Weihai Jiayikao Household Appliance Co., Ltd.

v. Yongkangshi Jinshide Industry & Trading Co., Ltd. and

Zhejiang Tmall.com Network Co., Ltd., A Dispute over Infringement of an Invention Patent

Guiding Case No. 83

(Discussed and Passed by the Adjudication Committee of the Supreme People’s Court Released on March 6, 2017)

CHINA GUIDING CASES PROJECT

English Guiding Case (EGC83) September 14, 2018 Edition∗

∗ The citation of this translation of this Guiding Case is: 《威海嘉易烤生活家电有限公司诉永康市金仕德

工贸有限公司、浙江天猫网络有限公司侵害发明专利权纠纷案》 (Weihai Jiayikao Household Appliance Co., Ltd. v. Yongkangshi Jinshide Industry & Trading Co., Ltd. and Zhejiang Tmall.com Network Co., Ltd., A Dispute over Infringement of an Invention Patent), STANFORD LAW SCHOOL CHINA GUIDING CASES PROJECT, English Guiding Case (EGC83), Sept. 14, 2018 Edition, http://cgc.law.stanford.edu/guiding-cases/guiding-case-83. The original, Chinese version of this case is available at 《 中 国 法 院 网 》 (WWW.CHINACOURT.ORG), http://www.chinacourt.org/article/detail/2017/03/id/2574908.shtml. See also 《最高人民法院关于发布第 16 批指导

性案例的通知》 (Notice of the Supreme People’s Court on the Release of the 16th Batch of Guiding Cases), issued on and effective as of Mar. 6, 2017, http://www.chinacourt.org/law/detail/2017/03/id/149260.shtml.

This document was primarily prepared by James Yuan, LUO Wen, Sean Webb, Peter Witherington, WU Yin, and Dr. Mei Gechlik; it was finalized by Sean Webb, Dimitri Phillips, and Dr. Mei Gechlik. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings, was done to make the piece more comprehensible to readers; all footnotes, unless otherwise noted, have been added by the China Guiding Cases Project. The following text is otherwise a direct translation of the original text released by the Supreme People’s Court.

Keywords

Civil Infringement of an Invention Patent Valid Notice

Necessary Measures Network Service Provider

Joint and Several Liability

Main Points of the Adjudication

1. Where a network user uses network services to carry out infringing acts, notice given by the infringed party in accordance with the Tort Liability Law to the network service provider requesting that it take necessary measures [to address the infringement], the content of which includes the identity of the infringed party, a certificate of ownership, the network address of the infringer, preliminary evidence of the facts of the infringement, constitutes valid notice. The rules for complaints set by the network service provider itself should not impact the rightholder’s safeguarding in accordance with law of his1 own legal rights.

2. Article 36 Paragraph 2 of the Tort Liability Law provides that the necessary measures [to address infringement] that a network service provider, after receiving notice, should take include, but are not limited to, deleting, blocking, or disconnecting links [to the infringing material]. “Necessary measures” should follow the principles of prudence and reasonableness and [should be] comprehensively confirmed according to the nature of the right(s) infringed, the specific circumstances of the infringement, technical conditions, etc.

Related Legal Rule(s)

Article 36 of the Tort Liability Law of the People’s Republic of China2

Basic Facts of the Case

Plaintiff Weihai Jiayikao Household Appliance Co., Ltd. 3 (hereinafter referred to as “Jiayikao Company”) claimed: Yongkangshi Jinshide Industry & Trading Co., Ltd.4 (hereinafter referred to as “Jinshide Company”), without [the plaintiff’s] authorization, publicized and sold, on network platforms such as Tmall, products that infringed on [the plaintiff’s] patent No. 1 The terms “he” and “his” as used herein are gender-neutral terms that may refer to “she” and “her” or “it” and “its”. 2 《中华人民共和国侵权责任法》 (Tort Liability Law of the People’s Republic of China), passed and issued on Dec. 26, 2009, effective as of July 1, 2010, http://www.gov.cn/flfg/2009-12/26/content_1497435.htm. 3 The name “威海嘉易烤生活家电有限公司” is translated herein literally as “Weihai Jiayikao Household Appliance Co., Ltd.” 4 The name “永康市金仕德工贸有限公司” is translated herein literally as “Yongkangshi Jinshide Industry & Trading Co., Ltd.”

