proving that Zhejiang A Group Company and Shanghai C Industrial Co., Ltd. engaged in manufacturing, selling, and offering to sell the accused infringing products, and that Zhejiang B Chemical Co., Ltd. and Beijing D Technology Co., Ltd. engaged in selling the accused infringing products.

On December 31, 2019, the court of first instance rendered a civil judgment: the three affiliated companies and Beijing D Technology Co., Ltd. shall immediately cease infringing the patent in suit; the three affiliated companies shall jointly and severally compensate the Swiss Company for economic losses of RMB 14 million and reasonable rights-enforcement expenses of RMB 300,000. The Swiss Company and the three affiliated companies, dissatisfied, each appealed. On January 26, 2024, the Supreme People's Court rendered the （2022）最高法知民终111号 [Zui Gao Fa Zhi Min Zhong No. 111 (2022)] civil judgment: (1) revoking the civil judgment of the court of first instance; (2) the three affiliated companies shall jointly and severally compensate the Swiss Company for economic losses of RMB 19 million and reasonable rights-enforcement expenses of RMB 500,000; (3) dismissing the other claims of the Swiss Company; (4) dismissing the appellate claims of the three affiliated companies.

[Adjudication Opinion]

The effective judgment of the court held: The Swiss Company claimed in the present case that the period for calculating damages for the accused infringing acts ran from September 30, 2007 (i.e., the day following the filing of the prior case) to December 31, 2019 (i.e., the date on which the first-instance judgment of the present case was rendered). In this regard, the second instance of the present case focused on examining whether the period from September 30, 2007 to May 3, 2013, i.e., the period before the first-instance judgment of the prior case was rendered, should be included in the period for calculating damages for the accused infringing acts in the present case.

In principle, the reference time point of a court's adjudication should end at the conclusion of the court debate before that court (and, generally, it should be the conclusion of the court debate at first instance), because a court can objectively try only facts that occurred before the conclusion of the court debate, and it is generally difficult to try facts occurring after the conclusion of the court debate. However, with respect to continuing infringing acts disputed by the parties, in order to reduce the burden of litigation, the court of first instance may, in accordance with the parties' claims, handle such continuing acts together. Specifically in the present case: First, the Swiss Company filed the prior case based on the infringement facts discovered before filing that lawsuit, raising claims for cessation of infringement and for damages; during the litigation, it neither raised new infringement facts nor added claims. It cannot be found that the Swiss Company had, in the prior case, raised a damages claim for infringing acts that might occur during the litigation of the prior case; therefore, facts that might have occurred during the litigation of the prior case should not, as a matter of course, be included in the scope of trial of the prior case. Second, in neither the prior case nor the present case did the Swiss Company adduce evidence proving that the three affiliated companies committed continuing infringing acts during the litigation of the prior case, nor did the court ascertain such facts; the infringement facts ascertained in the prior case occurred only in 2007. Accordingly, the finding of the court of first instance of the present case — namely, that the damages determined by the first-instance judgment of the prior case covered the infringing acts continuously occurring during the first-instance litigation of the prior case (up to May 3, 2013), and that the period for calculating damages for the accused infringing acts in the present case should therefore run from May 4, 2013 to December 31, 2019 (the date the first-instance judgment of the present case was rendered) — lacked factual basis and was not rigorous in its legal reasoning, and should be corrected. However, given that the Swiss Company did not adduce evidence proving that the three affiliated companies committed continuing infringing acts during the litigation of the prior case, the above erroneous finding of the court of first instance of the present case did not affect the outcome of its judgment on damages and other matters in the present case.

The infringement facts ascertained in the present case were the four infringing acts discovered between July 1, 2013 and July 7, 2015 through notarized purchases and other means, and the acts of the three affiliated companies in selling the accused infringing products during the period from May 4, 2013 to June 30, 2018, as discovered through the judicial audit commissioned by the court of first instance of the present case. Given the following two aspects of bad-faith conduct on the part of the three affiliated companies — first, the three affiliated companies continued the infringement even though the judgment of the prior case had found patent infringement; second, in the present case, the three affiliated companies refused to provide complete financial account books and the passwords of the electronic financial account books, among other conduct obstructing the adducing of evidence — and in order to give effect to the strong protection of intellectual property rights, in the present case, based on the sales revenue of more than RMB 47.29 million (more than RMB 47.57 million minus more than RMB 279,000) during the first two years, i.e., the period from May 4, 2013 to June 18, 2015, and taking into account the three affiliated companies' long-term continuous infringement and obstruction of evidence, the level of damages could be appropriately raised; also giving consideration to factors such as the fact that the three affiliated companies were not operators engaged in infringement as their business, and upon overall and comprehensive consideration, the Supreme People's Court adjusted the amount of damages of RMB 14 million determined at the discretion of the court of first instance of the present case to RMB 19 million. Meanwhile, in view of the Swiss Company's long-term rights enforcement, its reasonable rights-enforcement expenses were appropriately adjusted to RMB 500,000.

[Related Index]

Article 71 of the Patent Law of the People's Republic of China (the provision applied in this case is Article 65 of the Patent Law of the People's Republic of China effective as of October 1, 2009)

Source: Intellectual Property Court of the Supreme People's Court of China, original release date: 2026-07-03, original link: https://ipc.court.gov.cn/zh-cn/news/view-5880.html