Guiding Case No. 217: Cixi Bo[REDACTED] Plastic Products Co., Ltd. v. Yongkang Lian[REDACTED] Industrial & Trading Co., Ltd., Zhejiang Tian[REDACTED] Network Co., Ltd., et al.
(dispute over infringement of utility model patent rights)    

Keywords: Civil Litigation, Infringement of Utility Model Patent Rights, Reverse Behaviour Preservation, Amount of Security, Fixed Security Deposit, Dynamic Security Deposit  

Key Points of Judgment  

1. In intellectual property infringement disputes involving e-commerce platforms, where the alleged infringer applies to the court for behaviour preservation measures requesting the e-commerce platform operator to restore links or services, the court shall review the application.  

2. If the alleged infringer’s product links or services are suspended due to suspected patent infringement, and the patent-in-suit is subsequently invalidated but related administrative litigation is pending, the alleged infringer may apply for behaviour preservation measures to restore the links or services. The court may grant the application if the alleged infringer provides preliminary evidence or reasonable explanation showing that failure to restore the links or services would cause irreparable harm (e.g., severe loss of market competitiveness or business opportunities), the harm to the patent holder from restoration would not exceed the harm to the alleged infringer from non-restoration, and public interest would not be compromised.  

3. When granting such behaviour preservation measures, the court may order the alleged infringer not to withdraw a certain amount from their e-commerce sales account as security until the judgment takes effect. The amount of security shall be reasonably determined by considering factors such as the patent holder’s compensation claim, potential losses to the patent holder if the preservation measures are erroneous, and the alleged infringer’s potential profits after restoration. The security may take the form of a fixed deposit plus a dynamic deposit.  

Basic Facts

Cixi Bo[REDACTED] Plastic Products Co., Ltd. (hereinafter referred to as "Bo[REDACTED] Company") was the patent holder of the utility model patents "Flat Mop Cleaning Tool with Novel Bucket Structure" (the "patent-in-suit") and "Mop Bucket for Wringing and Cleaning Flat Mops" (Patent No. 180.2). Bo[REDACTED] Company alleged that Yongkang Lian[REDACTED] Industrial & Trading Co., Ltd. (hereinafter referred to as "Lian[REDACTED] Company") infringed these patents by selling a "Mop Miracle" product on the e-commerce platform "Tian[REDACTED] Network," operated by Zhejiang Tian[REDACTED] Network Co., Ltd. (hereinafter referred to as "Tian[REDACTED] Company"). Bo[REDACTED] Company filed two lawsuits with the Ningbo Intermediate People’s Court of Zhejiang Province (hereinafter referred to as "Ningbo Court"), including the present case and another case (No. [2019] Zhe 02 Zhi Min Chu 368, hereinafter referred to as "Case 368"). The Ningbo Court froze Lian[REDACTED] Company’s Alipay account balance of RMB 3.16 million in each case upon Bo[REDACTED] Company’s application for property preservation.  

After Bo[REDACTED] Company filed a complaint with Tian[REDACTED] Company, Lian[REDACTED] Company submitted an appeal and provided an Intellectual Property Security Commitment Letter, agreeing to deposit RMB 1 million as security in its Alipay account and authorising Alipay and Tian[REDACTED] Company to freeze all sales revenue from its online store starting from 22:00 on 10 November 2019.  

The Ningbo Court ruled in the first instance that infringement was established, ordering Lian[REDACTED] Company to cease infringement and pay damages, and Tian[REDACTED] Company to remove or delist the infringing product links. On the same day, Bo[REDACTED] Company filed another complaint against the infringing product with Tian[REDACTED] Company, which subsequently removed the product links from "Tian[REDACTED] Network."  

Lian[REDACTED] Company appealed to the Supreme People’s Court. During the second instance, the patent-in-suit was invalidated by the China National Intellectual Property Administration, though Bo[REDACTED] Company indicated it would file an administrative lawsuit. On 5 November 2020, Lian[REDACTED] Company filed an application with the Supreme People's Court for a preliminary injunction (commonly referred to as "reverse behavior preservation" in Chinese judicial practice), requesting the court to order Tian[REDACTED] Company to immediately reinstate the applicant's product sales links on "Tian[REDACTED] Network". Lian[REDACTED] Company asserted that: (i) the allegedly infringing products constituted its "best-selling items"; (ii) with the imminent "Double 11" shopping festival, the failure to restore the links would cause it irreparable harm; (iii) as of the injunction application date, Case No. 368 remained pending at first instance, and the involved Patent No. 180.2 maintained valid status; and (iv) the aggregate frozen balance in Lian[REDACTED] Company's Alipay account amounted to RMB 15.6 million, of which RMB 8.28 million represented the total sales revenue from its online store since 22:00 on 10 November 2019, which Lian[REDACTED] Company had consented to freeze.

Judgment 

The Supreme People’s Court issued Civil Ruling (2020) Zui Gao Fa Zhi Min Zhong 993 on 6 November 2020: 1. Tian[REDACTED] Company shall immediately restore the sales links for the alleged infringing products on "Tian[REDACTED] Network." 2. RMB 6.32 million in Lian[REDACTED] Company’s Alipay account shall remain frozen until the judgment takes effect. 3. From the date of link restoration until the judgment takes effect, if 50% of Lian[REDACTED] Company’s post-restoration sales exceed RMB 6.32 million, the excess amount shall be retained in its Alipay account and not withdrawn.  

Judgment’s Reasons  

The Supreme People’s Court held that:  

1. Lian[REDACTED] Company’s Standing to Apply for Behaviour Preservation

E-commerce platform operators are obligated to take down infringing links upon receiving prima facie evidence from rights holders. However, laws are silent on restoring links at the request of platform merchants. Article 100 of the Civil Procedure Law permits behaviour preservation applications not only by plaintiffs but also by defendants in e-commerce disputes, ensuring a balance among rights holders, platforms, and merchants.  

Given the uncertain validity of patents during litigation (e.g., invalidation or pending administrative appeals), and the urgency of avoiding irreparable harm (e.g., loss of market position), courts should review such applications. Here, the patent-in-suit was invalidated during the appeal, and Lian[REDACTED] Company had standing to seek link restoration.  

2. Factors for Granting Restoration:  

Courts must weigh:  

- Legal and factual basis: Utility model patents undergo no substantive examination, making them less stable. E-commerce platforms may require a patent evaluation report before delisting. Here, the patent was invalidated, and Lian[REDACTED] Company’s operations were severely impacted by frozen funds.  

- Irreparable harm: Delisting disrupts sales momentum, search rankings, and merchant ratings. The product’s high sales volume (e.g., 594,347 units by trial date) and timing ("Double 11") justified restoration to prevent irreversible losses.  

- Balance of interests: Restoration would not fully displace the patent holder’s products, and frozen funds mitigated potential harm.  

- Public interest: No evidence suggested the product harmed health, safety, or the environment.  

   - Other considerations: The parallel Case 368 involved a still-valid patent (No. 180.2), but its unresolved status and existing safeguards (e.g., frozen funds) did not preclude restoration.  

3. Determining the Security Amount:  

The amount must balance protecting the patent holder and avoiding undue burden on the alleged infringer. Here, the fixed deposit (RMB 6.32 million) covered Bo[REDACTED] Company’s compensation claims in both cases, while the dynamic deposit (50% of post-restoration sales) accounted for Lian[REDACTED] Company’s profits and costs.  

Relevant Provisions  

Article 103 of the Civil Procedure Law of the People’s Republic of China (2023 Amendment). (This case applies Article 100 of the Civil Procedure Law of the People’s Republic of China as amended in 2017).