[WeChat Account: Rule of Law in the YRD] SIPCFollowed the Principle of "Equal Protection" and Imposeda Fine of RMB 1 Million on an Italy LAICA Water Filter Maker for Infringement

September 24, 2019  WeChat Account: Rule of Law in the YRD

By Yu Dongming, Chen Yingying

Editor's note

An imported LAICA water filter labeled with "Made in Italy" was accused of infringing on the intellectual property rights of a Chinese company.

Recently,the Shanghai Intellectual Property Court (SIPC) made the first-instance judgment that the defendant should immediately stop the infringement and compensate the complaint RMB 1 million for economic losses and reasonable expenses, and that Wal-mart East China, the co-defendant, should assume joint and several liability for RMB 10,000 of that compensation.

According to some experts, the court's resolute judgementshows that China has been protecting intellectual property rights on an equal footing.

Infringement of Chinese patent

The "LAICA" 5000SERIES - J51 Water Filter Kettle (hereinafter referred to as "LAICA J51 Water Filter Kettle") on a shelf of "Sam's Club Shanghai," a Walmart-owned membership warehouse club, came to the attention of BlueTech. The packaging says "Manufactured by LAICA AG" and "Made in Italy," but BlueTech noticed a lot of similarities between it and its patented "Filter Element Separating Water Kettle."

BlueTech bought one for investigation and found that the technical features of the product fall into the protection scope of its own patent claims 1, 2, 3, 4, 7, 8.

BlueTech believed that both Wal-mart East China and LAICA had infringed its rights as the former had sold and promised to sell the product without its permission and the latter had imported, sold and promised to sell the product. So, it filed a lawsuit, requesting the court to order the two companies to stop the infringement and jointly and severally compensate RMB 2 million for its economic losses (reasonable expenses included).

The defendant LAICA argued that it had not infringed the patent right of the plaintiff's invention as the LAICA J51 Water Filter Kettle it had imported and sold did not fall into the protection scope of the plaintiff's patent right and it had implemented the prior art.

The co-defendant Wal-mart East China argued that its behavior did not constitute infringement as it, as a seller, had purchased the LAICA J51 Water Filter Kettle from an official and legal source.

Infringement ascertained

After hearing, the SIPC held that although the comparison of the technical features of LAICA and BlueTech's water filter kettles shows that the two filter elements in J51 Water Filter Kettle are connected in a way different from the technical feature in subordinate claim 4 of BlueTech's patent involved, J51 Water Filter Kettle's technical solution includes technical features which are identical with or equivalent to all the technical features under claims 1, 2, 3, 7, 8 of the patent involved and have fallen into the protection scope of such claims.

Given that LAICA failed toprove that the accused technical solutionadopted prior art, it had infringed the patent right of the plaintiff's invention by importing, selling and promising to sell LAICA J51 Water Filter Kettle without the permission of BlueTech. LAICA should bear the civil liability for stopping the infringement and compensating.

AlthoughWal-mart East China could prove that the LAICA J51 Water Filter Kettle was supplied by LAICA, it should have known clearly that the product it sold had infringed other's patent right based on the complaint it received including the basic information of BlueTech's patent, LAICA's product information, and the results of comparison. However, it did not pull the infringing product off the shelves within a reasonable period of time, so it should bear jointliability for compensation.

High sales volume

The SIPC found out during investigation that under the "Sales Networks" on LAICA's website, there are 11 platforms including Tmall, JD.com, and taobao listed under the "Online" section, and under the "Offline" section, there is a list of 230 stores across the country, including the "Sam's Club Shanghai" run by the co-defendant Wal-mart East China.

LAICA confirmed that more than 25,000 J51 Water Filter Kettles had been exported to China. After the lawsuit was filed, 3,500-4,000 of them were returned to the supplier, and the number was still on the rise.

As it was difficult to determine the actual losses inflicted on the plaintiff and the benefits that the two defendants had gained from the infringement, the SIPC decided the amount of compensationpayable by the two defendants, including the reasonable expenses, by taking into considerationthe type of the patent involved, the imported and returned quantities confirmed by LAICA, the sales channels of LAICA, and the purchase quantity proved by Wal-mart East China, and made the first-instance judgment.