Gree vs Oakes: The ins and outs of the 160 million patents awarded

A Japanese compressor patent filed 20 years ago could stir up a huge litigation battle between China's two major appliance giants? This magic-sounding story has been playing out for more than three years. Recently, the case was pronounced in the first instance by the Ningbo Intermediate People's Court, and Oaks won the judgment of more than 160 million yuan, so the patent had to be paid attention again.

What is the validity of the patents involved in Oaks?

According to the public information inquiry, the patent involved in the case is an invention patent for a compressor, the applicant is Toshiba Carrier Co., Ltd. in Japan, and the inventors are Onoda Izumi, Kawabe Kō, and Kato Hisatsune. Toshiba Carrier applied for the patent in Japan in August 1999, was granted in August 2007, and the patent was invalidated in August 2019; the Chinese family patent application for the patent was filed on August 11, 2000, published on September 11, 2002, and the patent abstract states: "A compressor, including: a sealing housing connected to the suction tube and an exhaust tube; a compression mechanism unit set in the sealed housing; and a motor unit set in the sealed housing, The motor unit comprises a stator and rotor for driving the compression mechanism unit, in the motor unit to form a gas channel for gas discharged from the self-compression mechanism unit, and the ratio of the groove portion constituting the groove portion between the grooves in the stator core and the coil in the stator of the motor unit is set to 0.3 or greater. ”

Oaks itself does not produce compressor products, and its purchase of the patents involved in the case is obviously difficult to get rid of the suspicion of exclusive litigation. When Oakes bought the patent in question, the 20-year protection period of its Chinese family of patents would end in 2020, and it has long been invalid. It can be said that Oakes filed an infringement lawsuit with the court on the eve of the expiration of the patent. Faced with the challenge of Oaks, Gree has filed an invalidation request for the patent in question. After review, the State Intellectual Property Office declared invalid claims 3 and 10 of the patent in question, but the main rights of the patent in question, namely claims 1 and 2, remained valid. However, the outside world's doubts about the validity of the patents involved in the case have not stopped here, and the three most important doubts can be summarized as follows:

First of all, a considerable number of industry experts believe that the patent involved in the case belongs to the technology that has been widely used in the field of inverter compressors, and the scope of application is extremely large, which should be classified as a well-known technology. In Japan, the technology of well-known compressor manufacturers in the daikin, Mitsubishi, Panasonic and other industries has almost fallen into the scope of protection of the patents involved in the case. Moreover, unlike Chinese patent family members with multiple independent claims, the Japanese family patent of the patent in question was examined and only one claim was merged to retain one claim. In fact, in the more than 19 years from the initial application of the patent in question to the transfer to Oaks in 2018, Toshiba Carrier has never conducted any litigation or licensing activities on the patent, which may be a major reason why Oaks, in its patent assignment commitment with Toshiba Carrier, specifically emphasized that "the claim rights before the transfer of the patent on December 4, 2018 were transferred from Toshiba Carrier to Oaks".

Second, the way the patent in question is drafted has obvious loopholes. As mentioned above, in the patent in question, "the ratio of the total area of the groove part constituting the groove part between the grooves in the stator core and the coil in the stator of the motor unit to the entire area of the gas channel is set to 0.3 or greater". However, the patent in question does not elaborate on why the ratio here is set to "0.3 or greater"; and there is also much controversy in the industry as to whether this ratio setting is related to the solution of technical problems, and whether the same technical effect can be achieved when other ratio settings are made, and even the definition and scope of the so-called "slot part" itself.

Finally, there are also some issues that need to be explained with regard to the invalidation examination decision of the patent in question. It is reported that Gree provided relatively complete and convincing public evidence of use in the request for invalidation of the patent in question, such as user information, purchase and sale vouchers, video recordings of the whole process of dismantling the air conditioner chassis and compressor, and the qualifications of the testing unit and the test results, etc., to prove that the patent involved in the case has lost its novelty. However, the examiner denied the validity of the above evidence provided by Gree on the grounds that the existing dismantling method might lead to inaccurate measurement results and that non-destructive measurement should be used. However, it is a common practice in the industry to use the whole video of the product dismantling as public evidence for the use of the patent, but the examination department did not make a clear reason as to why it did not accept the video evidence provided by Gree in the case. In addition, the ratio of the groove part to the gas channel area in the compressor product is determined by non-destructive measurement, which is currently technically unworkable. If this issue is not convincingly explained, it will leave potentially subversive loopholes in either decision.

Can a lawsuit save Oakes?

As one of the main brands in the field of domestic home appliances, Oaks has been worried about many things in recent years. Whether it is judicial litigation or market performance, Oaks's performance in recent years has not been satisfactory. Among them, the protracted feud between Oakes and Gree is the most interesting. Prior to this patent infringement case, Gree had maintained a record of total victory over Oaks. From this, it is not difficult to understand Oakes's eagerness to win back a city by buying patents and initiating lawsuits.

The patent infringement dispute between Gree and Oaks dates back to 2015. From 2015 to 2017, Oakes was sued by Gree for 15 patent infringements. In particular, in January 2017, Gree accused Oaks of manufacturing, selling, and promising to sell eight air conditioners, including KFR-35GW/BpTYC1+1, of repeatedly infringing on Gree's patent rights in bad faith, requesting that Oaks be ordered to stop the infringement, destroy inventory and molds, and claim economic losses of 40 million yuan and 6 million yuan in infringement damages. On April 20, 2018, the Guangzhou Intellectual Property Court rendered a first-instance judgment in support of Gree's litigation claims. On August 30, 2019, the second-instance judgment of the Guangdong Provincial Higher People's Court upheld the original judgment of the first instance. The case was selected as one of the "Top Ten Intellectual Property Trial Cases in Guangdong Province in 2019", with a total compensation amount of 46 million yuan, which also refreshed the record of patent infringement compensation in the home appliance industry and became a typical case of repeated and malicious infringement of intellectual property rights.

At the same time, Oakes also continued to sue and fight back gree.

In July 2017, Oaks sued Gree's "Painting Era Air Conditioner" for patent infringement, so he sued Gree in court. In the end, the court pronounced a judgment: Gree immediately stopped manufacturing, selling, and promised to sell the infringing painting era air conditioner, and destroyed the infringing products in inventory; Gree compensated Oaks for economic losses of 10 million yuan and more than 43,000 yuan of reasonable rights protection costs incurred to stop the infringement. It is reported that the court estimated the sales volume of the 17,000 yuan infringing product based on the sales of a best-selling split air conditioner of about 2,000 yuan in Gree. Gree also asserted the prior art defense, saying that it used the prior art, but it was not accepted by the court of first instance, and the final patent was invalidated by the Patent Reex Board because it was not novel, and the court of second instance rejected Oakes' lawsuit. The case also attracted widespread attention in the industry at the time, and it was a sensation.

What is certain is that the technical and legal disputes caused by the dispute between Gree and Oaks will inevitably not stop with the release of the judgment, and the entanglement of the two will continue for a period of time in the future. More importantly for Oakes, no matter what the final outcome of the dispute is, it will not change the dilemma he is currently facing; if he wants to reverse the decline, Oakes will have to find another way. This also profoundly enlightens large enterprises in all fields of technology: only independent research and development and independent technology can bring enterprises the most solid sense of security and gain.

Source: INTELLECTUAL PROPERTY FINANCE

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