Enforcement of Design Patent

In 1998, Pegasus Sewing Machine MFG Co., Ltd (hereafter referred to as "Pegasus"), a Japanese sewing machine manufacturer, filed a design patent application in China entitled "sewing machine" and the application was granted one year later. In 2000 and 2001, Pegasus found the "FY2000A" series of overlock sewing machine exhibited by its Chinese competitor, China Feiyue Group Co., Ltd (hereafter referred to as "Feiyue"), on two international exhibitions held in Shanghai infringed its design patent. In January 2002, Pegasus bought an overlock sewing machine of Feiyue in Beijing. A notary public was invited to notarize the transaction.

In August, 2002, Pegasus lodged an infringement lawsuit against Feiyue with the Hangzhou Intermediate People's Court in Zhejiang Province, after sending cease-and-desist letters to Feiyue without satisfactory answer. Upon request of the plaintiff, the court seized two alleged infringing machines for preserving evidence.

In September 2002, Feiyue filed an invalidation petition with the Patent Reexamination Board (PRB) against Pegasus's design patent. Accordingly, the Hangzhou court stayed the infringement procedures.

The design patent of Pegasus was declared invalid by the PRB in March 2003. This decision was upheld by the Beijing No. 1 Intermediate People's Court in 2004 when Pegasus appealed the PRB's decision.

Not satisfied by the decision, Pegasus appealed again to the Beijing High People's Court at the beginning of 2005. On July 28, 2005, a decision was made by this court overturning the decisions made by the PRB and the Beijing No. 1 Intermediate People's Court.

After issuance of the final decision, the Hangzhou court revived the infringement procedures. On February 10, 2006, the court issued its judgment in which it ruled that Feiyue infringed Pegasus's design patent and ordered Feiyue to stop manufacturing and selling the product. Damages of 300,000 yuan (US$ 37,000), compared with five million yuan (US$ 610,000) claimed by the plaintiff, was granted. The evidence obtained in Beijing was accepted by the court.

In May 2000, Feiyue field a design patent application entitled "Very High Speed Overlock Sewing Machine (FYO2000A)" and the application was granted in December 2000. Pegasus filed an invalidation petition with the PRB in January 2002 against the design patent on the ground of novelty. The design patent was announced invalid by the PRB.