China Patents: Judicial Determination Pathway of “Bad Faith” in Patent Infringement Litigation - No. 96 (2026) Supreme People’s Court Intel. Prop. Civ. Final Civil Judgment
Published 21 May 2026
Sarah Xuan
In April 2026, the Intellectual Property Court of the Supreme People’s Court rendered the No. 96 (2026) Supreme People’s Court Intel. Prop. Civ. Final civil judgment regarding the dispute over infringement of invention patent rights and the dispute over liability for damages caused by the bad faith initiation of intellectual property litigation between Hangzhou Luweimei Daily Chemical Co., Ltd. and Unitree Robotics Co., Ltd.. The judgment dismissed Luweimei Company’s appeal and sustained the first-instance judgment made by the Hangzhou Intermediate People’s Court of Zhejiang Province. Regarding the background of the case, the essential summaries of the adjudication, and the basic content of the judgment, reference may be made to the previously published article, The Supreme People’s Court Confirmed a Case of Bad Faith Patent Litigation in a Dispute Over Robo-Dogs.
In patent infringement litigation, the initiation of a lawsuit by a rights holder based on valid patent rights constitutes, in principle, the exercise of the exclusionary effect of patent rights; however, the exercise of patent rights does not naturally possess inherent legitimacy. Patent enforcement may degenerate into an abuse of rights, particularly when the accused technical solution conspicuously lacks the essential technical features defined by the claims, the rights holder fails to complete a minimum standard of infringement comparison, the claims for relief are significantly disproportionate to the evidentiary foundation, and the procedural measures possess a clear coercive function.
This article will first outline the normative and jurisprudential foundations regulating bad-faith litigation within China’s legal system. Secondly, it will establish the boundary principles distinguishing “legitimate enforcement of rights” from “bad-faith vexatious litigation”. Next, it will deconstruct the behavioral pattern recognition framework applied by the Supreme People’s Court in such reviews. Finally, grounded in the adjudicative logic of Case No. 96, it will output actionable compliance and countermeasure guidance for accused enterprises, as well as enterprises confronting critical milestones in the capital markets. I. Normative Foundations The legal regulation of bad faith initiation of intellectual property litigation is governed by a triple-restraint structure collectively composed of fundamental principles of civil law, the duty of good faith in civil litigation, the boundaries governing the exercise of patent rights, and general tort liability. This structure specifically includes:
(1) The underlying restrictions of fundamental principles of civil law: The principle of honesty and good faith established in Article 7, the public order and good customs principle in Article 8, and the rule prohibiting the abuse of rights in Article 132 of the Civil Code constitute the absolute boundaries for the exercise of civil rights.
(2) The procedural constraints of the principle of good faith in litigation: The principle of good faith in litigation established in Article 13 of the Civil Procedure Law provides the procedural law basis for courts to evaluate a party’s abuse of the right to bring an action, abuse of the preservation system, and fabrication or exaggeration of the facts of infringement.
(3) The direct application of honesty and good faith in patent law: Paragraph 1 of Article 20 of the Patent Law explicitly stipulates that the application for patents and the exercise of patent rights shall adhere to the principle of honesty and good faith, and patent rights shall not be abused to damage public interests or the legitimate rights and interests of others. This article provides a direct and concrete applicable foundation for the principle of honesty and good faith in the field of patent law.
II. Boundary Principles Patent infringement litigation involves a certain degree of technical complexity and legal uncertainty. Issues such as claim construction, the application of the doctrine of equivalents, and prior art defenses may all lead to the defeat of a rights holder. Therefore, the determination of bad-faith litigation cannot simply equate an unfavorable litigation outcome with subjective bad faith.
However, the valid existence of patent rights does not automatically confer legitimacy upon infringement allegations that lack factual and legal bases. The fundamental boundary between legitimate enforcement of rights and bad-faith litigation lies in whether the rights holder has fulfilled a reasonable duty of prudent care that is commensurate with its professional capacity and objective conditions. When the foundation of rights exhibits manifest flaws and a substantial disconnect exists within the evidence of infringement, yet the rights holder nonetheless forcibly initiates or maintains litigation procedures, and its litigation strategy exhibits distinct characteristics of procedural coercion, the focus of judicial scrutiny must shift from the protection of the exercise of rights to the regulation of the abuse of rights.
