This authentic utility‑patent dispute is selected from typical technical intellectual‑property cases published by the Supreme People’s Court of China. It reflects a pervasive risk for patent owners doing business on Chinese domestic e‑commerce platforms: actual manufacturers set up asset‑light sales‑focused shell limited‑liability companies to operate online storefronts, while concealing the real production entity behind corporate walls. Nominal shareholders and legal representatives are non‑related nominee persons who only provide identity documents for business registration, without participating in production, technical decision‑making, supply‑chain management or profit distribution. By separating online sales qualification from physical manufacturing, bad‑faith operators attempt to evade patent‑infringement compensation, property preservation and subsequent enforcement risks. This case demonstrates how Chinese intellectual‑property courts combine e‑commerce backend data, supply‑chain records, capital flow evidence and on‑site inspection findings to identify joint tort liability of hidden manufacturing entities.
The plaintiff holds a valid Chinese utility patent related to portable garden pruning equipment, covering innovative structural improvements of cutting‑head transmission assemblies. The patent had gone through substantive examination and maintained validity after invalidation defence. After launching its patented pruning product, the patentee found large quantities of low‑cost competing infringing goods sold on mainstream domestic B2C e‑commerce platforms. Public store information, product detail pages and transaction invoices all showed that the seller was Breeze Trading Co., Ltd, a small‑scale shell company registered for e‑commerce sales only. Public business‑information enquiries displayed two ordinary nominees as its shareholders and legal representative. No public materials mentioned the real manufacturing factory (anonymised as Green‑Power Manufacturing).
Breeze Trading possessed no production workshop, processing equipment or professional technical staff. Its core business was purely online store operation, product listing, customer service and order receiving. All physical pruning‑tool inventory was directly produced and supplied by Green‑Power Manufacturing. Green‑Power formulated product technical parameters, controlled mould development, arranged mass production and determined factory‑outlet prices. Breeze Trading only undertook online sales work according to pre‑set profit margins provided by the hidden manufacturer. Once patent‑infringement complaints emerged, Breeze Trading could theoretically be held solely liable; its registered capital and disposable assets were extremely limited, which would make large‑sum compensation difficult to enforce.
The patent holder filed a patent‑infringement lawsuit against Breeze Trading Co., Ltd before the local intellectual‑property court. At the early litigation phase, counsel for Breeze Trading put forward two major defence arguments. First, Breeze Trading acted merely as an ordinary reseller purchasing finished goods from an external unknown supplier; under Chinese Patent Law, only the actual manufacturer shall bear primary direct‑infringement liability. Second, there was no written sales contract or public document directly linking Breeze Trading with Green‑Power Manufacturing, so the hidden factory should not be added as a co‑defendant. If the court accepted such arguments, the plaintiff would obtain a nominal judgment against the shell trading company with little realizable property.
The patent applicant applied to the court for multiple investigation orders. Judicial authorities obtained e‑commerce platform backend data, third‑party logistics delivery manifests, bank transfer records, supplier chat history and notarised on‑site factory‑inspection evidence. Multiple critical factual conclusions were confirmed. First, product mould drawings, technical modification documents and defective‑product rework standards for accused infringing pruning devices originated entirely from Green‑Power Manufacturing’s internal technical department. Breeze Trading had no capacity to adjust product structures or resolve hardware‑quality complaints raised by online purchasers. Second, capital‑flow evidence revealed that most sales revenue generated by infringing goods, after deducting Breeze’s fixed sales commission, was promptly transferred to bank accounts controlled by Green‑Power Manufacturing. The shell trading company only retained a small predetermined service fee for online‑store operation. Third, chat‑record evidence showed Green‑Power directly decided product model selection, cost adjustment, online retail‑price range and stock‑replenishment rhythm for e‑commerce store inventory. Breeze Trading only executed sales instructions without independent commercial decision‑making power. Fourth, sworn inquiry statements from nominee shareholders confirmed they merely lent personal identities for company registration, received trivial annual compensation, and never intervened in any corporate business activity.
The intellectual‑property court conducted comprehensive evaluation on joint‑infringement constitutive elements under the Patent Law and personality‑confusion judging criteria under the Company Law. The judge ruled that Breeze Trading existed as a pure sales instrumentality for Green‑Power Manufacturing; the shell entity lacked independent authentic commercial purposes. Green‑Power Manufacturing completed core manufacturing and technical control links, consciously utilised Breeze Trading’s e‑commerce qualification to implement patent‑infringement sales activities, and obtained major economic benefits from infringement. The hidden manufacturer and nominal sales shell constituted joint tortfeasors and should bear joint‑and‑several civil liability for patent‑infringement damages.
In the final judgment, both defendants were ordered to cease manufacturing, sale and offer‑for‑sale of infringing garden‑pruning products. The court awarded economic compensation plus reasonable litigation expenses for the patentee. This case delivers essential practical take‑aways for domestic and foreign patent litigants in China. Relying only on e‑commerce store‑displayed seller information to define defendants creates huge enforcement risks. When confronting sales‑oriented shell‑company operators, rights holders shall actively apply to courts for investigation orders to obtain logistics documents, capital‑transfer records and backend operating data. Complete multi‑dimensional evidence chains are required to trace hidden actual‑manufacturing subjects. Judgements only against asset‑light sales shells frequently cannot deliver real‑world compensation. For patent enforcement targeting e‑commerce‑channel infringing goods, identifying the entity controlling production technology and capturing main infringement profits is the key to achieving satisfactory relief results.
