The Guangzhou Intellectual Property Court (the GZ IP Court) recently made the first-instance judgement (not effective yet) for the two zipper patent infringement cases in which we r...
Introduction The two patents involved, namely, Method for Decoding Based on Intra Prediction and Apparatus for Decoding Based on Intra Prediction, are standard patents in the worldl...
Civil Liability of Ceasing Infringement in IPR Litigation

Linda Liu & Partners
 
Forward

Civil litigation is a common tool for intellectual property owners fighting against infringement of their IP rights. Once a judgment has been made confirming infringement, the infringer should bear the relevant civil liabilities.

In China, Article 134 of the General Principles of Civil Law sets forth the main forms of civil liability: (1) ceasing infringement; (2) removing obstructions; (3) eliminating dangers; (4) returning property; (5) Restitutio in integrum; (6) repairing, remaking, replacing; (7) compensating for losses; (8) paying penalties for breach of contract; (9) eliminating negative effects and rehabilitating one’s reputation; (10) offering an apology, etc. However, special laws such as Patent Law, Trademark Law, etc., only set forth two ways of civil liability: ceasing infringement and compensating for losses.

In practice, many right owners in their infringement suit also request a public apology from the infringer. Such claim is not necessarily rejected by the court. However, in order to be allowed such a claim must meet some conditions. For example, the civil liability of offering a public apology is usually only applied to cases in which personal rights are infringed. In patent and trademark disputes - which only involve property - the possibilities are limited for such a claim to be supported.

Thus, it is clear that ceasing infringement and compensating for losses are the two major ways of discharging civil liabilities in IPR Litigation. Of the two, at present, ceasing infringement is the most widely used way of discharging civil liability in IPR infringement cases. Nearly all plaintiffs request cessation of infringement in their claims because this is always their main purpose in filing litigation. Since the infringing act varies in various IPR infringement cases, there are still a lot of issues worth discussing with respect to  discharging this civil liability. For example, what are the specific ways of ceasing infringement, and are destroying inventory and moulds included?    

Illustrated with actual cases and based on our experience in litigations, this article will introduce ceasing infringement as a way of discharging civil liability in IPR infringement litigations under present judicial practice and provide advice on how to claim civil liabilities in infringement litigation. It would be a great honor if this writing is of some reference to you.

I. Relevant laws and regulations

In addition to the relevant stipulations in the General Principles of Civil Law, Article 60 of Patent Law and Article 53 of Trademark Law are also involved. These two articles stipulate that with respect to the infringing act the right owners may choose to file litigation with the court or to request the administrative authority to handle the case. In cases where the administrative authority handles the suit, it is expressly stipulated that if infringement is determined by the administrative authority then immediate cessation of infringement shall be ordered. However, there is no such specific stipulation in cases where the litigation is filed with the court. Although there is no specific stipulation, once infringement has been determined by the court, an immediate cease of infringement can be ordered. Since litigation is a main relief, ceasing infringement is apparently a way of discharging civil liabilities.
Article 46 and Article 47 of Copyright Law expressly stipulate that ceasing infringement is one of the ways to perform the civil liabilities incurred from copyright infringement.

In addition, article 15 of the Opinions on Several Issues concerning IPR Trials to Serve the Overall Situation under Present Economic Situation of the Supreme Court also provides directions for the application of ceasing infringement.

II. Specific ways of ceasing infringement

Ceasing infringement is a general term for “ceasing a certain specific infringing act”. Though from a broad perspective this term is not incorrect, is more comprehensive and covers all circumstances, it is inconvenient when it comes to enforcing the judgment.

The former vice president of the Supreme Court, Cao Jianming, expressed in the Second Working Conference on IPR Trials of Nationwide Courts that if the infringing act continues when the judgment of first instance is made, normally the court should order an immediate cessation of infringement and state clearly the specific ways and details of stopping the infringement.

In order to state the specific ways and details of stopping the infringement, the specific ways and details of the infringement in the first place need to be clearly defined, which requires the plaintiff to accurately state in the suit the specific infringing acts by the defendant and the details thereof fully and without omission; for example, to provide the model number of the accused infringing product and details of infringing method.