ZL200980000002.8, which constituted patent infringement. [The plaintiff further claimed that] Zhejiang Tmall.com Network Co., Ltd. 5 (hereinafter referred to as “Tmall Company”), when Jiayikao Company complained about Jinshide Company’s acts of infringement, did not take any effective measures [to address the infringement] and should [therefore] jointly bear liability for infringement with Jinshide Company. [The plaintiff] requested [that the court] order:

1. Jinshide Company to immediately stop selling the allegedly infringing product;

2. Jinshide Company to immediately destroy the existing allegedly infringing product;

3. Tmall Company to cancel all of the links to Jinshide Company’s infringing product on the Tmall platform;

4. Jinshide Company and Tmall Company to jointly and severally pay Jiayikao Company compensation of RMB 500,000;

5. Jinshide Company and Tmall Company to bear the litigation costs of the case.

Jinshide Company defended its position, claiming: it is merely a vendor and not a manufacturer, and the amount of Jiayikao Company’s claim for compensation is too high.

Tmall Company defended its position, claiming:

1. As a trading platform, it is not the main operator or seller that produced or sold the infringing product.

2. It cannot be confirmed whether the product involved in this case infringed [the invention patent involved in this case].

3. It also cannot be confirmed whether the product involved in this case had been used before.

4. Where it cannot be proven that [Tmall Company] is an infringing party, and because [having Tmall Company] jointly and severally pay [Jiayikao Company] compensation of RMB 500,000 lacks [both] a factual and a legal basis and the company already deleted the links to the product involved in this case, Jiayikao Company’s litigation request to cancel all the links to Jinshide Company’s infringing product on the Tmall platform cannot be established.

The court handled the case and ascertained:6 on January 16, 2009, Jiayikao Company and its statutory representative, LI Jinxi, jointly applied to the State Intellectual Property Office for an

5 The name “浙江天猫网络有限公司” is translated herein as “Zhejiang Tmall.com Network Co., Ltd.” in accordance with the translation used on the company’s website, https://www.tmall.com. 6 The original text does not specify which court is referred to here. It is likely meant to be the first-instance court of this case, namely, the Intermediate People’s Court of Jinhua Municipality, Zhejiang Province.

invention patent named “infrared heating cooking device”. [The patent] was granted on November 5, 2014, and the patent number was ZL200980000002.8. The claims of that invention patent recorded:

1. A type of infrared heating cooking device, the feature of which is that the said infrared heating cooking device includes: a bracket, [which] has a shaft hole in the center of the top section and a power switch on one side; a rotating plate that is heated by infrared radiation [and] which acts as a disc-shaped container for holding food, and which has in the center of its bottom section a detachable protrusion that is inserted into the above-mentioned shaft hole; a stand that is vertically positioned to one side of the above-mentioned bracket; an infrared irradiation unit that is located on the top of the above-mentioned stand and that emits infrared radiation toward the above-mentioned rotating plate when power is applied; the above-mentioned bracket also has an oil drip pan that can be pulled out from the interior side of the bracket; [and] the protrusion on the above-mentioned rotating plate also has axial oil drainage holes.

On January 26, 2015, the patentee of the invention patent involved in the case was changed to Jiayikao Company. The patent annuities for the patent involved in the case had been paid through January 15, 2016.

On January 29, 2015, Jiayikao Company’s entrusted agency, Beijing Shangzhuan Law Firm, applied to Beijing Haicheng Notary Public Office7 for notarization of evidence preservation. Under the supervision of the notary public office, [Jiayikao Company’s] entrusted agents, WANG Yongxian and SHI Yin, operated a computer to log into Tmall.com (http://www.tmall.com), purchased a 3D grill in an online store called “Yixinkang Flagship Store” for RMB 388, and copied the business license information of the store operator.

On February 4 of the same year, under the supervision of the notary public office, SHI Yan received an express package from a sender named “Yixinkang Flagship Store”. Inside [the package] was a 3D grill in Korean-language packaging with [additional] free items, a hand-written receipt, a user manual in Chinese, and a warranty card. A notary notarized the entire process of evidence preservation and prepared the (2015) Jing Hai Cheng Nei Min Zheng Zi No. 01494 Notarial Certificate.

