In the production workshop of an automobile manufacturing plant in Changchun, Jilin Province, intelligent robots assemble vehicle tires and wheels. Xinhua News Agency
At the 13th China International Patent Technology and Products Fair, people are watching the patent projects and products exhibited. Photo by Liu Debin/Guangming Pictures
Exterior view of a chemical plant. Bright Pictures / Visual China
【Dharma Vision】
In Meishan, Sichuan, in the production workshop of a chemical company, there is a busy scene. On the production line, the white "melamine" powder "flows" along the conveyor belt, and then is packed in bags and neatly stacked in the factory.
"The company's benefits this year have been particularly good!" "Looking at the trucks flowing into the factory, the relevant person in charge of a chemical company in Sichuan said excitedly.
Just a few months ago, the company was in a different story. Since 2014, the company has been "going to court" against the infringer for the invention patent and technical secrets of "melamine" for nearly ten years. The market share continues to shrink, and the efficiency continues to decline...... The company's prospects are worrying.
On December 26, 2022, the Intellectual Property Court of the Supreme People's Court, the crisp sound of the gavel sounded here. A chemical company in Sichuan has fully supported its appeal request for joint and several damages of 218 million yuan from the infringers, and the company has seen hope of getting back on track. This is currently the highest amount of compensation awarded by the people's court for the same project in an intellectual property infringement case.
However, in the face of the court's judgment, the defendants not only did not stop the infringement, but continued to expand the scale of production, causing further losses to the plaintiffs, and the enforcement of the case reached a deadlock for a time. Under the promotion and coordination of the Supreme People's Court Executive Directorate, on January 30, 2024, the parties reached a comprehensive settlement, and in the face of the deadlock in the execution of the case, the right holder was finally compensated 658 million yuan, setting a record for intellectual property cases in mainland China!
"This intellectual property rights protection lawsuit has gone through twists and turns, and finally won the victory. The company has received considerable economic compensation, and the infringer has also been duly punished, which is a milestone for the healthy development of the company. The relevant person in charge of a chemical company in Sichuan said.
In January this year, this infringement case involving "melamine" invention patents and technical secrets was selected as one of the "Top Ten Cases in 2023 for Promoting the Rule of Law in the New Era".
What is the cause of the above-mentioned dispute over the protection of intellectual property rights? Why has it given the plaintiff a "headache" for nearly 10 years, and why is the amount of damages awarded so high? On the occasion of World Intellectual Property Day, this reporter conducted an in-depth interview on this issue.
Several years of research and development have finally achieved patent results
"Melamine", also known as melamine, was once infamous for the "Sanlu milk powder" incident. In fact, as a very important organic chemical raw material, melamine itself has its unknown "bright" side, which can be widely used in plastics, textiles, electrical appliances, medicine, flame retardant new materials and other industries. However, due to the limitation of technical level, there are problems such as short operation cycle, high energy consumption, easy blockage, and low product quality in production for a long time.
In 2006, Tang (now the president of a chemical company in Sichuan), who planned to upgrade the production equipment of melamine products as a whole, found a chemical company in Sichuan that was new to the field of melamine to discuss cooperation in Meishan to land melamine production equipment with an annual output of 50,000 tons. In April of the same year, a technology company in Beijing was established. The two companies work together to focus on melamine product production and process research and development. After spending hundreds of millions of yuan and years of hard work, the "pressurized gas phase quenching melamine production technology" was finally developed.
On April 28, 2011, a chemical company in Sichuan and a technology company in Beijing filed patent applications with the State Intellectual Property Office. On September 11, 2013, the patent application was approved, and the two companies enjoyed the invention patent right entitled "Energy-saving and Capital-saving Vapor Phase Quenching Melamine Production System and Process" (hereinafter referred to as the patent in question). At the same time, a chemical company in Sichuan also has the technical secret of the melamine production system with an annual output of 50,000 tons by pressurized gas phase quenching (hereinafter referred to as the technical secret involved in the case).
According to the claims and description of the patent involved in the case, the patent effectively solves the problems of low production efficiency, high power consumption of products, and high cost of exhaust gas recovery or utilization in the traditional low-pressure gas phase quenching process, which can greatly improve production efficiency. Later, the patentee filed patent applications in the United States, Japan, the European Union, South Korea and other countries and regions, all of which were approved.