However, the plaintiff may be exposed to some risks by fulfilling this requirement. In one aspect, to define the infringing act too specifically may lead to errors and incompleteness. For example, the definition of the infringing products may be inaccurate or only a portion of the infringing products are defined. In another aspect, penalties may be easily evaded by the defendant if the infringing act is defined too specifically. For example, in case that the plaintiff defines the infringing product by model number and the court orders to the defendant to cease manufacturing and selling those products, the defendant can merely change the model number of the product but leave the substance of the products unchanged, thus it is easy to cause problems in enforcing the judgment.

Therefore, when filing litigation, the plaintiff needs to firmly establish the infringing act by the defendant and define the infringing act comprehensively and accurately as much as possible.

III. Circumstances when the civil liability of ceasing infringement is not applicable

1. Status of right

It is necessary to consider the status of the IP right when making a judgment to impose ceasing infringement liability. If the right is no longer valid when the judgment is made, then the claim of ceasing infringement will not be supported since the basis of infringement no longer exists.

For example, if a patent has expired when the judgment is made in patent infringement litigation, although the infringer is liable to provide compensation for losses incurred during the period of validity of the patent, usually a claim for stopping infringement will not be supported.

There is a question of special interest in this regard: if the infringing products are confirmed to have been manufactured during the validity period of the patent, can a claim to cease selling of the products after expiry of the patent be granted? Generally, even if the infringing products are confirmed to have been manufactured in the period of validity, selling of the products should not be restricted since such selling after expiry of the patent is no longer an infringement.

2. De facto ceasing infringement

In January of 2007, Judge Cao Jianming, then the vice president of the Supreme Court, made a speech in the Symposium of IPR Trials of Nationwide Courts that the civil liability of ceasing infringement should be applied in accordance with law and appropriately. “If it is proved that the infringer has already ceased the infringing act before or during litigation, the court only needs to state this fact in the fact-finding part of the judgment. It is not necessary to order to cease the infringing act again in the main part of the judgment. With respect to some special infringing acts which continue during litigation, the court should consider the specific circumstances of the case in order to reasonably balance the interests of the litigants and the public as well as the cost and possibility of enforcement. If a judgment of ceasing infringement will lead to manifestly unreasonable result or will harm public interests, the court may choose to award proper compensation without making a judgment to cease manufacturing and selling of relevant products.”

With respect to the first half of the above speech, the key point is to prove that the infringer has already ceased the infringing act before or during litigation. Usually, the infringer shall bear the burden of proof, that is, the accused infringer should provide evidence to support its claim that the infringing act has already ceased. However, in fact, the focus of the plea by the infringer is always a counterclaim of non-infringement. Though in a few cases the infringers have claimed that infringement had ceased, they rarely submitted evidence to support their claims. Thus, there are only a few cases in which the court made a judgment without ordering cessation of infringement. However, in present judicial practice, a judgment without ordering cessation of infringement always happens in the situation when the right owner has already requested an administrative investigation into the infringing acts of the accused infringer. In such a situation, if the right owner has no further evidence to prove the continuation of the infringing act, the court is likely to make a judgment only on compensation.

3. Consideration of public interests

With respect to the last half of the above speech, article 15 of the Opinions on Several Issues concerning IPR Trials to Serve the Overall Situation under Present Economic Situation of the Supreme Court (Court Issue【2009】No. 23) provides a more detailed opinion, “If cessation of the relevant act will lead to a gross disparity of interests between litigants or is contrary to public interests or is in fact unenforceable, the court may choose not to order cessation of infringing act by weighting the interests of various parties according to the specific circumstances of the case. As alternatives, the court may solve the disputes by awarding more damages or compensation. In the circumstance that the right owner ignores the infringement and has been reluctant to actively protect the right over a long period, when the owner requests cessation of infringement, the court may consider not ordering cessation of the infringing act with discretion if cessation of the infringing act will lead to an obvious imbalance of interests among the litigants. But this would not affect the owner’s obtainment of reasonable compensation from the infringer.” 

The case of FUJIKASUI[1] is a typical case of not applying the liability of ceasing infringement following public interests. In this case, the patent involved is a desulphurization method and facility and the accused infringing products are desulfurizers mounted on power generating units in a power plant. The court of first instance, Fujian Higher People’s Court demonstrated clearly in the judgment, “The equipping of Flue gas desulfurization facilities by coal-fired power plant is in line with basic state policy and industrial policy of protecting the environment. And the supply of electricity from the power plant directly affects the local economy and peoples’ livelihoods. In order to balance the interests between the right owner and the public, the claim by Jingyuan Company requesting Huayang Company to cease infringement is thus not supported. However, Huayang Company should pay relevant royalties to Jingyuan Company until the patent involved expires.” The Supreme Court also supported this opinion in the trial of second instance.