III. Judicial Review Framework In conjunction with the adjudicative and trial practices of the Supreme People’s Court, the review of bad faith initiation of intellectual property litigation focuses on a structured penetration system across the following five core dimensions:
(1) Review of the foundation of rights The court focuses not only on whether the patent right is formally in a valid state, but more importantly on the rights holder’s subjective awareness regarding the stability of the right. For example, whether the rights holder clearly knew that the patent possessed major defects in ownership, concealed unfavorable patent right evaluation reports, or still initiated litigation based on a patent that had already been declared invalid or terminated due to non-payment of annual fees.
(2) Review of factual basis A patentee initiating an infringement lawsuit must complete at least a preliminary infringement comparison against the accused technical solution. For complex technical products sold publicly, relying solely on promotional brochures or webpage screenshots is generally insufficient to support a complete comparison of technical features.
In the determination of infringement under the doctrine of equivalents, the standard of “substantially the same means, performing substantially the same function, achieving substantially the same result, and capable of being associated by a person of ordinary skill in the art without creative labor at the time the infringement occurred” must be strictly adhered to. A rights holder cannot substitute the comparison of specific technical features with highly abstract functional similarities, such as generalizing a “gas sensor” into an “environmental sensing device” to claim that a LiDAR and a gas sensor constitute equivalents; nor can a rights holder forcibly demand rights through the broadening and generalization of generic concepts, as this would otherwise undermine the certainty and predictability of the boundaries of patent rights.
(3) Review of subjective bad faith The determination of subjective bad faith generally adopts a method of presumption based on objective facts. In this category of review, the “warning effect of prior judgments” carries extremely high probative value. If a prior judgment has already determined non-infringement regarding identical technical features of the same patent or similar products, the rights holder bears an exceptionally high duty of prudent care in subsequent litigation. In the absence of substantial new evidence, if the rights holder continues to file suit by deploying an infringement theory already judicially rejected, its subjective state of “knowing or ought to have known” can be directly presumed.
(4) Review of objective conduct In the determination of bad-faith litigation, the review of objective conduct focuses on the structure of the rights holder’s claims for relief, the intensity of the litigation measures, and whether a distinct imbalance exists between the two. For instance, whether procedural or substantive claims such as requests for preservation, auditing, or injunctions possess sufficient factual bases, whether the rights holder has provided corresponding preliminary evidence, and whether the relevant measures are truly necessary for ceasing infringement, preserving evidence, or compensating for losses. If a rights holder, under circumstances where the possibility of infringement remains unclear and the evidentiary foundation is conspicuously weak, nevertheless puts forward high-intensity requests sufficient to cause a major impact on the opposing party’s production and business operations, while controlling its own litigation costs through a low damages claim, such conduct may reflect that its true purpose has deviated from legitimate rights enforcement.
IV. Core Behavioral Patterns of Bad-Faith Litigation in Judicial Practice Through a comparison of recent cases, judicial practice typically categorizes the relevant typical cases into the following three core behavioral patterns:
(1) Abuse of preservation combined with flawed foundation of rights pattern Representative Cases: 1. The patent bad-faith litigation case involving a “Driving Recorder” — No. 869 (2023) Supreme People’s Court Intel. Prop. Civ. Final. 2. The utility model patent bad-faith litigation case involving a “Target Flowmeter” (Guiding Case No. 278) — No. 1861 (2022) Supreme People’s Court Intel. Prop. Civ. Final.
Under this pattern, despite clearly knowing that its patent right suffers from major stability flaws (such as termination due to non-payment of annual fees, or clear awareness that the ownership of the right is in dispute), the rights holder continuously initiates multiple patent infringement lawsuits and frequently applies for high-intensity property preservation.
As a guiding case, the “Target Flowmeter” utility model patent bad-faith litigation case provided principled guidance on the review of bad-faith litigation: “The so-called bad-faith litigation generally refers to a lawsuit intentionally initiated by a party lacking any legal or factual basis for the purpose of obtaining illegal or improper benefits, or causing the counterparty to suffer losses. The essence of bad-faith litigation is a tortious act, characterized by the abuse of rights rather than the legitimate exercise of rights, and aimed at acquiring illegal or improper benefits, or causing harm to the counterparty, rather than seeking remedies for rights conferred by law. The bad-faith initiation of intellectual property litigation shall satisfy the following elements: 1. The lawsuit initiated conspicuously lacks a foundation of rights or factual basis; 2. The plaintiff clearly knew this; 3. It caused damage to another person; 4. A causal relationship exists between the initiated lawsuit and the damaging results.”