With a number of leading independent research and development technologies, a chemical company in Sichuan has become the world's largest melamine manufacturer, accounting for 20% of the global market share and about 40% of the mainland, becoming a veritable industry champion.
For several years, the court awarded high compensation for rights protection
On April 30, 2014, a chemical company in Shandong issued an announcement announcing that its melamine project production line was officially put into operation, and the production line will form a melamine production capacity of 50,000 tons/year after reaching production.
At that time, only a chemical company in Sichuan had the mature patented technology of melamine pressurization device in China. The company was keenly aware of the strangeness and suspected that its technical secrets had been stolen, so it reported the case to the Meishan Public Security Bureau. Soon, the police found a clue.
Yin Moumou, who was an engineer of a science and technology company in Beijing and the chief engineer and director of the technology center of a chemical company in Sichuan, was one of the inventors of the patent involved in the case and participated in the research and development of the technical secrets involved in the case. The police found a full set of technical data illegally stored by Yin Moumou from the personal computer of Yin Moumou, who had left his post.
It turned out that as early as 2011, a chemical company in Shandong planned to build a production line with an annual output of 50,000 tons of "melamine", and it signed a tripartite agreement with two companies in Ningbo, agreeing that the two companies would provide technology and construction design respectively. The two companies in Ningbo illegally obtained a technical package containing the patented technical solution and technical secrets involved in the case from Yin, and asked Yin to help revise the technical drawings and give him a high remuneration. During the construction of the production line, Yin Moumou also went to the construction site many times to troubleshoot problems and provide technical guidance.
In order to protect their legitimate rights and interests, a chemical company in Sichuan and a technology company in Beijing filed patent infringement lawsuits and technical secret infringement lawsuits in the courts of Guangdong and Sichuan respectively. After trial, the court of first instance of the patent infringement case found that a certain chemical company in Shandong and the two companies in Ningbo had jointly committed the act of infringing the patent rights involved in the case, and the court of first instance in the case of technical secrets found that the four defendants, including a chemical company in Shandong, had jointly committed the act of infringing on the technical secrets. The courts of first instance in both places ordered the defendants to cease the infringement and upheld part of their claims for compensation.
After the first-instance judgment, all parties were dissatisfied with both cases and appealed to the Supreme People's Court. Eventually, the two cases came to the desk of Judge Cen Hongyu of the Intellectual Property Court of the Supreme People's Court.
"When I got the case, the thick files were piled up on the desk. Cen Hongyu recalled, "The two cases involved a huge amount of money and a long time span of infringement, of which Yin Moumou was also involved in a criminal case, and all parties appealed, and the case was very complicated." In the face of challenges, Cen Hongyu led the case-handling team to quickly devote themselves to the trial work such as sorting out the case, reviewing evidence, and organizing collegial discussions.
After several court hearings, the determination of infringement has become a "certainty", and how to determine the amount of compensation has become a "roadblock".
According to Cen Hongyu, the two cases adopted a comprehensive estimation method. The first is the annual profit of the two plaintiffs from operating melamine products; the second is the production capacity and profit margin of the production line of a certain chemical company in Shandong; and the third is the annual profit of enterprises of the same scale in the same industry. The combination of the three factors calculated that the reasonable profit obtained by a chemical company in Shandong from infringement was between 257 million yuan and 436 million yuan. The profits within this range are within the discretion of the people's courts.
"Considering that the alleged infringers in this case are joint intentional infringers, and there are egregious circumstances such as obstruction of the presentation of evidence and negligence in the presentation of evidence in the litigation, the amount of compensation should be determined from a higher level. Cen Hongyu pointed out.
On December 26, 2022, the Supreme People's Court made judgments in the two cases, changing the judgment to support all the claims of the right holders, ordering the destruction of the infringing production system within a time limit, and jointly and severally compensating the rights holders for economic losses and reasonable expenses totaling RMB 218 million (including RMB 120 million for invention patent infringement cases and RMB 98 million for technical secret infringement cases).
