Jacob Schindler

In what appears to be the first SEP-based injunction issued by a Chinese court, the Beijing IP Court on Wednesday morning ordered Sony Mobile to halt manufacture and sale of 35 mobile devices. The Japanese company was found to have infringed a patent held by Xi’an Iwncomm (sometimes known by its Chinese name Xi’an Xidian Jietong) that is relevant to the WLAN Authentication and Privacy Infrastructure (WAPI) standard, a Chinese counterpart to WiFi.

According to Xinhua, the case was filed back in 2015, but negotiations between Sony and Iwncomm over the patent stretch back to at least 2009. The injunction is set to affect 35 Sony models, including the Xperia Z1 and Xperia Z2 in the country. China’s Lexfield Law Offices has helpfully translated the court’s reasoning for granting the injunction, as part of an analysis you can read here:

The court should consider whether the parties had fault in prior licensing negotiation in deciding whether to grant an injunction. The patent in dispute is a core patent of the WAPI technology, and is essential to a national compulsory standard. In the negotiations, the plaintiff explained the patented technology relevant to WAPI and provided a list of its patent and a draft license agreement. Based on this, the defendant should be able to determine if the WAPI software within its mobile phone in dispute is covered by the claims of the patent in dispute, without the need for the plaintiff to provide a claim comparison chart. Thus, the defendant's request for the plaintiff to provide the claim chart was unreasonable. Meanwhile, since a claim chart would include the patent owner's opinions and arguments, the plaintiff was reasonable to ask the defendant to sign a non-disclosure agreement before such a claim chart were to be provided.

The court has also ordered Sony to pay 9.2 million yuan ($1.3 million) in damages. This method used to calculate the award was reportedly three times the offered royalty rate, with Iwncomm submitting as evidence four licence agreements with third parties as well as Sony’s sales data based on permits it has received from China’s Ministry of Industry and Information. Reportedly, factors including: “the technical contribution of the patent, the fact of being adopted into national mandatory standard and the bad faith of the defendant during the communication” were all taken into account.

The WAPI standard, which was designed as a domestic alternative to WiFi, has been a controversial one. Attempts in 2003 to require foreign firms to adopt the standard sparked a trade dispute with the United States, and the ISO rejected WAPI in favour of IEEE-developed WiFi a couple of years later. The WAPI protocol is almost never used, including in China, but it is still a mandatory testing criteria for connected mobile devices sold in China. That means if your mobile device doesn’t support WAPI functionality, the government won’t approve its sale in China. Iwncomm was one of the Chinese companies that pioneered the WAPI standard, and according to an article published in 2014 has filed hundreds of patents for the technology, 90% of which are invention patents.

There is a parallel battle going on over the patent’s validity. Apple filed an invalidation request to SIPO in May 2016, and oral hearings were heard in October. But the Patent Reexamination Board reportedly upheld the patent-in-suit in a ruling made just last month. You can bet Apple will appeal that ruling, setting up another showdown in the Beijing IP Court.

The infringement case, too, will almost certainly be appealed to the Beijing Higher People’s Court. This dispute looks set to continue for some time, but this particular ruling has sent a major signal to the patent market: at least in some cases, Chinese courts are willing to grant injunctions based on SEP rights.