4. Conflict between registered trademark and prior rights

In addition to the above mentioned circumstances, when a registered trademark is in conflict with prior rights of others such as copyright, trade name right, etc., if the registered trademark is unable to be canceled due to the earlier expiration of the dispute cancellation period prescribed in Trademark Law, the owner of the prior rights may still start a civil litigation based on infringement, but in its judgment the court will not order the infringer to undertake the civil liability of ceasing to use the registered trademark. [2]

Article 41 of Trademark Law sets forth: “Where a registered trademark stands in violation of the provisions of Articles 10, 11 and 12 of this Law, or the registration of a trademark was acquired by fraud or any other unfair means, the Trademark Office shall cancel the registered trademark in question; and any other organization or individual may request the Trademark Review and Adjudication Board to make an adjudication to cancel such a registered trademark.

Where a registered trademark stands in violation of the provisions of Articles 13, 15, 16 and 31 of this Law, any other trademark owner concerned or interested party may, within five years from the date of the registration of the trademark, file a request with the Trademark Review and Adjudication Board for adjudication to cancel the registered trademark. Where a well-known mark is registered in bad faith, the genuine owner thereof shall not be restricted by the five-year limitation.

In addition to those cases as provided in the preceding two paragraphs, any person disputing a registered trademark may, within five years from the date of approval of the trademark registration, apply to the Trademark Review and Adjudication Board for adjudication.

The Trademark Review and Adjudication Board shall, after receipt of the application for adjudication, notify the interested parties and request them to respond with arguments within a specified period.”

Conflicting with prior rights of others such as copyright, trade name right, etc. is a violation of article 31 of the Trademark Law. According to the above mentioned provision, the prior right owner should apply to the Trademark Review and Adjudication Board to cancel such a registered trademark within five years from the trademark registration date.

But in reality, the trademark may not be put into extensive use until long after registration which means that the prior right owner may not discover the existence of the accused infringing registered trademark in time. It is almost always more than five years after registration before the prior right owner notices and thus is unable to request cancellation of the trademark according to article 31 of the Trademark Law.

If a trademark is maintained by registration, it would be meaningless if it could not be actually used. Therefore, with respect to trademarks maintained by registration, the use of such trademarks is the legal use of registered trademarks and should not be prohibited. Considering the balance of interests between the prior right owner and the owner of the registered trademark, the Supreme People’s Court interpreted, “The owner of the prior rights may still start a civil litigation based on infringement, but the court will no longer order the infringer to bear the civil liability of ceasing to use the registered trademark in the judgment.”

IV. Destroying inventory and moulds

The Measures for Administrative Law-Enforcement of Patents and article 53 of the Trademark Law state that following an administrative investigation on an infringing act, the infringing goods and tools specially used to manufacture the infringing goods can be confiscated and destroyed, that is, the destruction of inventory and moulds. However, it is not clearly defined by law whether the courts are able to order to destroy inventory and moulds in litigation. In actual judicial practice, the courts in different places and, even different judges from the same court, adopt different standards.

1. What is included in the scope of ceasing infringement?

With respect to the destruction of inventory and moulds requested by the plaintiffs, some courts did not make a comment and only supported the request of ceasing infringement and compensation for losses in the judgment, while the other requests were all rejected. For example, in the (2007) No.2 Intermediate Civil First No.392 Judgment made by Beijing No.2 Intermediate People’s Court, though the request of ceasing infringement was supported, with respect to the ways of ceasing infringement, according to the specific circumstances of that case, the court only ordered the defendant to immediately cease manufacturing and selling of the infringing products and rejected other requests such as destroying the inventory and moulds.

In the above judgment, the reason why the court did not support the request for destruction of the inventory and moulds may be because of the lack of legal basis or because the court considered destroying inventory and moulds is included in the scope of ceasing infringement. With respect to this, the (2010) Chang Intermediate Civil San First No.0041 Judgment made by Changsha Intermediate People’s Court in Hunan Province provided a more explicit explanation. “The plaintiff also requested the defendant to destroy infringing moulds. This court held that destroying infringing articles is a specific way of ceasing infringement, which should be carried out in the enforcement procedure. This claim of the plaintiff is thus not supported.”

