Awarded Highest Amount of Statutory Damages | “Sewing Machine” Invention Patent Infringement | Linda Liu & Partners

Judgment Gist

Three types of the allegedly infringing product CSM-9820-00/01/02 and the allegedly infringing product CSM-9820A fully encompass all of the technical features of claims 1, 2, 4, and 6 of the subject patent, and thus fall in the scope of protection of claims 1, 2, 4, and 6 of the subject patent.

Without license by Brother Inc., Supreme Corporation manufactured, sold, and offered to sell the allegedly infringing product that fell in the scope of protection of a patent of Brother Inc., thereby infringing the patent right of Brother Inc. Supreme should bear the civil liability to desist from infringement and compensate for the losses of Brother Inc.

Case Information

 

Case Summary

Brother Inc. Ltd. (shortened to Brother Inc. hereinafter) is the patentee of patent No. ZL200610054932.X entitled “Sewing Machine” (hereinafter referred to as the subject patent). Brother Inc. found out that Ningbo Supreme Investment Management Co. Ltd. (hereinafter referred to as Supreme Corporation) manufactured, sold, and offered to sell an electronic round head keyhole machine (Type CSM-9820A, CSM-9820, and CSM-9820N) product (hereinafter referred to as the allegedly infringing product). Based on notarized purchase, Brother Inc. confirmed that the allegedly infringing product fell in the scope of protection of claims 1, 2, 4, 5, 6 of the subject patent. Brother Inc. then appealed to Shanghai Intellectual Property Court, requested the court to order Supreme Corporation to immediately desist from production, sales, and offer to sell allegedly infringing product and to dispose the stock and the semi-manufactures of the allegedly infringing product, the special equipment and molds for producing the allegedly infringing product, and requested Supreme Corporation to compensate Brother Inc. for economic losses of 4.4 million yuan and a reasonable expense of 0.3 million yuan and to pay for the litigation fee of the subject case.

Supreme Corporation argued that, the Plaintiff failed to prove that CSM-9820N fell in the scope of protection of the subject patent; CSM-9820A, CSM-9820 did not fall in the scope of protection of the subject patent; the Plaintiff failed to present proof of existence of stock, semi-manufactures, special equipment and molds; the claims of the Plaintiff did not have legal or factual basis; and the amount of damages and reasonable expense claimed by the Plaintiff was obviously excessively high.

The court of first instance determined that: the allegedly infringing productsCSM-9820A-00, CSM-9820-00 fully covered the all of the technical features of claims 1, 2, 4, 6 of the subject patent, and thus fell in the scope of protection of claims 1, 2, 4, 6 of the subject patent; based on the physical product and the manual and the promotion materials for the allegedly infringing product, products of the three types of CSM-9820-00/01/02, as well as products of CSM-9820A and CSM-9820 all fell in the scope of protection of the subject patent; without license of Brother Inc., Supreme Corporation manufactured, sold, and offered to sell the allegedly infringing product that fell in the scope of protection of a patent of Brother Inc., thereby infringing the patent right of Brother Inc.; Supreme should bear the civil liability to desist from infringement and compensate for the losses of Brother Inc.

In calculating the amount of damages, the court of first instance determined that: since Brother Inc. Ltd. did not prove its actual losses incurred by the infringement or the profits of Supreme Corporation earned from the infringement, the amount of damages was determined by the court of first instance based on comprehensive consideration of the type of the subject patent, the nature of the infringement behavior, and the consequences of the infringement behavior, etc. The court of first instance specifically stated the following:

First, the allegedly infringing product includes a variety of types, including CSM-9820A, CSM-9820, and CSM-9820-00/01/02.

Second, the infringement behavior has lasted for a relatively long period; according to the evidence provided by Brother Inc., its purchase of the allegedly infringing product for the first time happened in September, 2011; and multiple purchases of the allegedly infringing product of different types were performed till August 2015.

Further, the invoice records acquired from Yinzhou Tax Service (taxation administration of the residence of Supreme Corporation), Supreme Corporation also sold a large number of the allegedly infringing product during the period from April, 2015 to January, 2017.

Moreover, the sales amount of the allegedly infringing product was relatively high: the sales amount of the allegedly infringing product reached 15,853,933 yuan during the period from April, 2015 to January, 2017; and the total sales amount of Supreme Corporation reached 84,546,366 yuan during the period from July, 2014 to March, 2015.