Furthermore, the judgment pointed out: “Because of the third and fourth lawsuits initiated by Quanzhou Company, Fujian Technology Company had to incur expenses such as attorney’s fees to respond to the litigation; Fujian Technology Company has adduced evidence showing that in multiple bidding opportunities, the bidding parties required the non-existence of intellectual property disputes, which could cause it to lose bidding opportunities and result in losses; moreover, Quanzhou Company adopted property preservation measures against Fujian Technology Company in the fourth lawsuit, which would also cause losses to Fujian Technology Company. The aforementioned losses were all triggered by Quanzhou Company’s litigation, constituting tortious damages.”
In this case, the court did not evaluate the application for property preservation itself as naturally constituting bad-faith litigation. Instead, under the premise that the foundation of rights was conspicuously absent, the court examined the high damages claim in combination with the preservation behavior of freezing the large-amount property of the counterparty. It held that this litigation arrangement possessed the distinct characteristic of exerting pressure on the counterparty through judicial procedures and damaging its legitimate rights and interests, thereby becoming an important factor in determining subjective bad faith and damaging consequences.
(2) Bad faith fabrication of evidence combined with commercial disparagement pattern Representative Case: The utility model patent bad-faith litigation case involving a “Guide Rail” — No. 2586 (2022) Supreme People’s Court Intel. Prop. Civ. Final.
In this case, under circumstances completely devoid of normal evidence of infringement, the rights holder proactively provided technical drawings to the counterparty, induced the counterparty to manufacture a sample, and subsequently turned around to initiate litigation using said sample as evidence of infringement, while simultaneously sending warning letters on a large scale to the counterparty’s downstream customers.
The court pointed out in its judgment: “Guangdong Materials Company initiated a patent infringement lawsuit based on evidence of infringement obtained through inducement, which means it clearly knew that its lawsuit conspicuously lacked a factual basis; moreover, during the litigation process, it raised claims for high damages, applied for evidence preservation, and sent infringement warning letters to relevant customers. Its conduct clearly exceeded the reasonable limits of legitimate enforcement of rights, possessed the illegal purpose of disrupting, influencing, and suppressing competitors through litigation, and carried relatively manifest subjective bad faith. Furthermore, it caused losses to Zhongshan Metal Products Factory and Li due to their expenditure on attorney’s fees; therefore, the conduct of Guangdong Materials Company constitutes the bad faith initiation of intellectual property litigation.”
(3) Capital market critical milestone litigation pressure pattern Representative Cases: 1. The utility model patent bad-faith litigation case involving a “Finished Tank” — No. 2044 (2023) Supreme People’s Court Intel. Prop. Civ. Final. 2. The invention patent bad-faith litigation case involving a “Luo Han Guo Extract” preparation method — No. 1353 (2021) Supreme People’s Court Intel. Prop. Civ. Final.
The focus of the confrontation in this category of cases is highly concentrated during the sensitive periods when defendant enterprises launch IPOs or major financing. In handling this category, the judiciary displays an extremely precise and distinguishing attitude: in the “Finished Tank case,” the rights holder deliberately concealed an unfavorable patent right evaluation report and suddenly initiated a lawsuit claiming excessively high damages at the critical milestone of the defendant’s listing, which was determined to constitute bad-faith litigation; conversely, in the “Luo Han Guo Extract case,” although the timing of the lawsuit was similarly pinned to the counterparty’s listing period, the court upheld the boundary of judicial modesty and refrained from finding subjective bad faith, because the patent held by the rights holder remained valid and a preliminary infringement comparison and demonstration had been performed prior to the lawsuit, even though the case was subsequently withdrawn.
In the judgment of Case No. 2044 (2023) Supreme People’s Court Intel. Prop. Civ. Final, the court mentioned: “In this case, Jin Company disregarded the litigation risks brought about by the instability of its own foundation of rights, and under circumstances where it was relatively easy to determine whether the accused infringing product fell within the scope of protection of the patent involved, and where it knew the actual value of the accused infringing product, it nevertheless initiated the infringement litigation involved in this case during the listing process of Ling Company, and proposed an amount of compensation that obviously could not be supported but was capable of affecting Ling Company’s listing process.”; “The unstable foundation of rights, the dishonest act of concealing the patent right evaluation report, the relatively easy determination of infringement, the conspicuously excessive amount of compensation claimed, the coincidental timing of the lawsuit, and the losses suffered by Ling Company—the combination of the aforementioned factors is sufficient to indicate that Jin Company’s initiation of the patent infringement lawsuit in this case was not a legitimate enforcement of rights, but rather intended to delay Ling Company’s listing process and damage Ling Company’s rights and interests through said litigation, and should be determined to constitute bad-faith litigation.”
