Administrative Mediation in Patent Infringement Disputes | Dongguan Market Supervision Administration’s Handling of “Coin Inspection Device” Invention Patent Infringement Dispute | Linda Liu & Partners

Market Supervision Administration of Guangdong Province “2021 Typical Cases of Intellectual Property Administrative Law Enforcement” patent infringement case No. 7

Case Insight

In this case, under the mediation of the Dongguan Market Supervision Administration, the petitioner and the respondent reached a settlement agreement, in which the petitioner not only achieved the initial purpose of stopping the patent infringement, but also settled the copyright dispute, trademark and domain name disputes in a package, saving the cost of rights protection significantly.

Case Information

Case summary

KABUSHIKI KAISHA BANDAI SPIRITS (BANDAI SPIRITS CO., LTD.) (hereinafter referred to as “the petitioner”) is a comprehensive entertainment company founded in 1950 that deals in toys, models, eggshell toys, gashapon machines, etc. Many popular IPs such as Ultraman, Kamen Rider, Mobile Suit Gundam, and One Piece created by the petitioner are extremely popular all over the world, and have caused a boom and are widely sought after in China, and at the same time, the petitioner has also become highly well-known in China.

The petitioner applied for an invention patent named “coin inspection device” in China in 2002 and the patent was granted on September 21, 2011, with patent number ZL02809174.4 (hereinafter referred to as the “first patent”); In 2013, it applied for an invention patent named “manual commodity vending device” in China, and the patent was granted on April 22, 2015, with patent number ZL201310007360.X (hereinafter referred to as the “second patent”); In 2013, it applied for an invention patent named “manual commodity vending device” in China, and the patent was granted on June 20, 2017, with patent number ZL201510124801.3 (hereinafter referred to as the “third patent”).

The petitioner believed that the toy company in Dongguan, the respondent, infringed the legitimate rights of the petitioner by manufacturing and using products that fell within the scope of protection of the first patent without authorization, and selling or offering for sale a certain model of gashapon machines contained the accused infringing product. Moreover, the act of manufacturing, selling, and offering for sale of a certain model of gashapon machines without authorization of the petitioner also infringed the rights of its second and third patents. In March 2021, the petitioner filed a request for the handling of patent infringement disputes with the Dongguan Market Supervision Administration, requiring the respondent to stop manufacturing and using the accused infringing product that infringed the petitioner’s rights of the first patent, stop selling and offering for sale a certain model of gashapon machines that infringed its rights for the three patents, delete its promotional materials and sales information on Internet, and destroy the special equipment and molds used to manufacture the accused infringing products and the inventory of the accused infringing products.

On April 15, 2021, the Dongguan Market Supervision Administration accepted the case, and after accepting the case, at the request of the petitioner, conducted an on-spot inspection of the production site of the toy company in Dongguan, found a large number of accused infringing products on the site, and recorded them.

On May 19, 2021, the Dongguan Market Supervision Administration organized and conducted an oral hearing with the both parties, and invited the “disinterested” expert mediator of the Dongguan Intellectual Property Dispute Mediation Commission to observe the oral hearing of the case. During the oral hearing, the respondent argued that the product in question did not fall within the scope of protection of the patents involved in the case, while the petitioner presented comprehensive evidence and a detailed infringement comparison opinion.

After the oral hearing, the Dongguan Market Supervision Administration immediately conducted on-site mediation. After repeated communication and negotiation, the parties reached a preliminary “package” settlement agreement on three patent infringement disputes, as well as other intellectual property disputes such as trademarks and copyrights between the parties.

On July 2, 2021, in view of the fact that the respondent had basically fulfilled the main obligations of the settlement agreement, the petitioner submitted a request for withdrawal to the Dongguan Market Supervision Administration. After review, the Dongguan Market Supervision Administration approved the withdrawal application and closed the case.

Attorney’s Interpretation

This case was selected as the seventh patent infringement case in the “2021 Typical Cases of Intellectual Property Administrative Law Enforcement” selected by the Market Supervision Administration of Guangdong Province, and the highlight was that under the mediation of the Dongguan Market Supervision Administration, the two parties reached a preliminary “package” settlement agreement on three patent infringement disputes, as well as other intellectual property disputes such as trademarks and copyrights between the parties.

In China, there are both administrative and judicial remedies for patent infringement disputes. The two remedies have their own characteristics, and the right holder can choose the appropriate remedy according to the specific circumstances of the case and the main purpose of the exercise of the right.

There are mediation procedures in both administrative and judicial channels. Especially in recent years, in order to resolve disputes as soon as possible and achieve a speedy substantive settlement of infringement disputes, mediation has been strengthened in both administrative and judicial procedures. For example, in judicial procedures, a pre-litigation mediation procedure is set up, that is, after filing a lawsuit with the people’s court, before the people’s court formally accepts the case, a third-party mediator contacts the parties to conduct mediation. Generally, the pre-litigation mediation period is designated as one month, and if a settlement cannot be reached within one month, the mediator will record the reasons for the failure of the mediation, return the case to the people’s court, and then the people’s court will formally accept the case and hear it. Moreover, during the trial, the people’s court will also conduct mediation work at multiple nodes including pre-hearing, during the hearing, after the hearing, and before making the judgment. And if the parties are truly unable to reach a settlement, the court will then make the judgment.

The biggest advantage of administrative procedures over judicial procedures is their speedy processing. According to the Measures for the Administrative Enforcement of Patents, the administrative authority shall conclude the case within three months from the date of acceptance, and may apply for a one-month extension for special reasons. In such a short period of time, it is necessary not only to conduct mediation, but also to ensure that the ruling can be made in a timely manner if the mediation fails, so the administrative organs often carry out mediation and trial work in parallel, and not only complete the substantive trial of the case during the oral hearing, but also concentrate on mediation when the facts of the case are fully understood after substantive trial. In this case, the administrative organ invited the “disinterested” expert mediator of the Municipal Intellectual Property Dispute Mediation Commission to observe the oral hearing when the oral hearing is arranged, and the expert mediator also fully listened to the opinions of the parties and raised questions to both parties during the infringement comparison process. It was precisely because of our strict evidence and rigorous reasoning of infringement comparison that the respondent also realized that its claim of non-infringement defense was difficult to establish, and agreed to settle under the persuasion and mediation of the administrative authority.

Usually, the mediation of a case is mainly based on resolving the dispute involved, but in this case, in addition to the accused patent infringement, the respondent also had a number of issues such as trademark infringement and copyright infringement. On the basis of sufficient preservation of evidence in the early stage and the discovery of a large number of accused infringing products at the site of investigation, our attorneys who represented the client fully expressed our demands to the administrative authorities based on the purpose of exercising the rights and the settlement conditions confirmed with the petitioner, and also repeatedly explained the significance of a package solution to the respondent. Finally, with the support and mediation of the administrative authorities, on the day of the oral hearing, after several hours of negotiations, the two parties reached a preliminary package of settlement framework agreements on various disputes. After that, the two parties communicated several times on the specific content and details of the settlement, and finally formally signed the settlement agreement in June 2021. And under our supervision, the respondent performed all the agreed obligations cooperatively. A number of intellectual property disputes that may have required multiple litigations or investigations, and take a lot of time and efforts to handle, were resolved within a few months, achieving the goals expected by the right holder.

Leave a Comment

Your email address will not be published. Required fields are marked *