Our firm recently secured victory for a client in a patent infringement lawsuit, obtaining a final judgment that the infringer’s appeal was denied and the first-instance ruling was affirmed. In this complex case involving indirect infringement, both the trial court and appellate court ruled in our favor, holding that the defendant’s conduct constituted contributory infringement.
The patent-in-suit relates to automotive parts assembly consisting of Part A and Part B. Although the defendant manufactured only Part A—the accused product—and did not manufacture Part B, the accused product is specifically designed for use in combination with the plaintiff’s Part B. As the assembly resulting from the combination of the two falls within the scope of the asserted patent, we argued that the defendant’s conduct of manufacturing and selling the accused product constituted contributory infringement under Article 21, Paragraph 1 of the Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases. This provision stipulates that where any party provides, for production and business purposes, with the knowledge that a certain product constitutes a raw material, equipment, component, or intermediate specifically intended for implementing a patent, such a product to a third party whose conduct constitutes patent infringement without the authorization of the patentee, said party shall be deemed to have committed contributory infringement.
In judicial practice, contributory infringement is generally established based on proof of the following three elements: (a) a third party whose conduct constitutes patent infringement, i.e., the existence of direct infringement by a third party; (b) the accused party’s supply of a certain product that constitutes a raw material, equipment, component, or intermediate specifically intended for implementing the patent; and (c) the accused party’s knowledge, actual or constructive, on the third party’s infringing act.
We made the following arguments before the court. The evidence on record demonstrates that the accused product was sold together with the part B manufactured by the Plaintiff as a matching set, and that the purchaser would necessarily use them in combination. Therefore, objectively there is an act of direct infringement. Further, the accused product has no other reasonable non-infringing uses apart from being combined with the plaintiff’s Part B to form the patent parts assembly. Moreover, as a necessary and dedicated component for practicing the patented invention, the accused product embodies a core inventive point of the patent-in-suit. On the other hand, given that the accused product can only be used in combination with the part B manufactured by the Plaintiff in the patented parts assembly—a compatibility that is clearly the result of design and dedicated manufacture—the defendant, being an enterprise specializing in the auto parts industry, clearly knew that the accused product is a component specially used for practicing the patent-in-suit and that another party’s sale and use of the accused product would infringe the patent.
The defendant denied direct infringement, claiming that the part it manufactured was sold solely for repair purposes and that the patentee’s rights were exhausted. We rebutted each of the defendant’s defenses and pointed out that the defendant’s act of replacing the Part A in the patented parts assembly with the accused products without authorization simply cannot support a finding of patent exhaustion or permissible use.
Both the first-instance and second-instance courts accepted our arguments, holding that the accused products were components specially used for implementing the patent-in-suit and that the two defendants had the knowledge about the special use of the accused products. The courts found the defendants liable for contributory infringement and ordered them to cease infringement and pay damages.
The patent-in-suit relates to automotive parts assembly consisting of Part A and Part B. Although the defendant manufactured only Part A—the accused product—and did not manufacture Part B, the accused product is specifically designed for use in combination with the plaintiff’s Part B. As the assembly resulting from the combination of the two falls within the scope of the asserted patent, we argued that the defendant’s conduct of manufacturing and selling the accused product constituted contributory infringement under Article 21, Paragraph 1 of the Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases. This provision stipulates that where any party provides, for production and business purposes, with the knowledge that a certain product constitutes a raw material, equipment, component, or intermediate specifically intended for implementing a patent, such a product to a third party whose conduct constitutes patent infringement without the authorization of the patentee, said party shall be deemed to have committed contributory infringement.
In judicial practice, contributory infringement is generally established based on proof of the following three elements: (a) a third party whose conduct constitutes patent infringement, i.e., the existence of direct infringement by a third party; (b) the accused party’s supply of a certain product that constitutes a raw material, equipment, component, or intermediate specifically intended for implementing the patent; and (c) the accused party’s knowledge, actual or constructive, on the third party’s infringing act.
We made the following arguments before the court. The evidence on record demonstrates that the accused product was sold together with the part B manufactured by the Plaintiff as a matching set, and that the purchaser would necessarily use them in combination. Therefore, objectively there is an act of direct infringement. Further, the accused product has no other reasonable non-infringing uses apart from being combined with the plaintiff’s Part B to form the patent parts assembly. Moreover, as a necessary and dedicated component for practicing the patented invention, the accused product embodies a core inventive point of the patent-in-suit. On the other hand, given that the accused product can only be used in combination with the part B manufactured by the Plaintiff in the patented parts assembly—a compatibility that is clearly the result of design and dedicated manufacture—the defendant, being an enterprise specializing in the auto parts industry, clearly knew that the accused product is a component specially used for practicing the patent-in-suit and that another party’s sale and use of the accused product would infringe the patent.
The defendant denied direct infringement, claiming that the part it manufactured was sold solely for repair purposes and that the patentee’s rights were exhausted. We rebutted each of the defendant’s defenses and pointed out that the defendant’s act of replacing the Part A in the patented parts assembly with the accused products without authorization simply cannot support a finding of patent exhaustion or permissible use.
Both the first-instance and second-instance courts accepted our arguments, holding that the accused products were components specially used for implementing the patent-in-suit and that the two defendants had the knowledge about the special use of the accused products. The courts found the defendants liable for contributory infringement and ordered them to cease infringement and pay damages.