The Cost Of "30 Million Yuan" Patent Litigation

A few days ago, Shenzhen Guangfeng Technology Co., Ltd. (688007. Sh, hereinafter referred to as "Guangfeng technology") announced that it had signed the patent license agreement and strategic cooperation agreement with Chengdu Jimi Technology Co., Ltd. (hereinafter referred to as "Jimi technology"), Guangfeng technology agreed to authorize Jimi technology to implement the designated patent during the duration of the agreement. Jimi technology will be divided into five years The company will pay a total of 25 million yuan of patent license fee every year; Guangfeng technology and Jimi technology will carry out strategic cooperation, Jimi technology will develop its laser ultra short focus projection products with the help of optical peak technology research and development technology, and give priority to purchase a certain amount of core component products from the company, with a strategic cooperation period of 5.5 years, and pay a one-time non recycling fee (NRE) 5 million yuan.

This means that the previous three-month round of patent litigation between the two sides has temporarily ended.

Patent litigation ushers in settlement

On the evening of June 2, Guangfeng technology, one of the first listed companies on the science and technology innovation board, announced that fengmi technology, its holding subsidiary, filed a lawsuit with the court over the patent infringement dispute with Jimi technology, holding that the relevant technical solutions adopted by Z6 and z6x, two star intelligent projection products of Jimi technology, involve the infringement of fengmi technology's "high brightness excitation method and light-emitting device based on light wavelength conversion" "Technology patent".

Subsequently, Jimi technology quickly filed a counterclaim. Guangfeng technology then filed a request for invalidation of all 16 invention patents in Jimi technology's prospectus.

At that time, Jimi technology had just been accepted by the scientific and technological innovation board IPO on May 8, and entered the inquiry stage on June 1. The "shuangmi" patent dispute immediately attracted attention.

The 21st century economic report reporter noted that the IPO progress of Jimi science and technology innovation board is still in the "inquired" stage. The latest update date is July 29, and the first round of inquiry response was disclosed.

According to the reply to the first round of inquiry disclosed on July 29, Jimi technology added in the "major litigation risk" of the prospectus that as of the signing date of this prospectus, the issuer had a large amount of pending litigation, mainly due to the dispute over infringement of invention patent right by fengmi technology, a subsidiary of Guangfeng technology holding company, and the second branch company of Jimi horizon Tianjin (the second defendant) 。

Fengmi technology filed a lawsuit with the third intermediate people's Court of Tianjin to order the defendant to stop immediately on the ground that the technical scheme adopted by Z6 series projector manufactured by the issuer completely fell into Guangfeng technology as the patentee, and the protection scope of the patent zl201110086731.9, which has been licensed by fengmi technology in the form of "exclusive license", filed a lawsuit with the third intermediate people's Court of Tianjin to order the defendant to stop immediately The infringement act is to stop manufacturing, selling and promising to sell Z6 series projectors which infringe the patent rights involved in the case, and immediately destroy the molds and equipment specially used for manufacturing the accused infringing products, and destroy the inventory infringing products; request the defendant 2 to stop selling and promise to sell the accused infringing products immediately; request the two defendants to compensate the plaintiff for the economic loss of RMB 45 million; and Reasonable expenses for rights protection totaled 1 million yuan, a total of 46 million yuan; the two defendants were requested to bear all the litigation costs of the case.

"The case is still in the stage of jurisdiction objection review, so it is impossible to rule out the possibility that the company will lose the lawsuit and claim compensation for the case. If the case is lost, there is also the possibility that the court will order the company to stop manufacturing, selling and promising to sell the products involved, which will have an adverse impact on the company's performance." Jimi technology said.

In addition, as for Guangfeng technology's request for invalidation of 16 invention patents of Jimi technology, as of July 27, 2020, Jimi technology has received 10 notification of acceptance of invalidation request, and the State Intellectual Property Office has granted the acceptance of invalidation claims of 10 invention patents of Guangfeng technology.

Now three months later, the two sides have moved from multiple rounds of patent war to a handshake.

After several rounds of patent litigation, why did the two sides finally choose to settle?

"The reconciliation between Guangfeng and Jimi technology is based on the win-win position of both sides and reached through friendly negotiation between the two sides." Guangfeng technology replied to the 21st century economic report on September 9. The reporter said that Guangfeng technology, as a scientific and technological innovation enterprise, firmly uses intellectual property rights to protect its technological research and development achievements for many years. However, the company has always adhered to the attitude of open cooperation, seeking common development with peers and jointly promoting the industry forward. Jimi technology and Guangfeng technology will adhere to the concept of complementary industrial advantages, scientific research and production cooperation, To carry out all-round and in-depth cooperation around the core components of laser ultrashort focus is conducive to the in-depth integration of scientific research and sales resources of both sides, and to jointly explore effective ways for the development of laser display industry.

What does it mean for Jimi technology that the patent dispute between the two sides ends in a settlement? Does it mean clearing the barriers in the IPO process?

In response, Jimi technology replied to the 21st century economic report on September 9 that "both sides have reached an agreement on the lawsuit, and the lawsuit has no substantial impact on the IPO process of Jimi technology."

Explanation of Jimi technology's "scientific and technological innovation attribute"

According to the reporter's previous interview with 21st century economic news, the patent litigation between the two sides has laid the groundwork since December last year.

According to the communication process provided by Guangfeng technology to the reporter, on December 18, 2019, Guangfeng entrusted a law firm to send a paper lawyer's letter to Jimi (notarized service) regarding the laser TV products and projector products manufactured, sold and promised to be sold by Jimi (notarized service), and listed in the lawyer's letter the product models suspected of infringement by Jimi and their infringement Patent information of more than 30 patents committed. According to the email information, Jimi signed for the lawyer's letter on December 19, 2019.

The records show that the two sides have communicated many times since. On April 23, Jimi put forward a proposal to grant 1 million user fees.

The current cooperation scheme pays far more royalties than the scheme proposed at that time.

In accordance with the license agreement, Jimi technology will pay a total of RMB 25 million per year to Jimi technology in accordance with the patent license agreement. In addition, Guangfeng technology and Jimi technology will carry out strategic cooperation. Jimi technology will develop its laser ultra short focus projection products with the help of the R & D technology of Guangfeng technology, and give priority to the purchase of core component products with a certain amount from Guangfeng technology. The strategic cooperation period is 5.5 years, and the one-time non Recycling Engineering (one-time engineering cost) of RMB 5 million will be paid.

Does this also mean that Jimi technology admits that there are problems with the relevant patents involved in the previous litigation, and that it needs to pay the royalties to Guangfeng technology?

In response, Jimi technology replied to the 21st century economic reporter that "the settlement between Jimi technology and Guangfeng is that both sides believe that mutual benefit is better than long-term litigation deadlock. In addition, this cooperation is a commercial cooperation based on the long-term development strategy and the concept of customer service. The two sides will adhere to the concept of complementary industrial advantages, scientific research and production cooperation, and carry out all-round and in-depth cooperation around the core components of laser ultrashort focus. "

There are also voices in the market that question whether the scientific and technological innovation attribute of Jimi technology conforms to the positioning of the science and technology innovation board.

In response, Jimi technology also replied that "the company's main business is the research and development, production and sales of intelligent projection products, while providing consumers with accessories products and Internet value-added services around intelligent projection. Focusing on the field of intelligent projection, the company has built a strategic development mode with the whole machine, algorithm and software system as the core

"From the aspects of main business, R & D investment and technological innovation achievements, the company and the science and technology innovation board are more in line with the scientific and technological innovation attributes." Jimi technology said.

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