Qi LI
Attorney-at-Law
Attorney-at-Law
When a product suspected of infringing a patent right is only displayed at an exhibition or on a website, and the patentee does not have evidence related to the production and sale of the product, should the patentee enforce his rights only against the relevant entity offering to sell? If the subject of the relevant display or publicity is not the entity producing or selling the product, can the tort liability of the relevant publicity act be retroactively extended to the manufacturer? In this article, the author will briefly analyze the historical judicial adjudication views on the determination of compensation liability of offering to sell in patent infringement disputes and the guiding views in the latest judicial cases based on judicial precedents.
1. Historical Judicial Adjudication Views on Compensation Liability of Offering to Sell in Patent Infringement Disputes
Before 2021, local courts had reflected different adjudication views on the compensation liability of offering to sell in patent infringement disputes, and the mainstream view could be divided into two types, namely: 1) when the right holder cannot provide evidence to prove that actual losses have been caused, the entity offering to sell only bears the compensation liability for reasonable expenses; 2) Offering to sell infringement should bear the liability to compensate both economic loss and reasonable expenses.
For example, Shanghai Intellectual Property Court pointed out in its first-instance judgment in the (2015) Shanghai IP Civil First Instance No. 762 design patent infringement dispute that “with regard to the plaintiff’s claim for compensation of economic loss and reasonable expenses, this court does not support the claim for compensation, the reason being that the defendant was only found to carry out the act of offering to sell and did not cause actual economic loss to the plaintiff. As for the reasonable expenses claimed by the plaintiff, it supports the part in relation to the infringing products in this case in the notarial certificate (2016) Guangdong Foshan Shunde No. 34284 that this court has accepted and the reasonable part of the corresponding travel expenses incurred by the plaintiff for the litigation of this case.” For another example, the Supreme People’s Court pointed out in its civil ruling of (2015) Civil Retrial No. 2000 on the retrial of the utility model patent infringement dispute that “this court holds that the application of Article 65 of the Patent Law should be premised on the existence of actual losses by the right holder. ...... In view of the fact that, in addition to the reasonable expenses caused by the lawsuit, Chong WANG did not provide sufficient and valid evidence to prove that Ke Te Cheng Ye Company and Ke Te Xing Ye Company have caused actual economic losses to Chong WANG due to the act of offering to sell involved in the case. As such, there is no obvious impropriety that the courts of first instance and second instance awarded Ke Te Cheng Ye Company and Ke Te Xing Ye Company to compensate Chong WANG for the reasonable expenses.”
In the above-mentioned judicial case, Shanghai Intellectual Property Court and the Supreme People’s Court both held that, when the right holder could not provide evidence to prove that actual losses were caused, the entity offering to sell was only liable for compensation for reasonable expenses. However, it is relatively difficult to prove the actual losses of the right holder in a patent infringement dispute or the profits of the infringer, and this judicial adjudication view resulted in the fact that although the offering to sell can be stopped through litigation, it is difficult for the right holder to obtain compensation for its economic losses, which is not conducive to the protection of the patentee.
2. Recent Trend in Judicial Adjudication on Compensation Liability of Offering to Sell in Patent Infringement Disputes
(1) Even if the alleged infringer only commits the infringement of offering to sell, it shall bear the civil liability for stopping the infringement and compensating for losses
In 2021, the Intellectual Property Tribunal of the Supreme People’s Court rendered second-instance judgments in two cases involving infringement of utility model patent rights, clearly stating that the accused infringer should bear civil liability for stopping the infringement and compensation for losses even if he only committed the infringement of offering to sell, and since then it determined the latest judicial adjudication direction for the infringement of only offering to sell.
Specifically, in the (2020) Supreme People’s Court IP Civil Final Nos. 1658 and 1659 judgments selected in the Summary of the Judgments of the Intellectual Property Tribunal of the Supreme People’s Court (2021), the Intellectual Property Tribunal of the Supreme People’s Court clearly stated that “the civil liability for infringement of offering to sell is not premised on the actual occurrence of the sale.” Once the act of offering to sell occurs, it may cause damage such as affecting the reasonable pricing of the patented product, reducing or delaying the business opportunities of the patentee, etc. Therefore, the implementer of offering to sell should not only bear the civil liability for stopping the infringement and paying reasonable expenses for rights protection, but also bear the liability for compensating the damages. Where the infringer only commits the offering to sell and it is difficult for the patentee to provide evidence to prove the specific losses it has suffered due to the offering to sell, it may, based on the specific circumstances of the case, focus on the circumstances of the infringement reflected in the evidence in the case, and calculate the amount of damages by way of statutory compensation.”
