Mary Ma October 11 2021 IP Court penalises obstruction of litigation in patent infringement suit Wanhuida Intellectual Property | Intellectual Property - China Mary Ma Intellectual Property FactsShenzhen Intermediate CourtIP CourtCommentIn a recent case, even though the defendant successfully convinced the appellate court that the technical features of the alleged infringing equipment did not fall under the scope of protection of the plaintiff's patent, which led to the repeal of the first-instance judgment, it was still penalised for obstructing the litigation during the proceedings.FactsDongguan Yicheng Intelligent Equipment Co, Ltd (Yicheng) filed a patent infringement suit before the Shenzhen Intermediate Court against Shenzhen Xinhui Electromechanical Equipment Co, Ltd (Xinhui), claiming that the equipment manufactured and sold by the defendant infringed its patent right and requesting a permanent injunction and compensation.Shenzhen Intermediate CourtIn order to ascertain the technical features of the alleged infringing equipment, the trial judge went to the defendant's storage place to conduct an on-site inspection. However, Xinhui's legal representative refused to provide the password to turn on the equipment, instructed staff to remotely invalidate the password and kept thwarting the Court's efforts to employ alternative approaches to start the machine. This resulted in the Court's failure to identify the technical solution relating to the defendant's equipment.Moreover, in defiance of the court order on fulfilling the burden of proof, Xinhui refused to submit evidence on the operating condition and technical features of its equipment.Thus, the Court found infringement and ordered cessation and damages of 200,000 yuan.IP CourtXinhui appealed to the IP Court of the Supreme People's Court and submitted evidence showing the technical features of the alleged infringing equipment. Yicheng raised no objection to the authenticity of the evidence. The evidence adduced by Xinhui in the second instance was not new evidence per se, but rather evidence pertinent to the fundamental facts of the case, long overdue because Xinhui had deliberately withheld it. The Court therefore found the evidence admissible and overturned the first-instance decision.Although the final decision was favourable to Xinhui, its act of obstructing litigation was not exempt from civil liability. On 17 March 2021, the Court issued a penalty decision, finding that the defendant had:obstructed the court investigation in the first-instance proceedings, an act that should be penalised. The Court therefore imposed a 100,000 yuan fine on Xinhui and a 50,000 yuan fine on its legal representative; anddeliberately provided long-overdue evidence in the second-instance proceedings without providing a reasonable explanation. For this, the Court imposed a fine of 50,000 yuan.CommentIt is intriguing that the total amount of the fine is equivalent to the damages awarded by the trial court. Xinhui may be off the hook in terms of patent infringement, but it surely did not expect a fine for deliberately withholding evidence and obstruction of litigation.It seems that the IP Court used this case to make a point that the principle of good faith should be observed by litigating parties throughout the process of IP civil litigation.For further information on this topic please contact Mary Ma at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.