Headnote
In a patent infringement dispute, the period for calculating damages is, in principle, defined by the scope of the patentee's own claim. Where a patentee sues over a specific infringing act discovered before filing and quantifies damages on that basis — but never asks, before the close of first-instance argument, for damages covering infringement that continued or might have continued during the litigation itself — the court will generally not rule on damages for that later period.
Keywords: Civil · Invention Patent Infringement · Period for Calculation of Damages
Case Summary
The Patent and the Parties
A Swiss company held Chinese invention patent No. 0010****.7, “Azo Dye, Preparation Method and Use Thereof” (the “Patent”), which expired on 10 March 2020. On 18 June 2015, the company brought the present action against three affiliated Chinese manufacturers — Zhejiang A Group Company, Zhejiang B Chemical Co., Ltd., and Shanghai C Industrial Co., Ltd. (together, the “Three Affiliated Companies”) — and a distributor, Beijing D Technology Co., Ltd. It sought an immediate injunction, joint and several liability of RMB 230 million in economic losses, and RMB 1 million in reasonable enforcement costs.
A Related Earlier Case
The dispute had a direct predecessor. On 29 September 2007, the Swiss company had sued Shanghai C over dye products sold under the names “Super Black G” and “Super Black R,” alleging infringement of claims 1–7 and 9 of the Patent (the “Prior Case”). The first-instance court found infringement and awarded RMB 400,000 in damages on 3 May 2013; Shanghai C appealed, and the Shanghai High People's Court — which would later sit as the first-instance court in the present case — affirmed that judgment on 15 January 2015.
Evidence Gathered in the Present Case
Between 1 July 2013 and 7 July 2015, the Swiss company carried out a series of notarized purchases and evidence-preservation actions, establishing that the Three Affiliated Companies had continued to manufacture, sell, and offer for sale infringing products, and that Beijing D had sold them as well.
First-Instance Judgment and Appeals
On 31 December 2019, the first-instance court ordered the Three Affiliated Companies to cease infringement and pay RMB 14 million in economic losses plus RMB 300,000 in reasonable costs, on a joint and several basis. Both the Swiss company and the Three Affiliated Companies appealed.
The Supreme People's Court's Final Judgment
On 26 January 2024, the Supreme People's Court issued its final ruling — (2022) Zui Gao Fa Zhi Min Zhong No. 111 — deciding that:
• the first-instance judgment was vacated;
• the Three Affiliated Companies must jointly pay RMB 19 million in economic losses and RMB 500,000 in reasonable enforcement costs;
• the Swiss company's remaining claims were dismissed; and
• the appeal brought by the Three Affiliated Companies was dismissed.
The Court's Reasoning
The Swiss company had claimed damages running from 30 September 2007 — the day after it filed the Prior Case — through 31 December 2019, the date of the first-instance judgment in the present case. On appeal, the central question was narrower: should the period from 30 September 2007 to 3 May 2013, predating the first-instance judgment in the Prior Case, be folded into the damages period here? The Supreme People's Court addressed this through four lines of reasoning.
1. A Court Can Only Rule on What Has Actually Happened — With One Exception
As a general matter, a court's judgment must rest on facts that have arisen by the close of argument (ordinarily, first-instance argument), since a court can only examine conduct that has already occurred. To avoid forcing parties into repeat litigation, however, a first-instance court may — if a party asks it to — treat ongoing infringement as a single, continuing course of conduct and rule on it as a whole.
In the Prior Case, the Swiss company's claim was tied to a specific act of infringement discovered before filing; it never introduced new infringing conduct or expanded its claims once proceedings were underway. It could not, therefore, be treated as having sought damages for infringement that might have occurred during the Prior Case litigation itself, and any such conduct fell outside that case's scope.
2. No Evidence of Continuing Infringement During the Prior Case
Neither the Prior Case nor the present case produced evidence — and no court ever found — that the Three Affiliated Companies kept infringing while the Prior Case was being litigated. The infringing conduct actually established in the Prior Case was limited to acts occurring in 2007.
The first-instance court below had reasoned that the Prior Case damages already compensated for continuing infringement through 3 May 2013, and that the present case's damages period should therefore begin only on 4 May 2013. The Supreme People's Court found this reasoning factually unsupported and legally imprecise, and corrected it. Because the Swiss company had never proven continuing infringement during that earlier period in the first place, the error made no difference to the ultimate damages award.
3. What Was Actually Proven in This Case
The infringement established in the present case comprised four instances confirmed through notarized purchases between 1 July 2013 and 7 July 2015, together with sales by the Three Affiliated Companies from 4 May 2013 to 30 June 2018, as disclosed through a court-ordered judicial audit.
The Court also identified two forms of bad faith on the defendants' part: they continued infringing even after the Prior Case had already established that their conduct was unlawful, and they obstructed discovery in the present case by withholding complete financial records and the passwords to their electronic accounting systems.
4. Calculating the Award
To give patent rights meaningful protection, the Court anchored its assessment to sales revenue of roughly RMB 47.29 million (RMB 47.57 million less RMB 0.279 million in non-infringing revenue) generated between 4 May 2013 and 18 June 2015. It then adjusted the award upward to reflect the defendants' prolonged, continuing infringement and their obstruction of evidence — while also weighing the fact that infringement was not the Three Affiliated Companies' sole line of business. Balancing these factors, the Supreme People's Court raised the discretionary award from RMB 14 million to RMB 19 million, and — in recognition of the Swiss company's sustained enforcement efforts — increased reasonable enforcement costs to RMB 500,000.
Source: Intellectual Property Tribunal of the Supreme People's Court of the People's Republic of China
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