Regarding the reasonable expense, Brother Inc. presented the invoices of translation fee, notarization fee, and transportation costs; so the court of first instance supported the claims of Brother Inc. of the reasonable expense.

The foregoing evidence sufficiently proves that the infringement of Supreme Corporation has a wide range, involves a large sales volume, and results with a high profit. But the court of first instance also noted that the profit is the result of multiple factors including the technology, the brand, and the marketing; the contribution made by the subject patent to the profit should be considered in the calculation of the amount of damages.

Accordingly, the court of first instance determined that Supreme Corporation should compensate for the economic losses and the reasonable expense of Brother Inc. Ltd, which totals to 1 million yuan.

As shown above, the court of first instance decided that Supreme Corporation shall desist from infringement to the patent “Sewing machine” owned by Brother Inc. Ltd. as of the date of the judgment coming into effect, and that Supreme Corporation shall pay 1,000,000 yuan as compensation for the economic losses and the reasonable expenses of Brother Inc. Ltd. within ten days from the date of the judgment coming into effect.

Supreme Corporation was dissatisfied with the judgment of first instance and appealed to Shanghai Supreme People’s Court (the court of second instance) on the grounds that the allegedly infringing product does not have the technical feature of guaranteeing a space for swinging or the technical feature of freely rotatable; therefore, the allegedly infringing product does not fall in the scope of protection of the subject patent; and that the amount of damages determined in the first instance. Brother Inc. appealed to the court of second instance on the grounds that the court of first instance made a wrong judgment on the statement “the needle swing device is a functional feature”. After hearing the case, the court of the second court decided that the judgment of the first instance did not violate the law or contain injustice. The court of the second court then dismissed the case and upheld the judgment of the first instance.

Remarks by Attorney

The subject case relates to infringement dispute between a famous foreign industrial manufacturer and a domestic manufacturer. For years the involved parties have been engaged in a series of patent infringement cases before courts, the subject case being one of them. The court hearing the subject case judged that infringement was constituted, and determined the compensation to be 1 million yuan which was the upper limit of statutory compensation under the Chinese Patent Law by then. We represented Brother Inc. Ltd, the plaintiff, and won in the first and second instances, the invalidation procedure of the subject patent as well as its subsequent administrative lawsuits.

Through the procedure, in order to list the specific types of the allegedly infringing product exhaustively, Brother Inc. performed notarized purchase for several times and acquired various types of the allegedly infringing product, and had the exhibition and the related promotion materials of the defendant for the allegedly infringing product preserved under notarization. In addition, to clearly explain the features of the allegedly infringing product, we dissembled the purchased products, with a notary videoing the whole process, and photographed the parts embodying specific technical features of the subject patent, each part marked in a different color. On this basis, we prepared a detailed infringement opinion with clear illustrations. Moreover, to help the judge better understand the technical details of the patent, Brother Inc. also prepared a short video and 3D graphs for introducing the technology of the subject patent.

In terms of the compensation, as evidence for the profits from the allegedly infringing product, Brother Inc. submitted in the first instance the profit and loss statement in the annual report of Supreme Corporation for 2011, and requested the court of first instance to acquire the record of VAT invoices of Supreme Corporation from December 2011 to February 2017. The court of first instance approved the request for acquiring the evidence. Among the acquired invoice records, only a part recorded the specific product type; none of those dated before the year 2015 recorded the specific product type. Calculated from the invoice record, the sales amount including taxes for the product types 9820-01, CSM-9820-00, CSM-9820-01, and CSM-9820-02 from April 2015 to January 2017 was 15,853,933 yuan; and the total sales amount of Supreme Corporation for all products from July 2014 to March 2015 was 84,546,366 yuan. Though the invoices did not fully disclose the profit from the sales of the infringing product, they indicated the large sales volume of the allegedly infringing product and the high sales amount. Although the court decided that the evidence could not prove the actual damages caused by the infringement or the actual profits of Supreme Corporation earned from infringement and then adopted the statutory compensation, as Brother Inc. performed preservation of evidence for several times and thus proved that the allegedly infringing product included a variety of types and the duration of the infringement act was relatively long and further provided the high sales amount of the allegedly infringing product based on the invoice records of Supreme Corporation, the court finally determined the amount of damages based on the upper limit of the statutory compensation.

Note: The judgments of the first and second instances are published on https://wenshu.court.gov.cn

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