The (2010) No.1 Intermediate Civil First No.16759 Judgment made by Beijing No.1 Intermediate People’s Court had a similar opinion. “With respect to the claim by Lego Company requesting Loongon Company to hand in and destroy inventory and moulds used to manufacture the infringing products, since such a claim is in the scope of ceasing infringement liability, this claim is thus not supported.”

The above opinions of the courts lead to a summarization that destroying inventory and moulds is in the scope of ceasing infringement liability and there is no need to state separately. However, such opinion is incorrect. As mentioned above, ceasing infringement is a general term. When it comes to the enforceability, the court should define the specific ways of ceasing infringement in as much detail as possible. Ceasing the manufacturing and the selling of infringing products is a specific way of ceasing infringement and this way can be clearly stated in the main part of judgment. Likewise, destroying inventory and moulds is also a specific way of ceasing infringement. Why would it automatically be in the scope of ceasing infringement and why should such claim not be supported?

2. A way of civil sanction?

The (2011) Hu No.2 Intermediate Civil Wu First No.78 Judgment made by Shanghai No.2 Intermediate People’s Court indicated that “With respect to the claim by the plaintiff requesting the defendant to destroy inventory and moulds, since it is not a way to bear civil liability, the claim is not supported by this court.”

The author has also attended a trial in Shanghai No.2 Intermediate People’s Court. During the trial, with respect to the plaintiff requesting that the defendant be ordered to destroy inventory and moulds, the opinion of the collegiate bench was similar to the above, that is, it is not a way to bear civil liability but is a form of civil sanction. Therefore, the court required the plaintiff to withdraw the claim of destroying inventory and moulds and apply to the court to impose the civil sanction of destroying inventory and moulds on the defendant. Since this case was finally settled, the court did not make a judgment or decision regarding civil sanctions.

In fact, the above way is not common in judicial practice and it also lacks a legal basis. But no matter whether it is in the main part of a judgment or it is as a civil sanction in a separate decision, for the right owner, which form the court chooses makes no difference as long as the destruction of inventory and moulds is indeed enforced.

3. Evidence of inventory and moulds

In fact, article 15 of Opinions on Several Issues concerning IPR Trials to Serve the Overall Situation under Present Economic Situation of the Supreme Court (Court Issue【2009】No. 23) provides a clear opinion that “According to the claims by the litigants, the specific circumstances of the case and the actual need to adopt ceasing infringement, the court may explicitly order the litigants to destroy the materials and tools specially used to manufacture infringing products. But the awarding of destruction should be based on real need and correspond to the level of infringement, and not cause unnecessary loss.

The (2010) Yue Higher Civil No.3 Final No.432 Judgment made by Guangdong Higher People’s Court indicated that “A joint patent infringement was constituted. The defendant shall bear civil liability to Chusheng Company, including immediately to cease manufacturing and selling of infringing products and to destroy inventory. With respect to the claim of destroying moulds, since Dongfeng Factory admitted parts of the moulds are specially used, the original court thus also supported the claim by Chusheng Company and ordered Dachen Company, Eliks Company and Dongfeng Factory to destroy their moulds used to manufacture infringing products.

This judgment is consistent with the guiding opinion of the Supreme Court.

Some courts accept to support the request for the destruction of inventory and moulds. However, they require the plaintiffs to bear substantial burden of proof of the existence of the inventory and moulds.

For example, the (2012) Hai Civil First No.3613 Judgment made by Beijing Haidian District People’s Court indicated that “With respect to the claim by Li Changgao demanding the three defendants to destroy inventory and moulds, there is no evidence of inventory of foot massagers. The court is unable to take actual control of the inventory and moulds. Meanwhile, it is sufficient to prevent the infringing act by ordering the three defendants to cease infringement and Shanghai Shuangquan Company and Wenzhou Shuangquan Company to compensate for economic loss, so this court does not support the claim by Li Changgao.”

The above judgment took enforceability into consideration. The author has encountered similar cases in administrative enforcement. When local intellectual property offices failed to confirm the existence of moulds from their on-site investigations, some of the local offices would not include destroying inventory and moulds in their decisions.

The above treatment is reasonable to a certain extent since it fully considers enforceability. However, it is not a good way to fully protect the rights of litigants. Though it is possible that the situation of the inventory and moulds is not clear during the litigation, it does not necessarily mean that no inventory or moulds exist. In fact, the existence of moulds and special equipment can be presumed from the nature of the infringing products. In reality, it is too demanding to make the plaintiff bear the burden of proof to the existence of inventory and moulds. Moreover, though enforceability is taken into consideration in such a treatment, it is actually a limitation on enforcement. The reason is that without any determination on the inventory and moulds in the judgment, there will be no basis for the destruction of inventory and moulds in the enforcement procedure. Even if clues to the existence of inventory and moulds are found in the enforcement procedure, the enforcement is still unable to be carried out.

