Nokia Design Patent Infringements: Next Level of Sophistication/Statutory Damage

Nokia has sued:

• Shenzhen Telsda Mobile Communication Industry Developing Co Ltd
• Song Xun Da Zhong Ke Electronic (Shenzhen) Co Ltd

and their distributors:

• Beijing Tongwanbao Commerce & Trade Co Ltd, An Wai Avenue No 2 Branch
• Beijing Xin Tongwanbao Commerce & Trade Co Ltd

before the Beijing No 2 Intermediate People's Court, for infringing their design patents of the Nokia 7260 mobile phone.

Nokia demands:

• the companies to cease making and selling the allegedly infringing phones
• to pay damages and costs. The company is seeking the statutory maximum in damages in Chinese law of Rmb 500,000 ($62,500).

In China designs can be protected by patent; 'the patent right for design'.

Article 59 Amended patent law of 2001. "Where any person passes any non-patented product off as patented product or passes any non-patented process off as patented process, he shall be ordered by the administrative authority for patent affairs to amend his act , and the order shall be announced, and he may be imposed a fine of no more than RMB 50,000 yuan."

However, "according to a judicial interpretation issued by the Supreme People’s Court, damages can be a multiple, normally between one and three times, of the reasonable royalty. If there is no such royalty, or if the royalty is obviously unreasonable, courts often resort to quasi-statutory damages ranging from RMB 5,000 (US$620) to RMB 500,000 (US$62,000). The court may, at the request of the patentee, include reasonable expenses and all or part of attorneys’ fees into the damages award. However, recovery of all attorneys’ fees is unlikely." Source: Patent Litigation in Chinese Courts, by J. Benjamin Bai, Helen Cheng and Peter Wang of Jones Day.

I googled to find the relevant judicial interpretation. The secondary sources, although very prominent ones were easy to find. Jiang Zhipei, Justice of the Supreme People's Court who handles especially IPR explained the Provisions of Judicial Interpretation of Supreme People's Court on Questions Regarding Applicable Laws for Adjudication of Patent Dispute (also mentioned as .. the Applicable Laws in Deciding Patent damages). According to Jiang the ration damage charges the defendant to make economic compensation to the plaintiff under the situation mentioned above. This is another method of calculating damage in consideration of the characteristics of intellectual property infringement, in compliance with the "pre-fixed damage" of TRIPS as well as "Statutory Damage" adopted by some other countries. Jiang: "In order for the People's Court at various level applying the ration damage uniformly, the Supreme People's Court defines the ration damage in a range of 5,000 Yuan RMB to 500,000 Yuan RMB on the basis of years of experience." See here. Another secondary source, again very honorary is that of Luo Dongchuan, deputy chief judge of the Third Civil Tribunal of the Supreme People’s Court of China wrote in 2003 a comparative study on the Judicial Protection of Intellectual Property for IIP Bulletin: From the Viewpoint of the Trial of Intellectual Cases between China and Japan.

Both judges most probably mention the same document but name it differently due to discretionary translation possibilities. Finally: the primary document of Several Provisions of the Supreme People’s Court on Issues Relating to Application of Law to Adjudication of Cases of Patent Disputes (19 June 2001) at the interesting site of Linda Liu & Partners.

Article 21 of this Judicial Interpretation: "If it is difficult to determine the losses suffered by the patentee or the profits gained by the infringer but there is the patent royalty which can be used as a yardstick, the people’s court may determine the amount of damages by appropriately taking one to three times the said patent royalty as a basis according to factors such as the type of patent, the nature and circumstances of the patent right infringement, the amount of the patent royalty, and the nature, scope and time of the said patent royalty. If there is no patent royalty which can be used as a yardstick or the patent royalty is apparently unreasonable, the people’s court may determine the amount of damages to be a minimum of 5,000 Yuan and a maximum of 300,000 Yuan in general according to factors such as the type of patent, the nature and circumstances of the patent right infringement, the amount of the patent royalty, and the nature, scope and time of the said patent royalty. The amount of damages shall not exceed 500,000 Yuan."

Shahnaz Mahmud interviewed for MIP Horace Lam, IP consultant at Lovells in Beijing and concluded: "Without evidence to show generated revenue from the mobile phone replicas, Nokia can only claim statutory damages."
Lam said: "The likelihood that Nokia will succeed is good. Judging by the copies, its design patent seems valid".

Mahmud interviewed also Justin Davidson, partner with DLA Piper Rudnick Gray Cary in Hong Kong, about the case.

"Davidson [..] said that this case reflects a trend where Chinese companies are moving to the next level of sophistication in copying a shape without copying the trade mark."

Read the MIP article here.