Copycatting and counterfeiting prevails in the furniture industry in China, which makes the innovative enterprises who possess original works vulnerable to infringements. Some of the enterprises which have strong IP awareness choose to protect their designs through patent application and use legal means to safeguard their IP rights when encountering infringements. However, due to high professionalism and difficulty in determining infringements, the outcome of right safeguarding is hardly satisfactory for the furniture enterprises, which upsets many of them and deters them from litigations.
Shuangye Furniture Industry Co.Ltd (Shuangye) is famous for its wood furniture. It has filed a series of lawsuits against Jinan’s Laishi Furniture Manufacturing Co., Ltd. (Laishi) and Yitong Furniture & Decoration (Yitong) for design patent infringement since 2012, and has finally won both cases. The case against Laishi is considered the first winning case on patent protection for wood furniture. The compensation that Shuangye received in the case against Yitong is the highest in the wood furniture industry since the establishment of the design patent protection system in China. Shuangye’s victories in patent protection have greatly boosted the confidence of the whole furniture industry in their right safeguarding.
Gao Fei, CEO of Shuangye, used “hard-earned” to describe the winnings of the above two patent infringement cases.
First winning case on patent protection of wood furniture
Shuangye is a well-known furniture enterprise specializing in wood furniture design and manufacturing. It has applied for over 110 patents so far, and its trademark, “Shuangye Furniture” has been granted, “Well-known Trademark” status in China by the Trademark Office of the State Administration for Industry & Commerce of the People’s Republic of China.
In early 2012, Shuangye found Laishi had infringed its patent: Laishi produced and sold counterfeit products which were almost identical with Shuangye’s in design, including beds, entryway tables, etc. Certain types of Shuangye’s furniture were warmly received and good sales were made in the market after they had been granted patents. However, Laishi’s counterfeits had seriously affected Shuangye’s profits, since the sales of Shuangye declined dramatically after the counterfeit products went into market.
After several inconclusive communications with Laishi, Shuangye filed a lawsuit at Beijing Second Intermediate People’s Court on October 15th 2012. As the plaintiff, Shuangye claimed itself a professional and well-known wood furniture design and manufacturing enterprise with an honorable reputation. In 2010, Shuangye’s design patents at issue were granted. Laishi’s behavior violated relevant provisions of the Patent Law, which infringed on Shuangye’s patent right and brought significant harm to its legitimate rights and interests. Therefore Shuangye asked the court to order the defendant, Laishi to cease production and sales of infringing products, and pay compensation for plaintiff’s economic loss.
Beijing Second Intermediate People’s Court found that Shuangye had owned the patent right at issue and should be protected by the Patent Law. The products with the patent at issue manufactured by Shuangye and infringing products manufactured by Laishi belong to the same class. According to the Patent Law and related judicial interpretations, for the design patent right, the scope of protection shall be confined to the design of the product as shown in the drawings or pictures, and the brief description may be used to explain the said design as shown in the drawings or pictures. When determining whether the designs are identical or similar, the court should judge comprehensively based on the overall visual effect and the design features of both the plaintiff and defendant. Comparing with the ordinary parts of a product, parts which can be more easily seen have greater influence on visual effect. Once the defendant’s design is not substantively different from the plaintiff’s, the two designs are deemed similar. In the case of Shuangye, there is no substantive difference between the two designs on visual effect, so the defendant’s design is deemed similar to the plaintiff’s. Based on the provisions of relevant judicial interpretations, if the accused design patent has been used on the same or a similar kind of product of the granted design patent, then the accused design falls into the protection scope of the granted design patent. Therefore, the defendant’s design in the Shuangye case had fallen into the protection scope of Shuangye’s design patent at issue.
On July 21st 2013, Beijing Second Intermediate People’s Court delivered the first trial verdict: Laishi should cease the infringement of Shuangye’s design patent and pay 467,800 yuan for compensation, including economic damages and litigation expense. Unsatisfied with the first trial verdict, Laishi appealed to Beijing Higher People’s Court. On November 6th 2013, Beijing Higher People’s Court rejected the appeal and sustained the original judgment.
“As the first winning case on patent protection of wood furniture, the ruling did promote the IP protection of the entire furniture industry,” said Gao Fei.
Broke compensation record in the furniture industry
After filling a lawsuit against Laishi, on August 21st 2013, Shuangye sued another furniture company — Beijing Bohang Yitong Decoration Materials Ltd. (Yitong). Since 2012, Shuangye had found 15 pieces of furniture produced by Yitong were counterfeit products of Shuangye’s and had infringed on 5 of Shuangye’s patents. It was discovered that the amount of counterfeit products and infringing patents were the highest in history since China’s patent system was established.
Shuangye claimed that they had applied for 5 design patents from July to September in 2010. In early 2012, Shuangye found some of Yitong’s furniture had fallen into Shuangye’s patent protection scope. The infringing products that were produced, sold and promised to be sold by Yitong are the same with the product patents at issue owned by Shuangye in function, usage, marketing, etc. Therefore, Yitong had infringed on Shuangye’s patent right and had caused huge losses to Shuangye, which lead to a 54 million yuan compensation claim from Shuangye.