Therefore, as long as the existence of moulds and special equipment can be presumed from the nature of the products, the court should support the plaintiff’s request for the destruction inventory and moulds in order to better protect the interests of the right owner and to prevent infringement.

4. Legal basis of destroying inventory and moulds

During litigation, with respect to the plaintiff’s request for the destruction of inventory and moulds, the defendant often presents a defense based on the lack of a legal basis. And the court always requires the plaintiff to explain the facts and legal basis of the request.

As mentioned in the above, if requesting cessation of infringement is a specific way to bear civil liability, it is easy to cause a problem, namely, whether destroying inventory and moulds is necessary to cease infringement. As long as the inventory is not for sale and the moulds are not used for manufacturing infringing products, then the existence of inventory and moulds does not constitute infringement. Therefore, an order to cease manufacturing and selling infringing products alone is sufficient to prevent infringement and it is not necessary to destroy the inventory and moulds. That is a significant reason why the courts do not support requests for the destruction of inventory and moulds.

In litigations undertaken by the author, when required by the court to clarify the legal basis for destroying inventory and moulds, the main claim is that destroying inventory and moulds was a necessary means to eliminate the risk of infringement and the legal basis is article 134 of General Principles of Civil Law. The detailed claim includes the following: the moulds and equipments are specially used to manufacture infringing products. Apart from this, they have no other use. As long as the moulds and equipments exist, the infringer can manufacture the infringing products at any time. Likewise, the inventory has no value if not for selling. If the inventory is not destroyed, the infringer can sell infringing products at any time, which means the risk of infringement will always exist. To eliminate the risk, it is necessary to destroy the inventory and moulds and recall from distributors infringing products which have not yet been sold.

The Supreme Court accepted the author’s opinion above in the Judgment (2010) Civil Bring No.189. “The manufacturing of the infringing products BT98 tires involved in this case needs special moulds which can only be used to manufacture infringing products and which have no other use. The Huntington Company confirmed this point too. Destroying the special moulds can eliminate further infringement risk. …In order to prevent the infringing products from reaching the marketing channel, the moulds can be destroyed. …If there are products which have been transported to the distributors but have not yet sold to the final customers, the infringer should recall the products from the distributors to reduce further the risk of infringement and to completely exclude the infringing products from commercial channels. Such claim can be supported on the condition that it would not substantially increase the manufacturer’s burden and it is necessary in order to cease infringement.”

Although in the above mentioned case, the Supreme Court supported the plaintiff’s claim for the destruction of inventory and moulds, in judicial practice, there are still many local courts that have rejected such claims by plaintiffs due to various reasons as explained in the above. In a specific case, in order to obtain support from the court, the plaintiff needs to fully illustrate the fact of infringement and the necessity to destroy inventory and moulds.

V. Enforcement of ceasing infringement

Though a request for cessation of infringement is easy to get supported by the court, there are still many problems when it comes to enforcement. Especially when the defendant fails to perform the liabilities set forth in the judgment, a big problem in protecting intellectual property is how a plaintiff can make the defendant perform the liability of ceasing infringement.

1. Compulsory enforcement means

When the defendant fails to perform the liabilities set forth in the judgment, the plaintiff may apply to the court for compulsory enforcement. However, in practice, compulsory enforcement works relatively well when it comes to enforcement regarding money and assets. But with respect to action, there are difficulties in enforcement, especially when it relates to inaction. Ceasing infringement is usually a form of inaction, such as not manufacturing, not selling and not using and so on. However, it is impossible for the court to supervise the act of the enforced party. In reality, usually the enforcement is a conversation between the enforcement judges and enforced party, for which the enforcement judges reassert that the enforced party should not continue manufacturing, selling and using of the infringing products, and demand that the enforced party signs the transcript and gives guarantees. 

2. Continued infringing act

If there is evidence to prove that the infringing act of the defendant continues, the court may investigate the continued infringement and collect evidence. In the above mentioned speech by judge Cao Jianmin, “With respect to the continued infringing act after the judgment took effect and the enforcement has been done, the right owner may start another litigation investigating the newly occurring civil liability; after a trial, if the infringer indeed continues infringement determined by the original judgment, the court should coordinate with public security department and procuratorate to investigate the defendant for criminal liability based on refusing to enforce judgments or orders, according to the specific situation.

