As recently featured on ABC TV’s Landline programme, an Australian manufacturer, Lucas Mill, has succeeded before the High Court in China for patent infringement.
In 2014 Lucas Mill discovered a knockoff of its patented portable sawmill being sold online and took immediate action for infringement of its Chinese patent against the Chinese manufacturer, Shandong Shuanghuan Machinery Limited. Lucas Mill’s patent attorneys FPA Patent Attorneys formed a highly successful trans-cultural and cross-disciplinary team with Chinese law firm and specialist patent litigators, JunHe to bring the action. Last month’s decision from the High Court of Shandong has resulted in yet another win for Lucas Mill.
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Round 1 was heard by Qingdao Intermediate People’s Court. The court held that Lucas Mill’s patent was infringed and awarded Lucas Mill 2 million yuan (approximately AU $400,000) in compensatory damages.
In round 2, the defendant applied to the Chinese Patent Office to invalidate Lucas Mill’s patent and failed. The validity of the patent was upheld.
In round 3, the defendant appealed to the Shandong High Court. The court reduced compensatory damages to 1 million yuan (approximately AU $200,000). The compensatory damages awarded in the lower court had been based on the defendant’s own published production numbers of the knockoff sawmills. The High Court considered such production numbers to be inflated and doubted whether the defendant had the capability to produce such a large number of sawmills. The High Court held the patent infringed.
Summarising a highlight of the action, Tracey Hendy, principal of FPA Patent Attorneys says:
“By far the greatest difficulty was actually obtaining enough evidence to get into court in the first place. You can’t just approach a manufacturer in a small town in provincial China with legal team in tow and try to purchase a ten thousand dollar piece of machinery. We had to come up with a better plan. Through investigation, we were able to detect when a knockoff sawmill was leaving the factory and passing through customs on its way out of the country. Our Chinese patent lawyer tipped off customs and they obliged by seizing the knockoff sawmill. That gave us the springboard to get into court.”
“It is a commercial reality that until Chinese manufacturers gain the necessary sophistication in patent law they will continue to make copies of foreign products. However, the Chinese courts have shown that they are prepared to uphold patents, even against their own nationals. As our Chinese lawyer kept saying, ‘We must trust in the Chinese legal system.’”