Every year the general office of the Supreme Court of China announces their selection of top 10 intellectual property (IP) cases as well as top 50 “typical” IP cases. According to the notice from the top court, these cases were chosen and “distributed for reference by people’s courts at all levels in their intellectual property trial work”. These cases provide great insights into the latest stance and litigation guidelines that are to be taken on by the Chinese courts.
One of the top 50 typical IP cases chosen for 2019 was the utility model infringement lawsuit Shenzhen Laidian Technology Co., Ltd. (“Laidian”) v. Shenzhen Jiedian Co., Ltd. (better known as “Ankerbox”). Laidian and Ankerbox are both leading companies and direct competitors in the power bank rental industry in China, with Laidian having more than 180 million registered users and covering over 90% of Chinese cities. The case was selected by the Supreme People’s Court primarily to demonstrate the possible significance of utility models in a company’s IP portfolio, even though traditionally they may be viewed by most foreign companies as being less valuable when compared to invention patents. This case also highlights potential pitfalls in claim drafting that can be applicable for both utility models and invention patents.
The Supreme Court decision relates to whether lower courts erred in finding infringement of Laidian’s utility model patent ZL201520103318.2 (entitled “Absorption type charging device”) by Ankerbox. It was previously ruled in the first and second instances that Ankerbox infringed the claims in this utility model, even though some of these claims were later found invalid during the second instance.
The main point of contention in the appeal to the Supreme Court concerns whether the alleged infringing products of Ankerbox reads onto the technical feature of a “transmission component” in the claims of the utility model patent, as provided below:
An absorption style charging device, characterized in that it includes an absorption roller mechanism, a charging mechanism, and a main control PCB; the absorption roller mechanism includes a first motor, a transmission component connected to the first motor, and a first-level roller component connected to the transmission component; the first-level roller component includes two opposite rollers; the first motor is electrically connected to the main control PCB; the charging mechanism includes a charging PCB connected to the main control PCB.
The lower courts had concluded that the “transmission component” should be regarded as a functional feature, as the description of Laidian’s utility model refers to several different implementations of such “transmission component”. It had also been ruled that since the alleged infringing product includes a speed reduction motor which allows the transmission of power, Laidian’s utility model was infringed.
The Supreme Court subsequently overturned this decision, ruling that the “transmission component” of the patent in question is independent of the motor and is not part of the motor. It was also held that the function of the “transmission component” is to transmit the power of the motor to the roller such that it can be incorporated with the motor in the same mechanical structure while achieving the effect of driving the roller. On this basis, the top court determined that the technical means, functions and effects of the speed reduction motor of Ankerbox’s products and the “transmission component” of Laidian’s patent are neither the same nor equivalent, and therefore Ankerbox’s products fall outside the scope of Laidian’s utility model patent.
The Laidian v. Ankerbox infringement case demonstrates that Chinese utility models can be as equally effective as invention patents in deterring infringement particularly by direct competitors in the industry, provided that a comprehensive drafting approach is adopted. In fact, Laidian’s ultimate failure in recovering damages for Ankerbox’s alleged infringement provides a good lesson in diligent drafting practice, especially for utility model patents. Since there is no substantive examination for utility models prior to grant, it would be prudent to use broad and general claim language and to explore various permutations and implementations of the different components, so as to minimise the chances that the patent can be designed around.
This is for general information only and does not constitute legal advice. Should you require advice on this or any other topic then please contact firstname.lastname@example.org or your usual Haseltine Lake Kempner advisor.