On February 10 of the same year, Jiayikao Company entrusted a party external to the case, ZHANG Yijun, to upload complaint materials, including a patent infringement analysis report and a technical feature comparison table, to the Taobao Intellectual Property Protection Platform. However, Taobao ultimately did not approve a review [of the complaint].

7 The name “ 北京市海诚公证处” is translated here as “Beijing Haicheng Notary Public Office” in accordance with the translation used on the Office’s website, http://www.bjnotary.org.

On May 5 of the same year, Tmall Company applied to the Qiantang Notary Public Office

Hangzhou Municipality, Zhejiang Province,8 for notarization of evidence preservation. Its agent, DIAO Manli, under the supervision of the notary public office, operated a computer to search the Yixinkang Flagship Store for “Yixinkang 3D grill Korean-style home-use non-stick electric grill smokeless grill electric pan teppanyaki roaster”, [which] showed that there were no commodities matching [that description]. A notary notarized the entire process of evidence preservation and prepared the (2015) Zhe Hang Qian Zheng Nei Zi No. 10879 Notarial Certificate.

During the first-instance court trial, Jiayikao Company claimed that Claim 1 of the patent involved in the case served as the scope of claim protection in this case. [After the allegedly infringing product went] through comparison, Jiayikao Company argued that, apart from a different location for the on-off switch, the technical features of the allegedly infringing product fell within the scope of protection recorded in Claim 1 of the patent involved in the case, and [furthermore] that the change in location of the on-off switch could be resolved by ordinary personnel in the industry without requiring creative work and [therefore] was an identical feature. The two defendants in the original adjudication did not raise objections to the results of the comparison.

[The court] also ascertained that Jiayikao Company had paid a notarization fee of RMB 4,000 and an agency service fee of RMB 81,000.

Results of the Adjudication

On August 12, 2015, the Intermediate People’s Court of Jinhua Municipality, Zhejiang Province, rendered the (2015) Zhe Jin Zhi Min Chu Zi No. 148 Civil Judgment:

1. [The court orders] Jinshide Company to immediately cease the act of selling the product which infringes upon the invention patent numbered ZL200980000002.8;

2. [The court orders] Jinshide Company to pay, within ten days of the

judgment’s coming into effect, Jiayikao Company RMB 150,000 as compensation for economic losses (including reasonable expenses incurred by Jiayikao Company to stop the infringement);

3. [The court orders] Tmall Company to bear joint and several liability for

RMB 50,000 of the compensation amount [to be paid by] Jinshide Company mentioned above in the second item [of this judgment];

4. [The court] rejects Jiayikao Company’s other litigation requests.

8 The name “ 浙江省杭州市钱塘公证处” is translated here as “Qiantang Notary Public Office, Hangzhou Municipality, Zhejiang Province” in accordance with the translation used on the Office’s website, at http://www.qt-notary.com/qtgzw/index.xp.

After the first-instance judgment was pronounced, Tmall Company was unconvinced and appealed. On November 17, 2015, the High People’s Court of Zhejiang Province rendered the (2015) Zhe Zhi Zhong Zi No. 186 Civil Judgment: [the court] rejects the appeal and upholds the original judgment.

Reasons for the Adjudication

In the effective judgment, the court opined:9 none of the parties raised an objection [to Jiayikao Company’s claim that] the allegedly infringing product sold by Jinshide Company fell within the scope of protection of Claim 1 of Jiayikao Company’s patent involved in the case. The judgment of the original adjudication determining that the acts of Jinshide Company involved in this case constitute patent infringement is correct. On [the issue] of whether Tmall Company’s [acts] in this case constitute joint infringement, Article 36 Paragraph 2 of the Tort Liability Law provides that where a network user uses network services to carry out infringing acts, the infringed party has the right to notify the network service provider [of its request that the provider] take necessary measures [to address the infringement], such as deleting, blocking, or disconnecting links [to the infringing material]. A network service provider that, after receiving [such] notice, does not timely take necessary measures [to address the infringement] bears joint and several liability with the network user for the enlargement of damages. The above-mentioned provision refers to circumstances in which a rightholder, after discovering that a network user has used the services of a network service provider to carry out infringing acts, [gives] “notice” to the network service provider to take necessary measures to prevent the improper enlargement of consequences of the infringement, and at the same time, clearly defines, under these circumstances, the scope of obligations that should be borne by the network service provider and [what] constitutes [its] liability. In this case, whether the allegedly infringing acts of Tmall Company involved in this case constitute infringement should be considered comprehensively along with additional [factors] such as the subjective nature of Tmall Company, the validity of Jiayikao Company’s “notice”, whether Tmall Company, after receiving Jiayikao Company’s “notice”, should have taken any measures, and the necessity and timeliness of any measures taken [by Tmall Company].