After hearing the case, Beijing Third Intermediate People’s Court held that, based on relevant regulations, existing designs mean ones that are known to the public both domestically and abroad before the date of application, including those that had been in publications or been used publicly, if the accused infringer opposing the exploited design is an existing design, the court should determine whether the design of the infringing product is identical or similar with the existing design. After comparison, the existing design is neither identical nor similar with the design of the accused infringing products in the above case. Therefore the plea which was opposed by the defendant can not be accepted by the court due to the lack of evidence. The products with patent at issue and the infringing products are of the same kind. After comparison, the design of the above mentioned products have no difference in overall visual effect, therefore can be determined as identical. Based on provisions of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases, if the accused products are of the same kind with products which possess design patents, meanwhile the accused products use identical or similar design of that product, the design patent should be determined to fall into the scope of the design patent protection. Therefore, the court ruled that the accused products fell into the scope of patent protection of the product with the patent at issue.
Besides, the accused infringing products are brought from one store of Yitong, with Yitong International Furniture Sales Agreement and Yitong International Furniture Delivery Note, such documents can be evidence of Yitong’s sales of infringing products. Combined with products and manufacturing introduction on Yitong’s official website, it can be determined that the infringing products are manufactured by Yitong. In addition, Yitong admitted to the sale of infringing products.
Beijing Third Intermediate People’s Court delivered the first trial verdict on February 19th 2014 that Yitong must cease the infringement of Shuangye’s design patent at issue and pay 3.7 million yuan for compensation on Shuangye’s economic loss and reasonable litigation expenditure.
The 3.7 million yuan compensation which Shuangye got paid in the design patent infringement case, and 1.4 million yuan compensation for a single sue, are all far beyond the highest compensation amount 1 million yuan stipulated in China’s Patent Law. The compensation of the case broke the record in the furniture industry since the establishment of China’s patent system.
Defender of IPRs
The winning of the serial patent lawsuits brought by Shuangye have a great impact on the furniture industry. Some furniture practitioners held that the rulings did not only safeguard Shuangye’s right but also gave hope to the furniture enterprises who have been suffering from infringement for a long time.
Gao Fei, who led Shuangye to win the case, said that Shuangye always pays great attention to IP protection, which made it possible to win the case.
China IP learned that Gao Fei had not practiced in the furniture industry for a long time. He entered into Shuangye in 2012, and became deputy CEO and CEO in succession. Working in the investment industry for years, Gao Fei has been cultivated with a predictable vision and awareness of emerging things. He brought those abilities with him when he entered into Shuangye, which have gradually influenced the development of the company. Though working in Shuangye for a short time, he already had contacts with Shuangye for ten years. Like Gao Fei said, “If I decided to work in the furniture industry, Shuangye is no doubt the top choice. Shuangye has its dream over ten years, I am one of the Shuangye-ers who is striving to realize the dream.”
One of the core concepts in Shuangye’s dream is innovation. Gao Fei explained that, “Consumers of the furniture industry are relatively stable. Only high quality products can maintain continuous consumption. Shuangye sticks to self innovation, research and development since its establishment. Since 2010, over 110 pieces of Shuangye’s furniture are products with patent applications, mostly design and utility model patents, and most of them have been granted. Shuangye invested millions of yuan on product research and development every year, patent costs take as high as 10% of the total manufacturing cost. Shuangye also attaches great importance on IP management, thus specialists are assigned to be in charge of the IP related work under the CEO office, with the help from research department and professional law firms.”
Shuangye is facing one of its most severe challenges during its speedy development, that is how to cope with infringement. Like other furniture enterprises had encountered, Shuangye was also met with difficulties when safeguarding its legal rights.
Seeing the entire right safeguarding process, Gao Fei has became an IP “expert” to some extent. He said that the number of IP cases on wood furniture is limited, especially on design patent cases. It can be considered that Shuangye had taken a historical step on IP protection in the wood furniture industry.
Gao Fei expressed that compared with other industry, the widespread IP issues in the furniture industry mainly focus on design patent infringement. In dealing with such cases, the following problems are inevitable: the stability of patent right, and whether the infringing products fall into the patent protection scope. The above two problems are also key for Shuangye in its lawsuit with Yitong and Laishi.
Gao Fei further explained that unlike other kinds of civil and commercial cases which do not touch problems of technological feature comparisons, patent cases have to deal with such comparison. For example, if some technology features of Shuangye’s patented products have been found identical, vary slightly or have no essential differences in the infringing products manufactured by Yitong or Laishi, then it can be determined that the infringing products fall into the patent protection scope of Shuangye’s patented products. Legal measures are needed in the aspects of evidence preservation, patent right stability and substantial similarity identification.
(Translated by Emily Tan)