V. Practical Insights in Light of Case No. 96 When an accused enterprise faces an intellectual property blockade possessing such characteristics of bad faith, the accused enterprise (especially an enterprise intending to list) should not respond passively, but should rapidly construct an evidentiary chain for defense and counterattack:
(1) Prioritization of technical defense The objective prerequisite for the establishment of bad-faith litigation is that the original lawsuit conspicuously lacks a factual basis. In patent infringement disputes, the accused enterprise should position a solid technical defense as its primary priority, proving that clear and substantial technical differences exist between the accused technical solution and the claims of the patent involved. Particularly when involving the application of the doctrine of equivalents, the enterprise should accurately identify whether the plaintiff has engaged in overstepping behavior that forcibly expands the scope of patent protection through the generalization of generic concepts.
(2) Evidence lock-in Retrieve the plaintiff’s historical litigation track record, search whether prior losing cases targeting similar products exist, whether invalidation decisions that were dismissed exist, and whether circumstances of concealing patent right evaluation reports exist, thereby locking in its subjective state of “clearly knowing the claim is groundless.”
(3) Review of procedural abuse The accused enterprise should review whether a manifest imbalance of rights exists within the structure of the plaintiff’s claims for relief. In typical behavioral patterns of bad-faith litigation, the plaintiff frequently adopts an asymmetric tactic of “extremely low cost of litigation combined with extremely high procedural pressure,” an arrangement that has clearly exceeded the necessary limits and the principle of proportionality for legitimate rights enforcement. This category of evidence is especially vital for revealing to the court the plaintiff’s true purpose of procuring improper benefits outside of the litigation.
(4) Capital market compliance response When an enterprise intending to list or finance encounters an intellectual property blockade during a sensitive period, it must immediately launch a dual-track linkage mechanism combining capital market compliance and litigation response. At the levels of information disclosure and regulatory inquiries, the enterprise should not merely passively explain that the litigation “does not constitute a material impact,” but should promptly organize the sponsor institution, intermediaries, and litigation attorneys to form a specialized legal explanation document.
(5) Whole-process retention of traces for proof of damages From the date of receiving the complaint, the preservation ruling, or the attorney’s letter, the accused enterprise should establish independent loss records concerning direct litigation expenditures such as attorney’s fees, notarization fees, notary purchase fees, patent agency fees, and official fees for invalidation procedures. For enterprises intending to list or engaged in foreign contract manufacturing, greater attention should be paid to fixing indirect losses stemming from the drain of commercial opportunities. According to the latest adjudicative rule established in Case No. 869 (2023) Supreme People’s Court Intel. Prop. Civ. Final, the reasonable expected interest losses suffered by an accused party due to proactively abandoning relevant commercial opportunities or rejecting customer orders to handle bad-faith litigation conduct and hedge legal risks bear an appropriate causal relationship with the bad-faith litigation, and the bad-faith plaintiff shall provide compensation.
(6) Selection of countermeasure pathway (Counterclaim is superior to a separate action) When encountering bad-faith litigation, the accused party should preferentially choose to directly file a counterclaim within the original infringement litigation, rather than waiting for the judgment of the original case to take effect before initiating a separate action. Filing a counterclaim within the original case can compel the trial judge, within the same adjudicative space-time and the same set of courtroom debates, to intuitively contrast the plaintiff’s technical comparison against its bad-faith procedural coercive behavior. This not only immensely reduces the defendant’s communication and litigation costs, but can also better achieve the optimal outcome of “resolving two claims within a single case.”
Conclusion The No. 96 (2026) Supreme People’s Court Intel. Prop. Civ. Final civil judgment rendered by the Intellectual Property Court of the Supreme People’s Court, together with the adjudicative logic established by the Supreme People’s Court in landmark cases such as the “Driving Recorder case,” the “Target Flowmeter case,” and the “Finished Tank case” in recent years, constructs the judicial determination pathway for “bad faith” in patent infringement litigation. It also provides a clear countermeasure paradigm for accused enterprises, particularly technology-oriented enterprises and enterprises intending to list, to handle bad-faith intellectual property litigation.
