Case Brief

In March 2006, a utility model patent right for an "Internal Digital Target Flowmeter" owned by a certain instrumentation company was terminated due to unpaid annual fees. Dissatisfied with the CNIPA's decision to terminate the patent right at issue, the instrumentation company filed an administrative lawsuit with the Beijing Intellectual Property Court in 2017, but subsequently filed a motion to withdraw the lawsuit in 2018, which the court approved.

In May 2006, the company filed a lawsuit alleging that products manufactured and sold by a technology company and a machinery company in 2005 infringed its patent rights. The court ultimately ruled that the technology company's actions constituted patent infringement and ordered it to pay the instrumentation company RMB 125,000 in compensation.

Subsequently, the instrumentation company filed additional lawsuits with the court against the technology company in 2015, 2019, and 2020, alleging that the technology company had continued to mass-produce and sell products infringing the patent rights from May 2006 to 2010, and claiming compensation of RMB 3.5 million, RMB 4.5 million, and RMB 4.5 million, respectively. In the second and third lawsuits, the plaintiff withdrew the complaints after filing, while the fourth lawsuit was dismissed as withdrawn due to failure to pay the appeal case acceptance fee. During the fourth lawsuit, the instrumentation company applied for property preservation to freeze RMB 4.5 million of the technology company's property.

The technology company filed a lawsuit, alleging that the instrumentation company maliciously filed the third and fourth intellectual property lawsuits, knowing that its patent rights had been terminated. Therefore, the technology company requests a court order compelling the instrumentation company to issue a formal apology and compensate for economic losses, along with reasonable expenses for safeguarding rights.

Result of Ruling

The Xiamen Intermediate People's Court in Fujian Province issued a first-instance judgment ordering the instrumentation company to compensate the technology company for economic losses (including reasonable expenses) totaling RMB 60,000. The instrumentation company filed an appeal. Upon second-instance review, the Supreme People's Court held that the instrumentation company knew its lawsuits lacked a legal basis, yet still filed the third and fourth lawsuits, thereby causing harm to the opposing party. Given its intentional misconduct in contributing to the adverse consequences, the court deemed the actions to constitute malicious litigation. The appeal was rejected, and the original judgment was upheld.

Typical Significance

The case holds landmark significance for two "firsts": (1) it is the "first case" recognized by the Intellectual Property Court of the Supreme People's Court of China as malicious litigation in the field of intellectual property; and (2) it prominently addresses the "first question" that needs to be considered in the malicious litigation determination—namely, the issue of the basis for rights.

(Source: Typical Cases (II) on Regulating Intellectual Property Malicious Litigation issued by the Supreme People's Court)