This civil patent dispute was heard by the Zhejiang Higher People’s Court, focusing on utility‑model patent infringement of household smart‑sensing ventilation fans. All real‑world enterprise names are anonymized for commercial confidentiality. The core factual feature of this case is that the actual manufacturer deliberately split its business structure: a separate sales‑oriented limited company handled all external transactions, while the manufacturing entity remained hidden behind contractual arrangements. All product outer boxes, e‑commerce store pages, sales invoices and after‑sales services displayed only the sales‑shell entity, aiming to separate the manufacturing party from patent‑infringement litigation risks.
The patentee is a domestic hardware enterprise holding a valid Chinese utility‑model patent covering the structural assembly of smart ventilation fans. The patented solution optimizes the connection structure between sensor components and fan housing, reducing installation difficulty and improving sensing stability. In mid‑2021, the patent holder discovered large‑volume infringing ventilation fan products sold across multiple domestic e‑commerce platforms and offline building‑material wholesale markets. Every public sales document, product packaging and platform store information bore the name of Bosi Sales Co., Ltd., a trading‑focused shell company registered in Ningbo. On paper, Bosi Sales was the sole seller and market operator. This sales‑oriented company held no production workshops, no injection‑molding equipment, and only maintained a small‑size transit warehouse. Its registered capital was relatively low. If the patent owner only sued Bosi Sales, even obtaining a winning judgment would yield limited compensation, given the shell’s scarce enforceable assets.
During preliminary evidence collection, the plaintiff’s intellectual‑property attorneys faced substantial obstacles. Bosi Sales repeatedly stated in written replies that it merely purchased finished goods from external suppliers and refused to disclose the exact identity of the production factory. The infringing fan products carried no printed manufacturer information on outer packaging; only the sales‑shell company’s brand logo was printed. The major litigation challenge was to gather admissible circumstantial evidence to trace the concealed actual manufacturer. Under Chinese patent litigation rules, mere market speculation cannot support findings of joint infringement; courts require mutually‑corroborated objective evidence chains.
The plaintiff’s legal team adopted multi‑layer evidence‑gathering measures. Firstly, notarized purchase of infringing goods was completed. After product disassembly, mould‑casting marks embedded inside plastic housing components were identified, showing short‑form factory codes corresponding to Yongjia Hardware Manufacturing Co., Ltd., located in Taizhou. This manufacturer’s name never appeared on any external sales materials or product packages released by Bosi Sales. Secondly, the plaintiff applied to the court for evidence preservation orders targeting logistics records, corporate bank account transaction data and industrial‑and‑commerce filing materials. Logistics manifests showed that most infringing‑product batches were directly shipped from Yongjia Hardware’s factory warehouse, rather than Bosi Sales’ transit‑warehouse location. Thirdly, industrial‑and‑commerce records revealed that although the two entities had different legal representatives, they shared core sales personnel, financial staff and operated under the same marketing team. Several sales employees formally employed by Yongjia Hardware signed sales contracts and handled customer communications in the name of Bosi Sales. Fourthly, judicial investigation of bank‑flow records demonstrated regular capital circulation: buyers paid product payments to Bosi Sales’ corporate account, and approximately 87 % of received funds were transferred rapidly to Yongjia Hardware under the payment note “product processing fees”. Bosi Sales only reserved a small percentage as sales commission. Internal production‑order documents obtained via court discovery further confirmed that Yongjia Hardware completed mould opening, component procurement, mass‑production and quality inspection for the infringing ventilation fans.
After completing evidence consolidation, the plaintiff amended its complaint and added Yongjia Hardware Manufacturing Co., Ltd. as a joint defendant in the patent‑infringement civil lawsuit. During court hearings, Yongjia Hardware raised key defensive arguments. It claimed that Bosi Sales was an independent legal‑person entity with separate civil liability capacity. Yongjia Hardware argued that it only undertook OEM processing business according to purchase orders issued by Bosi Sales. It further contended that Yongjia Hardware had no knowledge that processed fan products would reproduce all technical features of the third‑party utility‑model patent, and all sales‑related infringing conduct belonged solely to Bosi Sales. Therefore, Yongjia Hardware should not bear joint tort liability for patent infringement.
The first‑instance court comprehensively reviewed product forensic appraisal reports, logistics records, bank‑flow evidence, personnel‑overlap materials and internal production documents. Judges analyzed key factors including asset mixing, staff overlap, business‑behavior confusion and the subjective purpose for setting‑up the sales‑shell entity. The core judicial criterion for identifying joint infringement in such shell‑company concealment patent cases is whether the sales‑focused entity is essentially a tool for isolating the actual manufacturer from legal liabilities. The first‑instance court ruled that Bosi Sales had no independent product‑development or manufacturing capacity; its main function was to serve as a front‑facing sales platform to mask Yongjia Hardware’s identity. Yongjia Hardware completed all core manufacturing links and controlled most profit distribution. The accused infringing products fully fell within the protection scope of the plaintiff’s utility‑model patent. The court ordered both defendants to cease manufacturing and selling infringing ventilation‑fan products, and jointly pay RMB 1.96 million for economic losses plus reasonable litigation expenses.
Yongjia Hardware disagreed with the first‑instance judgment and filed an appeal to Zhejiang Higher People’s Court. The appellant emphasized corporate‑person independence and argued there existed no direct written agreement proving joint‑infringement intent. The higher‑court panel re‑examined the whole evidence chain and delivered the final appellate ruling. Chinese courts may establish joint‑infringement liability based on multiple mutually‑supported indirect evidence, even without direct written conspiracy documents. Mould‑mark traces, logistics‑delivery records, capital‑transfer trails and overlapping personnel together proved that Bosi Sales was deliberately deployed as a superficial sales shell to hide Yongjia Hardware’s actual‑manufacturer status. The Zhejiang Higher People’s Court rejected the appeal and upheld the original judgment.
This case delivers practical guidance for global patent‑right holders dealing with Chinese supply‑chain participants. First, when facing asset‑light sales‑shell defendants, right holders should not rely merely on invoices and packaging information; physical‑product mould‑mark inspection, judicial evidence preservation and bank‑flow investigation are critical approaches to trace concealed actual manufacturers. Second, pay sufficient attention to indirect evidence; direct written conspiracy documents are rarely retained in real‑world business scenarios. Third, evaluate defendants’ asset conditions before litigation; suing only the outward‑facing sales‑shell may result in winning a judgment without available property for enforcement.
Official valid hyperlinks:
1. Supreme People’s Court Intellectual Property Tribunal official website https://ipc.court.gov.cn
2. CNIPA English‑version Patent Law of People’s Republic of China https://english.cnipa.gov.cn/col/col3068/index.html
3. WIPO‑Lex China patent judicial‑interpretation database https://www.wipo.int/wipolex/en/legislation/details/6530
4. CNIPA patent infringement judicial‑practice guidance page https://www.cnipa.gov.cn/col/col2432/index.html