Simultaneously, the judgments in these cases demonstrate that intellectual property law protects authentic innovation and legitimate rights enforcement, and patent rights should not be deployed as tools to execute litigation coercion, competitive disruption, or capital market blockades. For innovative enterprises in stages of rapid development, the adjudicative logic reflected in these precedents not only provides legal weapons to resist bad-faith litigation, but also contributes to maintaining a fair competitive order and a stable, predictable environment for innovation.
In patent infringement litigation, the initiation of a lawsuit by a rights holder based on valid patent rights constitutes, in principle, the exercise of the exclusionary effect of patent rights; however, the exercise of patent rights does not naturally possess inherent legitimacy. Patent enforcement may degenerate into an abuse of rights, particularly when the accused technical solution conspicuously lacks the essential technical features defined by the claims, the rights holder fails to complete a minimum standard of infringement comparison, the claims for relief are significantly disproportionate to the evidentiary foundation, and the procedural measures possess a clear coercive function.
This article will first outline the normative and jurisprudential foundations regulating bad-faith litigation within China’s legal system. Secondly, it will establish the boundary principles distinguishing “legitimate enforcement of rights” from “bad-faith vexatious litigation”. Next, it will deconstruct the behavioral pattern recognition framework applied by the Supreme People’s Court in such reviews. Finally, grounded in the adjudicative logic of Case No. 96, it will output actionable compliance and countermeasure guidance for accused enterprises, as well as enterprises confronting critical milestones in the capital markets. I. Normative Foundations The legal regulation of bad faith initiation of intellectual property litigation is governed by a triple-restraint structure collectively composed of fundamental principles of civil law, the duty of good faith in civil litigation, the boundaries governing the exercise of patent rights, and general tort liability. This structure specifically includes:
(1) The underlying restrictions of fundamental principles of civil law: The principle of honesty and good faith established in Article 7, the public order and good customs principle in Article 8, and the rule prohibiting the abuse of rights in Article 132 of the Civil Code constitute the absolute boundaries for the exercise of civil rights.
(2) The procedural constraints of the principle of good faith in litigation: The principle of good faith in litigation established in Article 13 of the Civil Procedure Law provides the procedural law basis for courts to evaluate a party’s abuse of the right to bring an action, abuse of the preservation system, and fabrication or exaggeration of the facts of infringement.
(3) The direct application of honesty and good faith in patent law: Paragraph 1 of Article 20 of the Patent Law explicitly stipulates that the application for patents and the exercise of patent rights shall adhere to the principle of honesty and good faith, and patent rights shall not be abused to damage public interests or the legitimate rights and interests of others. This article provides a direct and concrete applicable foundation for the principle of honesty and good faith in the field of patent law.
II. Boundary Principles Patent infringement litigation involves a certain degree of technical complexity and legal uncertainty. Issues such as claim construction, the application of the doctrine of equivalents, and prior art defenses may all lead to the defeat of a rights holder. Therefore, the determination of bad-faith litigation cannot simply equate an unfavorable litigation outcome with subjective bad faith.
However, the valid existence of patent rights does not automatically confer legitimacy upon infringement allegations that lack factual and legal bases. The fundamental boundary between legitimate enforcement of rights and bad-faith litigation lies in whether the rights holder has fulfilled a reasonable duty of prudent care that is commensurate with its professional capacity and objective conditions. When the foundation of rights exhibits manifest flaws and a substantial disconnect exists within the evidence of infringement, yet the rights holder nonetheless forcibly initiates or maintains litigation procedures, and its litigation strategy exhibits distinct characteristics of procedural coercion, the focus of judicial scrutiny must shift from the protection of the exercise of rights to the regulation of the abuse of rights.
III. Judicial Review Framework In conjunction with the adjudicative and trial practices of the Supreme People’s Court, the review of bad faith initiation of intellectual property litigation focuses on a structured penetration system across the following five core dimensions:
(1) Review of the foundation of rights The court focuses not only on whether the patent right is formally in a valid state, but more importantly on the rights holder’s subjective awareness regarding the stability of the right. For example, whether the rights holder clearly knew that the patent possessed major defects in ownership, concealed unfavorable patent right evaluation reports, or still initiated litigation based on a patent that had already been declared invalid or terminated due to non-payment of annual fees.