First, Tmall Company in accordance with law holds a value-added telecommunications business license and is an [Internet] service provider that [operates] an information publication platform. In this case, it provided network technology services to the “Yixinkang Flagship Store”, operated by Jinshide Company, that sold the allegedly infringing product involved in this case. [Provision of such services] satisfies the main conditions of network service providers stipulated in Article 36 Paragraph 2 of the Tort Liability Law.

Second, Tmall Company in the second-instance court trial confirmed that, on February 10, 2015, Jiayikao Company entrusted a party external to the case, ZHANG Yijun, to upload complaint materials including links to the commodity in the complaint, a patent infringement analysis report, and technical feature comparison tables, to the Taobao Intellectual Property

9 The original text does not specify which court opined. Given the context, this should be the High People’s Court of Zhejiang Province.

Protection Platform and that on the basis of the above-mentioned complaint materials, [it] could confirm the subject of the complaint and the commodity in the complaint.

The “notice” referred to in Article 36 Paragraph 2 of the Tort Liability Law is a condition for determining whether a network service provider is at fault and whether [it] should bear joint and several liability for the improper enlargement of the harmful consequences [of the infringement]. “notice” refers to an act by an infringed party where, given the fact that another party has used an internet service provider’s services to carry out infringing acts, it requests that a network service provider take necessary measures to prevent further enlargement of infringing acts. “notice” may be oral or it may be written. Normally, the content of the “notice” should include the identity of the rightholder, a certificate of ownership, preliminary evidence to prove the facts of infringement, and material clearly pointing to the network address of the allegedly infringing party. Where the above-mentioned conditions are satisfied, [an infringed party] should be regarded as [having given] valid notice. The notice in Jiayikao Company’s complaint involved in this case satisfies the basic requirements of “notice” as stipulated in the Tort Liability Law and constitutes valid notice.

Third, following an investigation, Tmall Company handled [the complaint] by not approving a review of Jiayikao Company’s complaint materials. In its reply [to the complaint materials], [Tmall Company] indicated that the reasons why a review was not approved were:

Please, in Table 2 of the comparison table of infringement analysis for utility models and inventions, fill in the details of the technical point(s) of the patent claim you provided into which the commodity in the complaint falls. [We] recommend a method that uses a combination of graphics and text to point out one by one [the technical point(s)]. (It must note the graphics and text on the product information released by the seller that are the objects of comparison.) [Please] also provide a purchase order number and the names of both members.

The second-instance court opined: the determination of infringement of an invention patent or a utility model patent often cannot be rendered solely in reliance on surface or written materials. Therefore, the patentee’s complaint materials usually include the identity of the rightholder, the name of the patent and the patent number, and the commodity in the complaint and the subject of the complaint, in order for the party receiving the complaint to convey the subject of the complaint. In this case, Jiayikao Company’s complaint materials included all of the above-mentioned elements. With respect to the infringement analysis comparison, Tmall Company, on the one hand, argued that its ability to judge whether the commodity sold by the seller infringed the invention patent was limited, and on the other hand, [argued that] it also required that the complainant “fill in the details of the technical point(s) of the patent claim [the complainant] provided into which the commodity in the complaint falls [and] recommend[ed] a method that uses a combination of graphics and text to point out one by one [the technical point(s)].” The court opined: considering the relatively large number of complaints in the area of the Internet and the complicated factors in [making] a complaint, the above-mentioned requirements of Tmall Company, while based on its own interests, also have a certain reasonableness, and they are also helpful to Tmall Company in making preliminary judgments about the nature of actions complained about and in taking

