Source:Case No.(2019) zuigaofazhiminzhong 147|Author:Ice Tang|Publish time: 2020-03-25|26 Views
Case Background
Shenzhen Dunjun Technology Co.,Ltd (hereinafter “Dunjun”or “Plaintiff”) owns an invention patent titled “Method for Simple Access to Web Portal of A Network Operator” (hereinafter “Patent at issue”), which is mainly applied to routers to simplify the portal realization process and reduce demands to access server base hardware. Shandong Tengda Technology Co., Ltd (hereinafter “Tengda” or “Defender”), a large network communications equipment and resolution provider located in Shandong province, mainly manufactures and sells routers.
Dunjun filed a complaint against Tengda and its distributors before Jinan City Intermediate People’s Court in Shandong Province (hereinafter “first-instance court”), accusing the defendants of manufacturing, offering to sell, selling the accused routers without authorization of the patentee, and claiming a damage of RMB 5 millions.
First-instance Judgement
The Judge noted that when the user used the accused technology to visit the web portal of a selected network operator, the user inevitably reproduced the entire technical solutions of claims 1 and 2 of the patent at issue, thus infringing the patent at issue. Therefore, the Judge came to a ruling in May 6, 2019, ordering Tengda to cease manufacturing, offering to sell and selling the accused products, and granting a monetary damage of RMB 5 millions to the plaintiff. Tengda’s distributors were found to infringe the patent at issue, but not liable to any monetary damages.
Unsatisfied with the judgement, Tengda appealed the ruling to the Supreme People’s Court for review, which accepted the case on July 4, 2019.
Gist of SPC’s Judgement
This case mainly deals with principles for claim construction, for infringement determination related to a method implemented by multiple entities (divided infringement), and distribution rules of burden of proof with respect to remedy or damage. The significance of this case resides in the SPC establishing, for the first time, rules of divided infringement determination, and clarifying the rules of presenting proof for damage calculation.
l Divided Infringement Determination
According to the general rules for patent infringement, only if the accused product or method covers each and every technical feature of a claim will patent infringement be found. This general rule turns out to be difficult to protect the interests of the patentee in case of a claimed method of which different steps are implemented by different entities. First of all, the manufacturer simply manufactures the accused product, without directly implementing one or more technical steps of the claimed method. Thus it is hard to establish direct infringement by the manufacturer. Second, it is equally difficult, if not impossible, for the patentee to prove that the manufacturer knows that the product it manufactures is specially made for the infringement purpose. Therefore, it is not possible either to establish contributory infringement according Article 21 of “Interpretation by the Supreme People’s Court on Some Issues Concerning the Application of Laws to the Trial of Patent Infringement Disputes”. Third, although the users do completely implement the entire method steps of a patent, the patentee is not allowed claim patent rights against the users because they do not implement the patent for business purpose. Finally, although the manufacturer can be reasonably assumed to implement all of the steps of the claimed method while testing the manufactured product, it does not provide sufficient legal protection to the patentee by punishing the testing activity, because it is not the testing activity that brings profits to the infringer. Therefore, despite ceasing the testing, the infringer is still very likely to keep infringing the patent. The manufacture earned great profit that should have belonged to the patentee by manufacturing and selling these accused products, which is obviously unfair to the patentee that have devoted large amount of time and money for R&D.
To avoid harmful effects to innovative and fair competitive environment, the SPC, from the perspective of encouraging invention creations and technical advancement, fully considers the technical characteristics and application of new technologies in the field of communications, and reveals the secret of divided infringement by embodying the technology in software to be implemented by multiple entities.
In particular, the SPC determined the “irreplaceable, substantial function” test specially for the multiple-entity-implemented method in network communications, which has significant impact on the relevant patent drafting and enforcement and the commercial activities of network communication equipment providers.
The SPC noted in the Judgement that if the accused infringer built in, in advance, the accused technology in a product for profit purpose, and if the build-in itself plays an irreplaceable and substantial role so as to lead the accused product to naturally reproduce the entire claimed method. Put it another way, led by the build-in instructions preset within the product, the end users will inevitably implement the entire claimed method when using the product without relying on other specific devices or special network setting or condition. Therefore, the Judge found the accused infringer to implement the patented method and infringe the patent (hereinafter “the irreplaceable substantial function” test).
The so-established “irreplaceable, substantial function” test provides substantial protection to the patents in relevant field. As is noted in the Judgement, the test helps realize the sustainable innovation and fair competition in the field of relevant industry, and shows that the Chinese judicial system values different rules and characteristics of industries, and serves and leads the development of the industry.
l Monetary Damage Determination
Regarding the monetary damage, the SPC determined that in the case where the plaintiff claims monetary damage based on the defendant’s gains by the infringing activities, the scale or size of infringement shall be taken as the basic fact for calculating the damage, and that the patentee shall shoulder initial burden of proof for this basic fact. If the patentee fulfills the burden, and if the accused infringer refuses to present related proof regarding the size or scale of the infringement without justified reasons such that it is impossible to accurately determine the basic facts for determining the commercial data, the Judge will not take into consideration the defendant’s other defense, such as the contribution of its patent to the accused product. The SPC makes it clearer that if the accused infringer does not agree to the remedy which the Plaintiff asserts and initially proves, the accused infringer, as the legal holder of profit data regarding infringement, is obliged to present evidence to support his defense, rather than turning a blind eye to the basic data the Plaintiff submits and making other allegations. The SPC’s ruling reveals that the scale of infringement shall be considered as priority fact for determining remedy. This has great significance in properly and accurately determining damages in IP infringement litigations, and helps lead the litigants to proceed in a litigation with greater credibility.