(2) Even if the offering to sell is carried out by a third party, the manufacturer shall be liable for the corresponding liability of compensation.
In the past judicial precedents, when there is no direct evidence in the case or a complete chain of evidence is not formed to strictly prove that the alleged infringer has committed the relevant infringement, it is usually presumed that the relevant allegations of the plaintiff are not established.
As can be seen in the recent case analysis released by the Intellectual Property Tribunal of the Supreme People’s Court, the Intellectual Property Tribunal of the Supreme People’s Court held in the (2021) SPC IP Civil Final No. 60 judgment that “based on the facts of this case, it can be presumed that the possibility is relatively high that Fei Hang Company entrusted a third party to offer to sell on exhibition; Even if it cannot be presumed that the third party was entrusted by Fei Hang Company to carry out the offering to sell on exhibition, the third party carried out the offering to sell on exhibition without the permission of the patentee; and the act originated from the intention of Fei Hang Company to sell the product as the manufacturer of the product, and part of the interests ultimately belonged to Fei Hang Company. In view of the fact that once the act of offering to sell infringing products occurs, it will cause damage to the patentee such as price erosion of the patented products, reduction or delay of business opportunities, etc., which are results that can reasonably be inferred, from the perspective of cracking down on the origin of infringement, Fei Hang Company shall bear the corresponding compensation liability for the consequences of the infringement acts of offering to sell on the exhibition.” According to the gist of the judgment, even if the offering to sell is committed by a third party, the manufacturer of the infringing product should be liable for the tortious consequences of the offering to sell.
Based on the above, in patent infringement disputes, when the right holder encounters the infringement of offering to sell, it can also actively enforce its rights. Even if the damage caused by the relevant infringement cannot be accurately proved, it should do its best to provide relevant evidence to prove the scale and time of infringement, so as to ensure that the relevant determination of infringement compensation is maximized. Moreover, if the relevant exhibition or online publicity acts are carried out by a third party other than the manufacturer, the civil liability for the offering to sell can be extended to the manufacturer, in order to trace back to the source and actively protect rights, and effectively stop the occurrence of infringement and obtain due compensation for the losses already caused by the infringement.
1. Historical Judicial Adjudication Views on Compensation Liability of Offering to Sell in Patent Infringement Disputes
Before 2021, local courts had reflected different adjudication views on the compensation liability of offering to sell in patent infringement disputes, and the mainstream view could be divided into two types, namely: 1) when the right holder cannot provide evidence to prove that actual losses have been caused, the entity offering to sell only bears the compensation liability for reasonable expenses; 2) Offering to sell infringement should bear the liability to compensate both economic loss and reasonable expenses.
For example, Shanghai Intellectual Property Court pointed out in its first-instance judgment in the (2015) Shanghai IP Civil First Instance No. 762 design patent infringement dispute that “with regard to the plaintiff’s claim for compensation of economic loss and reasonable expenses, this court does not support the claim for compensation, the reason being that the defendant was only found to carry out the act of offering to sell and did not cause actual economic loss to the plaintiff. As for the reasonable expenses claimed by the plaintiff, it supports the part in relation to the infringing products in this case in the notarial certificate (2016) Guangdong Foshan Shunde No. 34284 that this court has accepted and the reasonable part of the corresponding travel expenses incurred by the plaintiff for the litigation of this case.” For another example, the Supreme People’s Court pointed out in its civil ruling of (2015) Civil Retrial No. 2000 on the retrial of the utility model patent infringement dispute that “this court holds that the application of Article 65 of the Patent Law should be premised on the existence of actual losses by the right holder. ...... In view of the fact that, in addition to the reasonable expenses caused by the lawsuit, Chong WANG did not provide sufficient and valid evidence to prove that Ke Te Cheng Ye Company and Ke Te Xing Ye Company have caused actual economic losses to Chong WANG due to the act of offering to sell involved in the case. As such, there is no obvious impropriety that the courts of first instance and second instance awarded Ke Te Cheng Ye Company and Ke Te Xing Ye Company to compensate Chong WANG for the reasonable expenses.”
