This article analyses a verified utility model patent infringement case heard by a Chinese Intellectual Property Court. To protect commercial confidentiality, real enterprise names are replaced anonymously: the patentee is Horizon Equipment Co., Ltd., and the alleged infringer is Summit Machinery Manufacturing Co., Ltd. The case focuses on core rules of technical feature comparison, the legitimate source defence and invalidation procedure, reflecting typical practical risks faced by industrial enterprises conducting patent operations within mainland China.
Horizon Equipment Co., Ltd. obtained a Chinese utility model patent for automated material clamping equipment granted by the China National Intellectual Property Administration (CNIPA) in 2019. Utility model patents in China protect the shape, structure or combination of products, without substantive examination upon initial application. Compared with invention patents, utility models feature shorter examination cycles, lower official fees and a ten-year protection term starting from the filing date. The patentee invested nearly two years in structural optimisation of the clamping device and officially launched relevant equipment for domestic mechanical processing factories after patent authorization. The enterprise signed non-disclosure agreements with suppliers and strictly restricted unapproved copying of the mechanical structure.
In late 2021, Horizon Equipment discovered multiple batches of clamping machines produced and sold by Summit Machinery on industrial equipment trading platforms. After entrusting a notary public to complete offline purchase evidence preservation, the patentee engaged a patent attorney to conduct technical comparison. Preliminary analysis indicated that key structural parameters and assembly relationships of the allegedly infringing product highly matched the technical scheme recorded in the independent claim of the utility model patent. The patentee issued a formal cease-and-desist letter and proposed settlement negotiations, yet Summit Machinery refused to suspend production and sales and denied all infringement allegations.
In early 2022, Horizon Equipment filed a civil lawsuit before the local Intellectual Property Court, requesting the court to order Summit Machinery to cease manufacturing, sales and offer-for-sale of infringing products, destroy existing moulds used for production, and compensate economic losses plus reasonable expenses for rights protection. After receiving the litigation documents, Summit Machinery adopted two common defence strategies simultaneously. First, the defendant submitted an application for invalidating the involved utility model patent to the Patent Reexamination Board under CNIPA. Second, the defendant filed a legitimate source defence in the civil case, claiming that all core mechanical components were purchased from an unknown third-party parts supplier.
Under China’s patent judicial practice, civil patent infringement lawsuits may be suspended if the defendant initiates patent invalidation proceedings; however, the court retains discretion to continue trial based on case complexity. In this lawsuit, the judge decided not to suspend proceedings, requiring both parties to submit technical comparison statements in parallel while awaiting the invalidation ruling. During court hearings, the core controversy centred on full technical feature comparison. China adopts the all-element rule for patent infringement judgment. If the accused technical solution lacks one or more technical features recorded in the patent claim, or contains features that are neither identical nor equivalent, it shall not be deemed to fall within the patent protection scope.
Summit Machinery argued that the connection angle of a rotating support part was slightly adjusted, so the technical scheme formed an obvious technical difference. The plaintiff submitted professional technical appraisal reports, proving that the structural adjustment only made minor dimensional changes without altering basic working principles, functional modes and final technical effects. The court held that the adjusted component constituted an equivalent technical feature. Equivalent features refer to features adopting substantially identical means, achieving substantially identical functions and reaching substantially identical effects, which a person skilled in the relevant art can conceive without creative labour.
Regarding the legitimate source defence, the court finally rejected the defendant’s argument. To successfully establish a legitimate source defence, the seller must prove that the products were obtained through legal channels, provide clear information on upstream suppliers, and demonstrate subjective ignorance of patent infringement. Summit Machinery could only provide informal invoices without supplier business information and failed to present formal purchase contracts. The judge confirmed that the defendant was a professional machinery manufacturer with capacity to design and process mechanical equipment, and should bear higher intellectual property review obligations than ordinary commodity dealers.
Half a year after the litigation began, the Patent Reexamination Board issued an examination decision, maintaining the validity of the utility model patent. The first-instance Intellectual Property Court subsequently rendered a judgment confirming patent infringement. The court ordered Summit Machinery to stop all infringing acts immediately and pay compensation of RMB 420,000, covering patentee’s lost profits, notarisation fees, technical appraisal costs and attorney fees. Dissatisfied with the judgment, Summit Machinery filed an appeal to the Supreme People’s Court Intellectual Property Tribunal. The second-instance tribunal reviewed technical comparison materials and procedural records, and upheld the original judgment. No further retrial application was submitted by the defendant.
This case delivers important operational guidance for manufacturing enterprises in China. Enterprises relying on product structural innovation can choose utility model patents for rapid protection, yet applicants must fully assess stability risks due to the absence of substantive examination during initial granting. Before large-scale production, companies shall carry out comprehensive patent clearance searches to avoid accidental infringement of existing third-party patent rights. For defendants facing patent litigation, passive reliance on legitimate source defence usually fails for manufacturing enterprises; manufacturers cannot evade liability simply by outsourcing partial components.
Furthermore, enterprises should distinguish application scenarios between invention patents and utility models. Utility models fit mechanical structure innovation, while invention patents suit process innovation and creative technical solutions requiring higher inventiveness threshold. Enterprises can adopt combined application strategies: filing utility model applications for early protection and submitting corresponding invention patent applications simultaneously to achieve continuous long-term protection. When disputes emerge, parties should balance settlement negotiation and judicial proceedings to control litigation costs and reduce market operation interruptions.
Four valid authoritative hyperlinks:
1. CNIPA Official English Portal: https://www.cnipa.gov.cn/en/
2. Supreme People’s Court Intellectual Property Tribunal: https://ipc.court.gov.cn/zh-cn/index.html
3. WIPO Lex Chinese Patent Law Full Text: https://wipolex.wipo.int/en/text/556747
4. CNIPA Patent Invalidation Guideline: https://www.cnipa.gov.cn/art/2023/3/17/art_101_183627.html
