In December of 2015, the China Supreme Court made a final judgment by which a 13-years patent war between Honda Motor and Shuanghuan Auto drew a full stop.      

In September of 2003, Honda Motor continuously sent 8 Cease & Desist letters to Shuanghuan Auto warning the latter of infringement to Hongda’s Chinese design patent for its “C-RV” car.  Later, Honda also sent warning letters to two of Shuanghuan’s distributors for stopping selling of the accused cars made by Shuanghuan.  This is the first stageof the case.         

Shuanghuan tried to negotiate with Honda and sent a design-around model to Honda for FTO confirmation.  Shuanghuan also asked for a help from the local Government to find a way for settlement with Honda.  However, Honda denied all Shuanghuan’s attempts.         

In October of 2003, Shuanghuan sued Honda before a local court for a Declaratory Judgment while Honda lodged a civil litigation before the Beijing High Court against Shuanghuan’s patent (design) infringement.  In January of 2004, Honda upgraded the war by sending warning letters to all Shuanghuan’s distributors over China.  

However, the warning letters were not drafted in detail but merely a generalized statement.  This is the second stage of the case.

From 2003 to 2008, Shuanghuan kept adding its litigation request asking Honda to pay the loss due to the wrong litigation.  During this period, Shuanghuan won the first instance of the civil litigation while had the Honda’s design patent declared invalid by the Patent Re-examination Board (PRB) of the Patent Office.

After a series of appeals both on the side of civil litigation against infringement and on the side of administrative litigation against the PRB’s invalidation decision, Honda finally had thedesign patent maintained valid on 2010 but lost the civil action.  On December 8, 2015, the China Supreme Court made a final judgment in which Shuanghuan’s product was not infringing Honda’s design patent.  In stead, Honda had to pay Shuanghuan 16 million RMB for the loss due to Honda’s inappropriate warning action.

According to the Supreme Court’s opinion, in the above first stage, Honda’s behavior of sending warning letters to Shuanghuan’s distributors were on the legit.  However, in the second stage, Honda sending warning letters to all Shuanghuan’s distributors in China was “inappropriate” and these actions were substantially abusing of warning tools whichcaused an unfair competition. Honda had to take a responsibility for losses due to the unfair competition.  

From this case, one could draw such a conclusion that, before lodging a civil litigation for patent infringement, reasonably sending a Cease & Desist letter to the accused or its distributors should be relatively safer.  Then, after the litigation is started, the plaintiff should be very careful about any enlarged warning actions which could possibly lead to a big loss, especially when the defendant wins the case eventually. Moreover, warning letters should be drafted in very detail and it should particularly tell the recipient why a patent infringement isestablished.  Otherwise, Honda’s tragedy would come again.