This result is undoubtedly the best "reward" for a chemical company in Sichuan and a technology company in Beijing for several years to protect their rights.
The amount of settlement is a record for intellectual property cases
It is understood that during the trial of the case, a chemical company in Shandong did not stop infringing, but continued to expand the scale of production. On December 27, 2018, the company announced that its 100,000 tons/year melamine project (phase II) production line was put into operation, and on January 18, 2019, it said that it planned to build two more sets of melamine production units. Until the second-instance verdict was pronounced, the infringement did not stop.
A wave of unevenness has risen again and again. On April 19, 2023, after the Intellectual Property Tribunal of the Supreme People's Court made a ruling, a chemical company in Sichuan filed another lawsuit against the cause of action of infringement of technical secrets by a chemical company in Shandong and four other defendants. The company argued that after December 30, 2018, the melamine project (phase I) of a chemical company in Shandong was still in operation, and the technical scheme used in the second phase was the same as that of the first phase, and it also infringed the technical secrets involved in the case identified by the effective judgment of the previous case, so it claimed a total of 601 million yuan.
"It is not easy to conclude the case, and it is even more important and difficult to get the infringer to accept the judgment and stop the infringement. Cen Hongyu said. In order to fully resolve the grievances of all parties and to break the impasse in enforcement, the Executive Bureau of the Supreme People's Court, together with the seven local courts, acted in unison, with the responsible persons of the Sichuan High Court and the Guangdong High Court deployed on the front line, and the responsible persons of the Supreme People's Court Executive Bureau and the Executive Bureaus of the three provinces also rushed to the scene to carry out enforcement work.
On January 30, 2024, a chemical company in Shandong issued an announcement on reaching a lawsuit settlement. On the basis of the judgment of 218 million yuan, the parties reached a comprehensive settlement on the new project and subsequent production activities during the execution, and the infringing party obtained a license from a Sichuan chemical company to avoid the dismantling of the infringing production facilities and equipment. The right holder (a chemical company in Sichuan and a technology company in Beijing) was finally compensated 658 million yuan, and all parties maximized their interests. As a result, the case set a record for intellectual property cases in mainland China.
"This case is currently the highest amount of damages awarded by the people's court for the same project of intellectual property infringement, which fully embodies the trial concept of strengthening the judicial protection of intellectual property rights in the new era of strong, effective and equal protection of the Intellectual Property Court of the Supreme People's Court. Zhou Xiang, vice president of the Intellectual Property Court of the Supreme People's Court, said.
"Patents and technical secrets are two basic legal means to protect technological achievements, which are essential for enterprises to maintain competitive advantages and high-quality economic development. Cen Hongyu told reporters that the rights holders involved in the case are Sino-foreign joint ventures and high-tech private enterprises, and a chemical company in Shandong is a listed enterprise with a state-owned background. The adjudication of the case not only demonstrates the strength of judicial protection, but also reflects the equal treatment of all types of enterprises.
To protect intellectual property is to protect innovation. Deng Hongguang, a professor at Southwest University of Political Science and Law, believes that the case involving "melamine" invention patents and technical secrets explores hot and difficult issues in the judicial protection of intellectual property rights, such as the burden of proof, the determination of the amount of damages, the joint infringement and its liability, and the scope of stopping the infringement.
It has been learned that the two verdicts in the "melamine" case are more than 170 pages long and nearly 200,000 words.
"A good legal document carries the whole of the case. Cheng Yongshun, an expert in intellectual property law, pointed out that the judgment of the case provides strong protection for intellectual property rights in accordance with the law, conveys confidence and determination to innovators, points out the direction of fair competition for market operators, and also demonstrates the judge's cognition, the court's attitude and the dignity of the law by stopping and punishing infringements.
"Innovative adjudication, protection and innovation to promote development, reconciliation and enforcement, win-win for all parties to see the original intention." "Not long ago, a chemical company in Sichuan and a technology company in Beijing sent pennants to the Supreme People's Court. These 22 words are full of joy for the successful rights protection of the parties, and are also soaked with sincere respect for the cause of intellectual property adjudication. The two companies were finally able to devote themselves to the development of the "melamine" production technology without distractions......
(Reporter Jin Hao, correspondent Li Yanjun)