(2) Review of factual basis A patentee initiating an infringement lawsuit must complete at least a preliminary infringement comparison against the accused technical solution. For complex technical products sold publicly, relying solely on promotional brochures or webpage screenshots is generally insufficient to support a complete comparison of technical features.
In the determination of infringement under the doctrine of equivalents, the standard of “substantially the same means, performing substantially the same function, achieving substantially the same result, and capable of being associated by a person of ordinary skill in the art without creative labor at the time the infringement occurred” must be strictly adhered to. A rights holder cannot substitute the comparison of specific technical features with highly abstract functional similarities, such as generalizing a “gas sensor” into an “environmental sensing device” to claim that a LiDAR and a gas sensor constitute equivalents; nor can a rights holder forcibly demand rights through the broadening and generalization of generic concepts, as this would otherwise undermine the certainty and predictability of the boundaries of patent rights.
(3) Review of subjective bad faith The determination of subjective bad faith generally adopts a method of presumption based on objective facts. In this category of review, the “warning effect of prior judgments” carries extremely high probative value. If a prior judgment has already determined non-infringement regarding identical technical features of the same patent or similar products, the rights holder bears an exceptionally high duty of prudent care in subsequent litigation. In the absence of substantial new evidence, if the rights holder continues to file suit by deploying an infringement theory already judicially rejected, its subjective state of “knowing or ought to have known” can be directly presumed.
(4) Review of objective conduct In the determination of bad-faith litigation, the review of objective conduct focuses on the structure of the rights holder’s claims for relief, the intensity of the litigation measures, and whether a distinct imbalance exists between the two. For instance, whether procedural or substantive claims such as requests for preservation, auditing, or injunctions possess sufficient factual bases, whether the rights holder has provided corresponding preliminary evidence, and whether the relevant measures are truly necessary for ceasing infringement, preserving evidence, or compensating for losses. If a rights holder, under circumstances where the possibility of infringement remains unclear and the evidentiary foundation is conspicuously weak, nevertheless puts forward high-intensity requests sufficient to cause a major impact on the opposing party’s production and business operations, while controlling its own litigation costs through a low damages claim, such conduct may reflect that its true purpose has deviated from legitimate rights enforcement.
IV. Core Behavioral Patterns of Bad-Faith Litigation in Judicial Practice Through a comparison of recent cases, judicial practice typically categorizes the relevant typical cases into the following three core behavioral patterns:
(1) Abuse of preservation combined with flawed foundation of rights pattern Representative Cases: 1. The patent bad-faith litigation case involving a “Driving Recorder” — No. 869 (2023) Supreme People’s Court Intel. Prop. Civ. Final. 2. The utility model patent bad-faith litigation case involving a “Target Flowmeter” (Guiding Case No. 278) — No. 1861 (2022) Supreme People’s Court Intel. Prop. Civ. Final.
Under this pattern, despite clearly knowing that its patent right suffers from major stability flaws (such as termination due to non-payment of annual fees, or clear awareness that the ownership of the right is in dispute), the rights holder continuously initiates multiple patent infringement lawsuits and frequently applies for high-intensity property preservation.
As a guiding case, the “Target Flowmeter” utility model patent bad-faith litigation case provided principled guidance on the review of bad-faith litigation: “The so-called bad-faith litigation generally refers to a lawsuit intentionally initiated by a party lacking any legal or factual basis for the purpose of obtaining illegal or improper benefits, or causing the counterparty to suffer losses. The essence of bad-faith litigation is a tortious act, characterized by the abuse of rights rather than the legitimate exercise of rights, and aimed at acquiring illegal or improper benefits, or causing harm to the counterparty, rather than seeking remedies for rights conferred by law. The bad-faith initiation of intellectual property litigation shall satisfy the following elements: 1. The lawsuit initiated conspicuously lacks a foundation of rights or factual basis; 2. The plaintiff clearly knew this; 3. It caused damage to another person; 4. A causal relationship exists between the initiated lawsuit and the damaging results.”
Furthermore, the judgment pointed out: “Because of the third and fourth lawsuits initiated by Quanzhou Company, Fujian Technology Company had to incur expenses such as attorney’s fees to respond to the litigation; Fujian Technology Company has adduced evidence showing that in multiple bidding opportunities, the bidding parties required the non-existence of intellectual property disputes, which could cause it to lose bidding opportunities and result in losses; moreover, Quanzhou Company adopted property preservation measures against Fujian Technology Company in the fourth lawsuit, which would also cause losses to Fujian Technology Company. The aforementioned losses were all triggered by Quanzhou Company’s litigation, constituting tortious damages.”