corresponding measures [to address such complaints]. However, as far as a rightholder is concerned, the above-mentioned requirements are not necessary conditions for the validity of a rightholder’s notice of complaint. Moreover, in the complaint materials in this case, Jiayikao Company provided over five pages of technical feature comparison tables which were presented in an illustrated way using [both] graphics and text. Nevertheless, Tmall Company, using a dogmatic and formulaic response, considered the technical features comparison as one of the reasons why a review [of the complaint materials] was not approved, [and this response constitutes] a mishandling [of the complaint]. With respect to Tmall Company’s failure to approve a review [of the complaint materials] and the requirement put forth that [Jiayikao Company] provide a purchase order number and the names of both members, the court opined: whether or not the complainant in this case provided a purchase order number or the names of both members does not influence the legal validity of the actions complained about. Furthermore, the regulations for complaints confirmed by Tmall Company do not have legally binding force with respect to the protection of rights of a rightholder. A rightholder only needs to exercise protection of [his] rights within the framework provided for in law. A complainant can entirely, based on his own interests, decide whether to accept the regulations for complaints confirmed by Tmall Company. Moreover, a complainant may, without purchasing a commodity, provide proof [of infringement] through other evidence and may also, on the basis of purchasing acts of others, discover potential infringing acts. Even if the complainant does [carry out] direct purchasing acts, it can still refuse to provide [proof of such acts] on the basis of certain economic interests or trade secrets.

Finally, Article 36 Paragraph 2 of the Tort Liability Law provides that the necessary measures [to address infringement] that a network service provider, after receiving notice, should take include, but are not limited to, deleting, blocking, or disconnecting links [to the infringing material]. “necessary measures” should be comprehensively confirmed according to the nature of the right(s) infringed, the specific circumstances of the infringement, technical conditions, etc.

In this case, after confirming that Jiayikao Company’s act of complaining was legally valid, a judgment had [to be made] about whether, after receiving the complaint materials, Tmall Company’s handling [of Jiayikao Company’s complaint] was prudent and reasonable. The court opined: this case is a dispute about the infringement of an invention patent. Tmall Company is a provider of an e-commerce network service platform, and based on a consideration of factors such as its company’s subjective ability to judge invention patent infringement, the probability of success of infringement complaints, and a balance of interests, Tmall Company is not necessarily required, after receiving a complaint, to immediately take measures [such as] deleting or blocking with respect to a commodity in a complaint. The necessary measures taken with respect to a commodity in a complaint should follow the principles of prudence and reasonableness in order to avoid adversely affecting the legal rights and interests of the complainant. However, conveying valid complaint notice materials to the respondent of the complaint and notifying the respondent of the complaint [that it should] defend [itself] is one of the necessary measures that Tmall Company should take—otherwise, the rightholder’s act of complaining will lose any meaning and it will be difficult for the rightholder to realize the protection [of his] rights. A network service platform provider should ensure the smooth delivery of valid complaint information and should not become a black hole for complaint information. The respondent of the complaint, with respect to whether the commodities he produces or sells infringe [upon the rights of others] and whether

he should actively and by his own will stop [engaging in] the complained about acts, [should] himself make corresponding judgments and respond accordingly. However, the consequences of Tmall Company’s failure to perform the above-mentioned basic obligations resulted in the respondent to the complaint failing to receive any warning and therefore caused the enlargement of harmful consequences. As for Tmall Company immediately taking the measures of deleting and blocking the commodity in the complaint after Jiayikao Company initiated litigation, [these actions] were prudent and reasonable. In conclusion, Tmall Company, after receiving notice from Jiayikao Company, failed to timely take the necessary measures [to address the infringement] and should bear joint and several liability with Jinshide Company for the enlargement of damages. Grounds for appeal raised by Tmall Company with respect to this [issue] cannot stand. With respect to the share of liability that Tmall Company should bear, the court of first instance’s comprehensive consideration of the time period during which the infringement continued and the time it should have taken for Tmall Company to learn the facts of the infringement and [the court’s] confirmation that Tmall Company [should] bear joint and several liability for RMB 50,000 of the compensation amount [to be paid by] Jinshide Company are proper.

(Adjudication personnel of the effective judgment: ZHOU Ping, CHEN Yu, and LIU Jing)