According to the spirit of the above mentioned speech, the plaintiff may take further measures if evidence of continued infringement has been collected. On one hand, the plaintiff may file a separate litigation to investigate the defendant’s criminal liability. On the other hand, the plaintiff may negotiate with the defendant based on such evidence and urge the defendant to truly cease infringement.

However, in reality, if the infringers lose litigation, they usually do not continue to manufacture and sell the infringing products, but modify them. After modification, in some cases, the products may not fall into the scope of the owner’s right. But some products may still constitute infringement. After modification, especially when the modification is obvious, the court needs to make a new judgment on whether the products still constitute infringement. Under such circumstances, since it is no longer the same infringing act determined by the original judgment, it is hard to investigate the defendant’s criminal liability of refusing to enforce judgments or orders.

3. Enforcement of destroying inventory and moulds

In reality, ceasing manufacturing and selling is a form of inaction. The enforcement and supervision of these are therefore difficult. However, destroying inventory and moulds is a form of action and relatively more enforceable. And generally, if the moulds and special equipments are destroyed, the cost of remanufacturing infringing products will be substantially increased. Therefore, many right owners take destroying inventory and moulds, particularly destroying moulds, as a way to guarantee cease of infringement. However, the enforcement of destroying inventory and moulds is, in fact, not easy.

Usually, the plaintiff does not yet have a clear picture of the inventory and moulds when the judgment is made, let alone take actual control of them. So it is hard to get confirmation of whether the defendant has destroyed the inventory and moulds or not. Even if compulsory enforcement is applied to the court, if the defendant is not cooperative, the judge is unable to find the involved inventory and moulds, which makes their destruction unrealistic.

The plaintiff’s claim for the destruction of moulds was supported in the (2009) Shen Intermediate Civil San First No.69 Judgment made by Shenzhen Intermediate People’s Court in Guangdong Province. “Without authorization, Du Chuanhua manufactured and sold the involved patented products which infringed the patent of Zheng Weilin who requested Du Chuanhua to cease infringement and destroy moulds specially used for manufacturing the patented products. The claim was in accordance with law and the original court supported the claim.”

In the trial of second instance, the plaintiff strongly claimed for damages than destroying moulds. According to the record of (2010) Yue Higher Civil San Final No. 292 Judgment, the plaintiff claimed in the second instance that “Zheng Weilin sued several infringers in the year of 2007. Shenzhen Intermediate Court and Guangdong Higher Court ordered the infringers to compensate Zheng Weilin 100,000 Yuan for economic loss and destroy moulds. But the destroying of moulds has not yet been enforced till now. Even if the defendants compensate with 100,000 Yuan in each case, it is still insufficient to recover Zheng Weilin’s loss.

It is not a special case that the destruction of moulds does not get enforced for a long time. Instead, it is a common situation. In judicial practice, with respect to the enforcement of inventory and moulds, in most situations, the court takes the same measure as that in the above mentioned item 1, that is, to have a conversation with the defendant and require the defendant to destroy the inventory and moulds. If the defendant declares that the destruction has been performed, then the court is unable to determine if this is true or false. And the case just ends up there.

The number of judgments supporting a request for the destruction of moulds is very samll and the cases in which the moulds were actually destroyed are even fewer. The enforcement in the patent infringement dispute case between ALFA LAVAL LUND AB and Jiangyin Hengli Refrigeration Appliance Co., Ltd. was the only one successful case which has been praised and commented a lot in the industry.

In that case, ALFA LAVAL LUND AB filed litigation with Shanghai No.2 Intermediate People’s Court for a patent infringement dispute in May 2005. At the trial, the court found that the plate heat exchangers ZL50D and ZL95A manufactured, sold and offered for sale by Hengli Co., Ltd. infringed two patents for invention ZL94192808.X and ZL96198973.4 owned by ALFA LAVAL LUND AB. The court ordered Hengli Co., Ltd. to cease infringement, and compensate ALFA LAVAL LUND AB with 300,000 Yuan for economic loss. Besides, in light of that ALFA LAVAL LUND AB requested destruction of the moulds used by Hengli Co., Ltd. to manufacture the infringing products and Hengli continued to manufacture and sell the above mentioned products after ALFA LAVAL LUND AB filed litigation, the court made the following civil sanction decision according to the relevant provisions from the General Principles of Civil Law: to confiscate the moulds used to manufacture plate heat exchangers ZL50D and ZL95A and transfer them to the enforcement tribunal for compulsory enforcement.[3]

