In 2004, the applicant, a company that sells sports equipment, entered into a patent licensing agreement with the defendant, a manufacturer of sports equipment. In accordance with its product and licensing agreement („Agreement“), the defendant was licensed to incorporate the plaintiff`s patented technology into the defendant`s elliptical machines. In return, the defendant agreed to pay the applicant a 5% royalty on the sales it received for products using the applicant`s patents. Some of the complainant`s patents were established in the United States, while others were foreign patents, including Chinese patents. The court expressly rejected the defendant`s argument that the payment of royalties to the applicant would be contrary to the „patent abuse doctrine“. As the United States Supreme Court in Brulotte v. Thys Co., 379 U.S. 29 (1964), states that „the use of a licensing agreement that goes beyond the expiry date of the patent is illegal“ and „[c] ontracts that require a licensee to pay royalties on a product after the patent of that product expires are unworkable.“ If your English language and Chinese language parts are silent, which portions are controlled, the Chinese language part will control arbitration procedures in Chinese courts and in China. In real life, if the English part of your joint venture contract says you receive 10 percent of the joint venture`s revenue, but the Chinese part says you will receive 10 percent of the profits (which will of course be much less than revenue), you have no legal basis to claim just over 10 percent of the profits. It is not surprising that these are joint venture agreements and licensing agreements in which our Chinese lawyers most often see such a sensible dichotomy between the English and Chinese parts of the contract. In this case, lawyers should carefully consider the scope of licensing agreements made by clients, particularly where licensing agreements concern both U.S. and foreign patents and their foreign language translations. As noted above, the parties must be careful not to violate existing licensing agreements.
Failure to comply with such contractual agreements can lead to costly and lengthy litigation and may be financially disadvantageous to the loser. However, the Brussels court also found that when a licensing agreement covers several patents, „royalties can go as far as the expiration of the last patent covered by the agreement between the parties.“ This exception to the doctrine of patent abuse is also referred to as „binding“ or „bundling.“ In finding that the doctrine of patent abuse is not applicable, the Tribunal found that the products at issue were under the Chinese patent at the time the U.S. patent expired. There is a growing need to translate licensing agreements from English to Chinese. Licensing agreements are often concluded when a company wishes to use products or technologies protected by another company`s patent. In our increasingly globalized economy, licensing agreements may include several patents, not all of which cannot be established in the United States. After the defendant found that the defendant was violating the parties` licensing agreement, the court ruled in favour of the applicant and against the defendant for an amount of 1,782,508 $US.