In this case, the court did not evaluate the application for property preservation itself as naturally constituting bad-faith litigation. Instead, under the premise that the foundation of rights was conspicuously absent, the court examined the high damages claim in combination with the preservation behavior of freezing the large-amount property of the counterparty. It held that this litigation arrangement possessed the distinct characteristic of exerting pressure on the counterparty through judicial procedures and damaging its legitimate rights and interests, thereby becoming an important factor in determining subjective bad faith and damaging consequences.
(2) Bad faith fabrication of evidence combined with commercial disparagement pattern Representative Case: The utility model patent bad-faith litigation case involving a “Guide Rail” — No. 2586 (2022) Supreme People’s Court Intel. Prop. Civ. Final.
In this case, under circumstances completely devoid of normal evidence of infringement, the rights holder proactively provided technical drawings to the counterparty, induced the counterparty to manufacture a sample, and subsequently turned around to initiate litigation using said sample as evidence of infringement, while simultaneously sending warning letters on a large scale to the counterparty’s downstream customers.
The court pointed out in its judgment: “Guangdong Materials Company initiated a patent infringement lawsuit based on evidence of infringement obtained through inducement, which means it clearly knew that its lawsuit conspicuously lacked a factual basis; moreover, during the litigation process, it raised claims for high damages, applied for evidence preservation, and sent infringement warning letters to relevant customers. Its conduct clearly exceeded the reasonable limits of legitimate enforcement of rights, possessed the illegal purpose of disrupting, influencing, and suppressing competitors through litigation, and carried relatively manifest subjective bad faith. Furthermore, it caused losses to Zhongshan Metal Products Factory and Li due to their expenditure on attorney’s fees; therefore, the conduct of Guangdong Materials Company constitutes the bad faith initiation of intellectual property litigation.”
(3) Capital market critical milestone litigation pressure pattern Representative Cases: 1. The utility model patent bad-faith litigation case involving a “Finished Tank” — No. 2044 (2023) Supreme People’s Court Intel. Prop. Civ. Final. 2. The invention patent bad-faith litigation case involving a “Luo Han Guo Extract” preparation method — No. 1353 (2021) Supreme People’s Court Intel. Prop. Civ. Final.
The focus of the confrontation in this category of cases is highly concentrated during the sensitive periods when defendant enterprises launch IPOs or major financing. In handling this category, the judiciary displays an extremely precise and distinguishing attitude: in the “Finished Tank case,” the rights holder deliberately concealed an unfavorable patent right evaluation report and suddenly initiated a lawsuit claiming excessively high damages at the critical milestone of the defendant’s listing, which was determined to constitute bad-faith litigation; conversely, in the “Luo Han Guo Extract case,” although the timing of the lawsuit was similarly pinned to the counterparty’s listing period, the court upheld the boundary of judicial modesty and refrained from finding subjective bad faith, because the patent held by the rights holder remained valid and a preliminary infringement comparison and demonstration had been performed prior to the lawsuit, even though the case was subsequently withdrawn.
In the judgment of Case No. 2044 (2023) Supreme People’s Court Intel. Prop. Civ. Final, the court mentioned: “In this case, Jin Company disregarded the litigation risks brought about by the instability of its own foundation of rights, and under circumstances where it was relatively easy to determine whether the accused infringing product fell within the scope of protection of the patent involved, and where it knew the actual value of the accused infringing product, it nevertheless initiated the infringement litigation involved in this case during the listing process of Ling Company, and proposed an amount of compensation that obviously could not be supported but was capable of affecting Ling Company’s listing process.”; “The unstable foundation of rights, the dishonest act of concealing the patent right evaluation report, the relatively easy determination of infringement, the conspicuously excessive amount of compensation claimed, the coincidental timing of the lawsuit, and the losses suffered by Ling Company—the combination of the aforementioned factors is sufficient to indicate that Jin Company’s initiation of the patent infringement lawsuit in this case was not a legitimate enforcement of rights, but rather intended to delay Ling Company’s listing process and damage Ling Company’s rights and interests through said litigation, and should be determined to constitute bad-faith litigation.”
