Record compensation awarded by Beijing IP court in patent infringement case, with award of attorney fees.
In December 2016, the Beijing Intellectual Property Court found that Hengbao Co Ltd had infringed the patent of the plaintiff, Watchdata Technologies Ltd. Hengbao was ordered to compensate Watchdata for an economic loss of RMB 49 million ($7 million), and attorney fees of RMB 1 million. This is the highest award by the Beijing IP Court for an economic loss. Furthermore, it is the first time that it has awarded compensation in respect of attorney fees.
Both Watchdata and the defendant Hengbao produce smart password key products (known as "U shield" in China) for the financial sector. Watchdata owns a patent entitled "Physical identification method and electronic device", for U shields, and alleged that several USB key products produced by Hengbao, and sold to dozens of domestic banks, infringed Watchdata's patent. € e Beijing IP Court agreed. Hengbao sought to defend at the Beijing IP Court, on the basis that it had its own patents and therefore did not infringe, and apparently failed (Note: it is a common misunderstanding by Chinese companies that having their own patent gives them the right to work an invention).
It is worth noting that this is the first time that the Beijing Intellectual Property Court has calculated attorney fees on time-spent basis. Specifically, the RMB 1 million compensation in respect of attorney fees was determined based on reasonable time after considering whether it is necessary to use attorneys, the complexity of the case, the actual e* orts of the attorney and other factors. It should be noted that compensation in respect of attorney fees is o% en denied by Chinese courts, and even if awarded, the amount is typically between RMB 10,000 and RMB 20,000 ($1,455 and $2,910), which is far from the actual attorney fees spent by the patentee. difficulty in recovering attorney fees has been one of the factors preventing owners of Chinese patents enforcing their patents. Hopefully this judgment will set a precedent for other courts in China.
This article was published in the February 2018 issue of the UK Chartered Institute of Patent Attorneys (CIPA) Journal, and are re-posted here with the kind permission from the UK CIPA. The UK CIPA Journal covers updates, articles and case law reviews on IP in the UK, Europe, and around the world. The Journal is available for subscription at GBP130 per year, and for free by becoming a foreign member at GBP405 per year. For more information on the CIPA Journal please email editor@cipa.org.uk.
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