I. Case Summary

The plaintiff Jing X Network Company and Jing X Communication Company (hereinafter referred to as “Jing X”) are the legitimate patent owners of the invention patent named "Cavity Microwave Device". This patent relates to a microwave device, which is an essential element in the field of mobile communication network coverage, whose performance significantly impacts overall network quality. The patent demonstrates high innovation and industrial application value.

The defendant Guangdong Hui X Communication Company (hereinafter referred to as “Hui X”) is a listed enterprise in the field of communication equipment. The plaintiff found that Hui X manufactured and sold multiple products without permission that were identical or substantially identical to the technical solution of the patent in dispute. Therefore, the plaintiffs filed a lawsuit for patent infringement, seeking a court order for Hui X to cease infringement and compensate for economic losses of RMB 40 million.

II. Key Disputed Issues

The key issues in dispute in this case are as follows:

1) Whether compensation may be determined based on the infringer’s profits when the rights holder is unable to accurately calculate its losses.

2) Whether the defendant’s refusal to provide accounting materials, as a listed company, constitutes obstruction of evidence.

3) Whether the court may reasonably estimate the profits generated from the infringement and award compensation exceeding the statutory limit, even in the absence of accounting records.

III. Summary of the Judgment

During the trial, a Jing X submitted evidence including a winning bid announcement, financial annual reports (2017-2019), annual reports of two peer listed companies, and expert witness testimony, to demonstrate the scale of profits obtained by the defendant as a result of the infringement. The plaintiff also requested the court to order Hui X to provide its account books and sales records. As a listed company, Hui X refused to submit these materials during both the first and second instance trials, citing reasons such as “internal restructuring” and “ongoing data cleaning.”

The Guangzhou Intellectual Property Court held in the first instance that Hui X had committed infringement and engaged in evidence obstruction, and therefore should bear the corresponding adverse consequences. According to Article 65 of the Patent Law, where it is difficult to determine the losses of the rights holder, the amount of compensation may be determined based on the infringer’s gains. Compensation calculated in this manner is not subject to the statutory limits (RMB 10,000 - RMB 1,000,000).

In this case, the court considered that the patented technology involved is of high value and generates significant social and economic benefits, and therefore deserves stronger protection to encourage technological innovation. Based on the annual report data, average sales profit margin (40%), and patent contribution rate (60%) provided by the plaintiff, the court estimated Hui X’s illicit gains at approximately RMB 51.9438 million. Accordingly, the court fully upheld the plaintiff’s claim for compensation of RMB 40 million and ordered Hui X to immediately cease the infringing acts.

Hui X appealed the first-instance judgment to the Supreme People’s Court. After retrial, the second-instance court concluded that the facts found in the original trial were clear and the application of law was correct. The appeal was therefore dismissed, and the original judgment was affirmed.

IV. Significance

1) Strengthened Mechanism for Obstruction of Evidence and Improved Damage Presumption Rules:

This case clarifies that companies cannot refuse to submit accounting records citing internal reasons. When a rights holder has provided preliminary evidence, the court may make a reasonable presumption based on the evidence obstruction rule, thereby offering a feasible method for calculating infringement damages.

2) Comprehensive Protection for High-Tech Patents:

The invention patent in question pertains to a core communications component, characterized by significant innovation and high industrial value. By fully recognizing its contribution rate and market benefits, the court achieved targeted protection and adequate redress for this high-value patent.

3) A Pragmatic Precedent for Exceeding the Statutory Compensation Cap:

By calculating damages based on the infringer's profits, this case awarded compensation that surpassed the statutory limit, demonstrating the judicial principle of value-based compensation in intellectual property protection.

4) An Institutional Warning on Listed Companies' Compliance Obligations:

The judgment emphasizes that listed companies bear a higher burden of proof in patent litigation and that non-cooperation will lead to adverse consequences from evidence obstruction. This serves as a strong deterrent and reference for other industry players.

As a landmark case concerning both the calculation of intellectual property damages and evidence obstruction, this dispute not only reflects key judicial principles but also provides a practical reference for patent owners in exercising their rights.