V. Practical Insights in Light of Case No. 96 When an accused enterprise faces an intellectual property blockade possessing such characteristics of bad faith, the accused enterprise (especially an enterprise intending to list) should not respond passively, but should rapidly construct an evidentiary chain for defense and counterattack:
(1) Prioritization of technical defense The objective prerequisite for the establishment of bad-faith litigation is that the original lawsuit conspicuously lacks a factual basis. In patent infringement disputes, the accused enterprise should position a solid technical defense as its primary priority, proving that clear and substantial technical differences exist between the accused technical solution and the claims of the patent involved. Particularly when involving the application of the doctrine of equivalents, the enterprise should accurately identify whether the plaintiff has engaged in overstepping behavior that forcibly expands the scope of patent protection through the generalization of generic concepts.
(2) Evidence lock-in Retrieve the plaintiff’s historical litigation track record, search whether prior losing cases targeting similar products exist, whether invalidation decisions that were dismissed exist, and whether circumstances of concealing patent right evaluation reports exist, thereby locking in its subjective state of “clearly knowing the claim is groundless.”
(3) Review of procedural abuse The accused enterprise should review whether a manifest imbalance of rights exists within the structure of the plaintiff’s claims for relief. In typical behavioral patterns of bad-faith litigation, the plaintiff frequently adopts an asymmetric tactic of “extremely low cost of litigation combined with extremely high procedural pressure,” an arrangement that has clearly exceeded the necessary limits and the principle of proportionality for legitimate rights enforcement. This category of evidence is especially vital for revealing to the court the plaintiff’s true purpose of procuring improper benefits outside of the litigation.
(4) Capital market compliance response When an enterprise intending to list or finance encounters an intellectual property blockade during a sensitive period, it must immediately launch a dual-track linkage mechanism combining capital market compliance and litigation response. At the levels of information disclosure and regulatory inquiries, the enterprise should not merely passively explain that the litigation “does not constitute a material impact,” but should promptly organize the sponsor institution, intermediaries, and litigation attorneys to form a specialized legal explanation document.
(5) Whole-process retention of traces for proof of damages From the date of receiving the complaint, the preservation ruling, or the attorney’s letter, the accused enterprise should establish independent loss records concerning direct litigation expenditures such as attorney’s fees, notarization fees, notary purchase fees, patent agency fees, and official fees for invalidation procedures. For enterprises intending to list or engaged in foreign contract manufacturing, greater attention should be paid to fixing indirect losses stemming from the drain of commercial opportunities. According to the latest adjudicative rule established in Case No. 869 (2023) Supreme People’s Court Intel. Prop. Civ. Final, the reasonable expected interest losses suffered by an accused party due to proactively abandoning relevant commercial opportunities or rejecting customer orders to handle bad-faith litigation conduct and hedge legal risks bear an appropriate causal relationship with the bad-faith litigation, and the bad-faith plaintiff shall provide compensation.
(6) Selection of countermeasure pathway (Counterclaim is superior to a separate action) When encountering bad-faith litigation, the accused party should preferentially choose to directly file a counterclaim within the original infringement litigation, rather than waiting for the judgment of the original case to take effect before initiating a separate action. Filing a counterclaim within the original case can compel the trial judge, within the same adjudicative space-time and the same set of courtroom debates, to intuitively contrast the plaintiff’s technical comparison against its bad-faith procedural coercive behavior. This not only immensely reduces the defendant’s communication and litigation costs, but can also better achieve the optimal outcome of “resolving two claims within a single case.”
Conclusion The No. 96 (2026) Supreme People’s Court Intel. Prop. Civ. Final civil judgment rendered by the Intellectual Property Court of the Supreme People’s Court, together with the adjudicative logic established by the Supreme People’s Court in landmark cases such as the “Driving Recorder case,” the “Target Flowmeter case,” and the “Finished Tank case” in recent years, constructs the judicial determination pathway for “bad faith” in patent infringement litigation. It also provides a clear countermeasure paradigm for accused enterprises, particularly technology-oriented enterprises and enterprises intending to list, to handle bad-faith intellectual property litigation.
Simultaneously, the judgments in these cases demonstrate that intellectual property law protects authentic innovation and legitimate rights enforcement, and patent rights should not be deployed as tools to execute litigation coercion, competitive disruption, or capital market blockades. For innovative enterprises in stages of rapid development, the adjudicative logic reflected in these precedents not only provides legal weapons to resist bad-faith litigation, but also contributes to maintaining a fair competitive order and a stable, predictable environment for innovation.