The Supreme People's Court made a final ruling on the case of invention patent infringement and the damages caused by malicious intellectual property litigation between the Appellant Zhuhai A Company and the Appellees Shanghai B Company and Shanghai C Company, where the negative response behavior of Zhuhai A Company after the appeal was handled as the withdrawal of the appeal, and at the same time, Zhuhai A Company was ordered to bear the reasonable expenses incurred by the other party in the second-instance litigation on the basis of the first-instance judgment.
Zhuhai A Company acquired the invention patent in the case through assignment in 2017. In 2021, Zhuhai A Company filed this lawsuit, requesting Shanghai B Company and Shanghai C Company to immediately stop the infringement and to jointly compensate for economic losses and reasonable expenses. Shanghai B Company filed a counterclaim, believing that Zhuhai A Company abused its patent, and requested to compensate losses such as attorney fees and notarization fees caused to it by malicious litigation. After trial, the first-instance court held: First, Zhuhai A Company had sued Shanghai B Company and Shanghai C Company based on the same patent and the same alleged infringing product in a previous case in 2019. The alleged infringement claimed by Zhuhai A Company in this case occurred before the judgment of the previous case. The structure and model of the alleged infringing product are the same as those in the previous case, and the production date is also earlier than the production date in the previous case. Therefore, Zhuhai A Company has no right to file this lawsuit again. Secondly, when Zhuhai A Company filed the previous case, it was aware of the existence of the infringement alleged in this case and had already made claims in the previous case, but did not submit the physical object of the alleged infringing product in this case. In the absence of evidence to prove that Shanghai B Company and Shanghai C Company have continued the infringement or committed new infringements, Zhuhai A Company's re-filing of this lawsuit evidently violates the principle of good faith and constitutes the abuse of rights. Based on this, the first instance court ruled to dismiss Zhuhai A Company's lawsuit, support the counterclaim of Shanghai B Company, and order Zhuhai A Company to compensate for the loss of attorney fees. Zhuhai A Company, dissatisfied with the first instance judgment, filed an appeal.
After accepting the case, the Supreme People's Court served the court summons to Zhuhai A Company twice, but it did not appear in court to participate in the lawsuit, while Shanghai B Company and Shanghai C Company did. Shanghai B Company spent the litigation agency fees and necessary transportation expenses on the second-instance litigation activities and explicitly claimed Zhuhai A Company to afford the above-mentioned additional reasonable expenses.
The Supreme People's Court held that since the Appellant Zhuhai A Company refused to appear in court without a justifiable reason after being summoned by the summons, this case should be treated as the appeal having been withdrawn. The first-instance judgment took effect after the second-instance ruling was served, including the content of the determination that Zhuhai A Company constituted the abuse of patent. Based on this, Zhuhai A Company should compensate Shanghai B Company for the reasonable expenses paid for this litigation. Although Shanghai B Company did not appeal, it clearly claimed in the second instance that Zhuhai A Company should bear the additional expenses incurred during the second instance. This claim and the claims of compensation request in the counterclaims against the first instance are both based on the fact that Zhuhai A Company abused its rights. Given the circumstance where the first-instance court ruled to dismiss Zhuhai A Company’s legal requests and support Shanghai B Company’s counterclaims, Zhuhai A Company should execute its legal right to sue more proactively after filing the appeal. However, in the written appeal, Zhuhai A Company did not mention any substantive reasons for believing that there are errors in factual determination or law application in the first-instance judgment, except for the reasons such as "the first-instance court did not form a trial record", "the first-instance court refused to provide the audio and video materials of the trial when it applied", and "local protectionism". In addition, Zhuhai A Company could have exercised its litigation rights by having its legal representative or entrusted litigation agent participate in the litigation and explain the specific reasons for the appeal, but refused to appear in court to participate in the litigation after the court served the subpoena in accordance with the law. Based on the above facts, Zhuhai A Company did not exercise its litigation right actively and properly and constituted a continuous abuse of its rights in the second instance, which actually increased the burden on Shanghai B Company. Based on this, the Supreme People's Court made a final ruling that the case should be treated as Zhuhai A Company has withdrawn its appeal, and at the same time, Zhuhai A Company should pay the reasonable expenses that Shanghai B Company spent on the second instance.
The final ruling of this case clearly stated that if a party concerned abuses its patent and causes direct losses to the counterparty in the litigation, in order to reduce unnecessary litigation, the people's court may, based on the claims of the counterparty without fault, order the party abusing its rights to bear the reasonable expenses incurred by the other party in the litigation. The handling of this case highlights the judicial concept of protecting integrity, guiding the parties concerned to conduct litigation in good faith, and preventing the abuse of rights.
(2023) Zui Gao Fa Zhi Min Zhong No. 203
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