In the above-mentioned judicial case, Shanghai Intellectual Property Court and the Supreme People’s Court both held that, when the right holder could not provide evidence to prove that actual losses were caused, the entity offering to sell was only liable for compensation for reasonable expenses. However, it is relatively difficult to prove the actual losses of the right holder in a patent infringement dispute or the profits of the infringer, and this judicial adjudication view resulted in the fact that although the offering to sell can be stopped through litigation, it is difficult for the right holder to obtain compensation for its economic losses, which is not conducive to the protection of the patentee.
2. Recent Trend in Judicial Adjudication on Compensation Liability of Offering to Sell in Patent Infringement Disputes
(1) Even if the alleged infringer only commits the infringement of offering to sell, it shall bear the civil liability for stopping the infringement and compensating for losses
In 2021, the Intellectual Property Tribunal of the Supreme People’s Court rendered second-instance judgments in two cases involving infringement of utility model patent rights, clearly stating that the accused infringer should bear civil liability for stopping the infringement and compensation for losses even if he only committed the infringement of offering to sell, and since then it determined the latest judicial adjudication direction for the infringement of only offering to sell.
Specifically, in the (2020) Supreme People’s Court IP Civil Final Nos. 1658 and 1659 judgments selected in the Summary of the Judgments of the Intellectual Property Tribunal of the Supreme People’s Court (2021), the Intellectual Property Tribunal of the Supreme People’s Court clearly stated that “the civil liability for infringement of offering to sell is not premised on the actual occurrence of the sale.” Once the act of offering to sell occurs, it may cause damage such as affecting the reasonable pricing of the patented product, reducing or delaying the business opportunities of the patentee, etc. Therefore, the implementer of offering to sell should not only bear the civil liability for stopping the infringement and paying reasonable expenses for rights protection, but also bear the liability for compensating the damages. Where the infringer only commits the offering to sell and it is difficult for the patentee to provide evidence to prove the specific losses it has suffered due to the offering to sell, it may, based on the specific circumstances of the case, focus on the circumstances of the infringement reflected in the evidence in the case, and calculate the amount of damages by way of statutory compensation.”
(2) Even if the offering to sell is carried out by a third party, the manufacturer shall be liable for the corresponding liability of compensation.
In the past judicial precedents, when there is no direct evidence in the case or a complete chain of evidence is not formed to strictly prove that the alleged infringer has committed the relevant infringement, it is usually presumed that the relevant allegations of the plaintiff are not established.
As can be seen in the recent case analysis released by the Intellectual Property Tribunal of the Supreme People’s Court, the Intellectual Property Tribunal of the Supreme People’s Court held in the (2021) SPC IP Civil Final No. 60 judgment that “based on the facts of this case, it can be presumed that the possibility is relatively high that Fei Hang Company entrusted a third party to offer to sell on exhibition; Even if it cannot be presumed that the third party was entrusted by Fei Hang Company to carry out the offering to sell on exhibition, the third party carried out the offering to sell on exhibition without the permission of the patentee; and the act originated from the intention of Fei Hang Company to sell the product as the manufacturer of the product, and part of the interests ultimately belonged to Fei Hang Company. In view of the fact that once the act of offering to sell infringing products occurs, it will cause damage to the patentee such as price erosion of the patented products, reduction or delay of business opportunities, etc., which are results that can reasonably be inferred, from the perspective of cracking down on the origin of infringement, Fei Hang Company shall bear the corresponding compensation liability for the consequences of the infringement acts of offering to sell on the exhibition.” According to the gist of the judgment, even if the offering to sell is committed by a third party, the manufacturer of the infringing product should be liable for the tortious consequences of the offering to sell.
Based on the above, in patent infringement disputes, when the right holder encounters the infringement of offering to sell, it can also actively enforce its rights. Even if the damage caused by the relevant infringement cannot be accurately proved, it should do its best to provide relevant evidence to prove the scale and time of infringement, so as to ensure that the relevant determination of infringement compensation is maximized. Moreover, if the relevant exhibition or online publicity acts are carried out by a third party other than the manufacturer, the civil liability for the offering to sell can be extended to the manufacturer, in order to trace back to the source and actively protect rights, and effectively stop the occurrence of infringement and obtain due compensation for the losses already caused by the infringement.