Offering for Sale in the Design Infringement

Author: Zhong Yi, Liu Jiayin [Shanghai Runhe Law Firm]

1.  Case  Introduction 

Court: Intermediate People's Court of One City

Plaintiff: Company A (Patentee)

Defendant: Company B (Infringer)

The Plaintiff claimed that: The Plaintiff, Company A is a factory specializing in the production of fabric sofa, which legally possesses a patent for design named "Y" and the patent was granted in 2004. One day in 2005, during the Plaintiff's attendance of a furniture exhibition in City M, the fabric sofa on display of the Defendant in the exhibition room was the same as the fabric sofa protected by the patent for design of the Plaintiff. Moreover, the Defendant unfairly competed with the Plaintiff by offering to the clients at a lower price, which obviously reduced the Plaintiff's purchase orders of the clients and severely affected the expected effect of the Plaintiff's attendance of the exhibition. The Plaintiff claimed that the Defendant should cease production and sale of the infringing products, compensate the Plaintiff economic losses, and bear the litigation costs of this case.

The Defendant argued: The very day of the Defendant's attendance of the furniture exhibition in City M, the Defendant withdrew the display of the sofa involved in the Case immediately according to the requirement of the Association of Furniture Industries of City M. Therefore, such set of sofa wan't sold to the customers. The Defendant doesn't sell such set of sofa afterwards. The Defendant didn't cause any economic loss to the Plaintiff. Hence, it requested that the Court reject the claims of the Plaintiff according to laws.

Upon hearing the Case, the Court verified that: The Plaintiff legally possesses the patent for design named "Y". After the comparison between the pictures of the Defendant's fabric sofa shown in the exhibition room shot by the Association of Furniture Industries of City M in the exhibition of this City and the one in the product picture of the patent for design of the Plaintiff, they are almost the same. The Parties concerned didn't agree to the claimed prices of the sofas of each other and they didn't submit any evidence materials to prove such claims.

The Court held that: The Plaintiff owns the patent for design named "Y". The sofa shown in the furniture exhibition of City M was produced by the Defendant, which looked almost the same as the sofa protected by the patent for design of the Plaintiff. The Defendant, without prior licensing from the patentee, exploited the patent of the Plaintiff for production and business purposes, which infringed upon the patent right of the Plaintiff. However, the Defendant withdrew the display of the sofa immediately according to the requirement of the Association of Furniture Industries of City M and didn't sell any of them. The Plaintiff didn't have other evidences to prove that such sofa of the Defendant had been already sold to the market. Therefore, the Defendant's display of the sofa in the furniture exhibition was the action of offering for sale and which didn't cause actual losses to the Plaintiff.

As a whole, the Court rendered the judgment that the Defendant should stop infringing upon the patent right of the Plaintiff.

2. Case  Review

Offering for sale is one way of exploiting a patent, which refers to the manifestation of intent to sell the commodities by way of advertising, displaying them in the shop windows or showing them in the exhibition, etc.[1] The above-mentioned judgment concerning the infringement upon the patent for design of fabric sofa was given in 2006. The Court held that the Defendant infringed the Plaintiff's patent right and considered the acts of the Defendant as those of offering for sale by reference to Article 11 of Patent Law amended in 2000[2] and Article 24 of Several Provisions of the Supreme People’s Court on Issues Concerning Applicable Laws to the Trial of Patent Controversies, etc. The law and judicial interpretation at that time only regulated the right of offering for sale of the patent for invention and utility model, which didn't include relevant provisions concerning the right of offering for sale of the patent for design. Therefore, the judgment of the Court may be of superior consciousness then.

Article 11 Para. 2 of Patent Law revised in 2008 has supplemented regulation on the right of offering for sale of the patent for design[3], which will come into effect on Oct. 1 this year (Oct. 1, 2009). Upon the new Patent Law takes effect, the court may, directly by reference to Article 11 Para. 2 of Patent Law, give the judgment that the party infringes the patentee's right of offering for sale of design patent products if he takes such action for production and business purposes without the prior licensing from the patentee.

In the case of the infringement upon the right of offering for sale, the plaintiff shall pay attention to the burden of proof if the damages are claimed. Reasonable investigation charges and attorney fees, etc. may be claimed as the foundation of the compensation in the event that the plaintiff fails to prove the business losses; if the plaintiff doesn't have any evidence to prove that it actually suffered losses, the court generally will not support the plaintiff's claims of damages. In addition, with the optimization of the our country’s protection system of intellectual property rights, except for the internet advertisements, we generally call clients’ attention to start action taking offering for sale as the cause of action in the event that the patentee fails to investigate the acts of production of patented products by the infringer, which is particularly effective in the suit of design infringement owing to the more and more convert illegal acts of the infringers.

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[1] Article 24 of Several Provisions of the Supreme People’s Court on Issues Concerning Applicable Laws to the Trial of Patent Controversies, the offering for sale referred to in Article 11, Article 63 of Patent Law means the manifestation of intent to sell the commodities by way of advertising, displaying them in the shop windows or showing them in the exhibition, etc.

[2] Article 11 of Patent Law of the People's Republic of China (2000.08.25) regulates that after the grant of the patent right for an invention or utility model, except where otherwise provided for in this Law, no entity or individual may, without the authorization of the patentee, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, or use, offer to sell, sell or import the product directly obtained by the patented process, for production or business purposes. After the grant of the patent right for a design, no entity or individual may, without the authorization of the patentee, exploit the design, that is making, selling or importing the product incorporating its or his patented design, for production or business purposes.

[3] Article 11 Para. 2 of Patent Law of the People's Republic of China (2008.12.27) stipulates that after the grant of the patent right for a design, no entity or individual may, without the authorization of the patentee, exploit the design, that is, make, offer to sell, sell or import the product incorporating its or his patented design, for production or business purposes.

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