Upon receiving the case, the enforcement judges investigated Hengli Co., Ltd. in Jiangyin City, Jiangsu Province several times, sealed up the relevant infringing moulds and made preparations for their confiscation. After repeated research, the collegiate bench finally set up the confiscation plan. On May 25, 2007, the enforcement judges, identification experts and foreign representatives from ALFA LAVAL LUND AB went to Jiangyin City in Jiangsu Province to confiscate and destroy the two infringing moulds at the Hengli Company premises. According to the plan, after arriving at the enforcement site, the judicial policemen cleared the site and then the legal representative of Hengli Company was notified to be present. After the identification experts and the foreign representatives verified on site the infringing moulds sealed by the court previously, the moulds were confiscated and destroyed on site by the staff from the destruction organization appointed in advance by the court.

The successful experience from this case is worth studying. But it can be seen that the efforts of a court is necessary for the successful destruction of moulds.

It is hard for enforcement judges to identify infringing moulds based only on their common sense and general work experience. In that case, the enforcement officers had performed a series of tasks. Firstly, they invited the technical experts who were authorized as identification experts in the trial and asked them to help with identifying the infringing moulds on site. Secondly, before confiscation, the enforcement officers and identification experts went to Hengli Company to compare and identify the infringing moulds on site and have them sealed. Thirdly, they took photos of the sealed moulds and showed them to ALFA LAVAL LUND AB to get their assistance in identifying them. Fourthly, when it was time to confiscate the infringing moulds, they invited the identification experts and foreign representatives from ALFA LAVAL LUND AB to check and identify the sealed moulds once again.

The above mentioned work is much more complicated than having a conversation with the defendant. Most of enforcement judges will not do their job to such an extent, or we may say that it is not an efficient way for them to spend their time. Therefore, in most cases, the court would not try so hard to enforce the destruction of moulds.

In general, the enforcement of destroying inventory and moulds is no less difficult than that of ceasing manufacturing and selling. In fact, if the right owners pay too much attention to the destruction of inventory and moulds, it may not help to protect their rights and interests.

Ending

This article has introduced the difficult and hot issues in relation to the cessation of infringement as a way to perform civil liability in IPR infringement litigations.

From juridical practice, most right owners care more about the actual result of ceasing infringement, compared with to receiving compensation. In reality, repeated infringement is not uncommon, such as the continued but disguised infringing act after the infringers have been sued. Therefore, under such circumstance, many right owners may think it is meaningless to work on IPR litigation in China since litigation is far from sufficient to ensure that the infringers bear the civil liability of ceasing infringement.

Surely we cannot deny that such negative phenomenon exists. However, the IPR protection environment in China is improving gradually. From legislation to enforcement, the protection of legal rights and the interests of right owners play a more and more important role. Now there are more and more cases in which right owners successfully protected their rights and ensured their market positions, which is the mainstream.

Right owners can be confident in IPR protection in China. In order to protect their lawful rights to the maximum, on one hand, the right owners may try their best to present their claims in litigation and achieve a favorable outcome under present juridical system. On the other hand, litigation is only a means rather than a goal. It is also a good solution to put pressure on infringers by the means of litigation in order to finally reach a settlement. In fact, infringement can only truly cease when infringers are willing to stop their infringing acts. However, to make infringers cease infringement, it is necessary to take tough measures and put pressure on them in order to make them realize the serious consequence of infringement. In order to achieve these effects, the right owners and lawyers need to work together and never let infringement go unchallenged.
 

[1] The case number of the first instance trial is (2001) Min IP First No. 4 (闽知初字第4号) and the case number of the second instance is (2008) Civil Third Final No.8 (民三终字第8号)
[2] Opinions on Several Issues concerning IPR Trial to Serve the Overall Situation under Present Economic Situation of the Supreme Court (Court Issue【2009】No. 23)
[3] (2005) Hu No.2 Intermediate Civil No.5 (IP) First No. 156
 
(2013)
About us | Contact us | Favorite | Home Page
LINKS:Beijing Wei Chixue Law Firm
©2008-2025 By Linda Liu & Partners, All Rights Reserved.