How to Calculate Compensation for Non-Settling Patent Infringers？

Basic Facts of the Non-Settling Patent Infringers

Xinyang Agriculture and Forestry University (XYAFU) was the purchaser of the furniture project for student apartments, and Tianyi Company was the winning bidder for the project. After winning the bid, Tianyi Company purchased infringing products from Kangsheng Company, and Kangsheng Company purchased infringing products from Hongding Company. The infringing products were produced by Hongding Company according to Kangsheng Company’s custom-made requirements. The plaintiff Qisheng Company in this case is the patentee of the utility model patent ZL201521011294.4 “Bed Frame Buckle Structure”. Qisheng Company filed a patent infringement lawsuit against Xinyang Agriculture and Forestry University, Tianyi Company, Kangsheng Company, and Hongding Company as defendants(non-settling patent infringers). During the first instance litigation, Tianyi Company reached a settlement with the patentee Qisheng Company, and compensated Qisheng Company 90,000 yuan. The patentee Qisheng Company withdrew the lawsuit against Tianyi Company.

In the first instance, the court of first instance did not support the plaintiff Qisheng Company’s request for Kangsheng Company and XYAFU to compensate for losses and for XYAFU to stop using. These two requests are not the focus of this article, and the reasons will not be elaborated. Regarding the amount of compensation for losses, since Qisheng Company did not provide evidence to prove the 200,000 yuan infringement compensation, the court of first instance comprehensively considered the type of patent rights involved, the original defendant’s business scale, the nature and circumstances of the infringement, the price of the products involved, and the reasonable expenses incurred by Qisheng Company for rights protection, and determined that Hongding Company should compensate Qisheng Company for economic losses of 100,000 yuan. Hongding Company was dissatisfied with the judgment of the first instance court and filed an appeal.

SPC of the second instance court changed the sentence that Hongding Company and Kangsheng Company jointly and severally compensated the patent owner for economic losses of 60,000 yuan. SPC believes that regarding the civil liability of this case, it is also necessary to consider the fact that Qisheng Company withdrew the lawsuit against Tianyi Company during the original trial and only filed a lawsuit against the non-settling patent infringers in the same infringement facts. In this case, Qisheng Company did not provide evidence to prove its actual losses due to infringement, or the profits obtained by Kangsheng Company and Hongding Company due to infringement. Based on the nature of the patent right, the nature of the infringement, and the reasonable expenses of Qisheng Company for rights protection, and considering the sales amount of the alleged infringing products involved in the case, the profit contribution rate of the patent bed buckle structure involved in the case to the alleged infringing products, and Qisheng Company’s claims, SPC decided that Qisheng Company should be compensated 150,000 yuan for the infringement in this case. Qisheng Company has received 90,000 yuan in compensation from Tianyi Company due to the infringement in this case, which should be deducted from the amount of compensation that Qisheng Company should receive. Therefore, Kangsheng Company (the second instance held that there was a commissioned processing relationship between Kangsheng Company and Hongding Company, which is not the focus of this article. Please refer to Patent Infringement in Bidding: Is the Bid Organizer Liable?) and Hongding Company shall bear joint and several liability for the remaining 60,000 yuan in compensation.

Referee’s opinion

In patent infringement litigation, the manufacturer of the alleged infringing product shall bear full compensation liability for the consequences of the infringement. For the same subject of litigation, when multiple entities have implemented the act of manufacturing the alleged infringing product, each infringing entity shall bear joint and several liability for compensation to the right holder. The right holder may choose to claim compensation from all or part of the non-settling patent infringers, and each infringing entity is obliged to bear full compensation liability to the right holder. However, in specific cases, no matter how the amount of compensation is calculated, the amount of compensation that the right holder should receive for the same subject of litigation is certain. If the right holder has received partial compensation due to reaching a settlement with some infringing entities, in order to avoid double profit for the right holder, the amount of compensation already received should be deducted, that is, the remaining alleged infringing entities only need to bear joint and several liability for the amount after deduction. The patent owner in this case has received 90,000 yuan in compensation due to the settlement with Tianyi Company, so the amount of compensation for the remaining infringers should be reduced by the amount already received.

Summary

This case mainly discusses the legal issue of how non-settling patent infringers? should bear the liability for compensation after some infringers reach a settlement with the patent owner in a joint infringement case. By analyzing the court’s judgment, we can draw the following insights:

The principle of joint liability for joint infringement. In patent infringement cases, if multiple parties jointly participate in the manufacture or sale of infringing products, they need to bear joint liability for the losses of the patent owner. Even if some infringers have reached a settlement, the other infringers still need to bear the corresponding compensation obligations.

The deduction mechanism of the compensation amount. In order to prevent the patent holder from receiving double compensation due to settlement, the court will deduct the compensation amount already received in the settlement when determining the compensation amount of the non-settling patent infringers. This ensures that the patent holder only receives a one-time reasonable compensation, which not only protects the rights and interests of the patent holder, but also avoids excessive punishment of the infringer.

The importance of evidence. In the case, the patent owner failed to provide sufficient evidence to prove the fault of a specific infringer, resulting in the failure to support some of the claims. This shows that in patent infringement litigation, the integrity of the chain of evidence is crucial to obtaining reasonable compensation.

Overall, this case reminds us that in patent infringement litigation, it is necessary not only to clarify the facts of infringement, but also to fully prepare relevant evidence and reasonably allocate and deduct the settlement and compensation amounts to ensure fairness and justice of the law.

Original link:After some of the joint infringers have settled with the patent owner, how should the non-settling patent infringers be compensated?
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