Three years ago, the conclusion of a patent dispute in the microwave oven industry sparked widespread debate in the home appliance industry, as stakeholders had different opinions on the overturned ruling.
Recently, there have been significant developments in the patent dispute between Guangdong Galanz Microwave Electrical Appliances Manufacturing Co. (“Galanz”) and Zhongshan Meige Electronic Technology Co., Ltd. (“Meige”). In a civil judgment issued by the Supreme Court of China, Meige was found to have infringed Galanz’s patent rights. As a result, the court ordered Meige to immediately cease manufacturing and using the patented invention with patent number 201510373341.8 related to Galanz microwave ovens and to destroy all manufactured rivet cover molds. In addition, Meige was ordered to pay ¥10 million in damages to Galanz.
Notably, the Guangzhou Intellectual Property Court’s initial ruling contradicted this outcome, stating that Meige’s actions did not infringe Galanz’s patent rights, and consequently dismissed all of Galanz’s claims in the lawsuit.
These two dramatically different rulings have sparked extensive discussion, particularly regarding the economic damages evidence presented by the plaintiff on appeal and accepted by the court. Some industry experts contend that certain data accepted in the calculation formula deviates significantly from industry norms. Xingwei Li, representing Meige, stated that there is ample room for discussion, particularly regarding the determination of infringement and the amount of damages. During the appeal, Meige submitted a wealth of professional opinions to prove its innocence, but these opinions were not thoroughly considered in the court’s judgment.
Li further explained that the formula used to calculate the compensation amount during the appeal is (sales price – cost) * sales volume * technology contribution rate. According to this formula, the calculated result in this case is approximately ¥19 million [(¥70 – ¥27) * 445 * 10%]. Both parties agree on the formula, but the court accepted Galanz’s evidence of a sales price of ¥70 per magnetron, which has caused consternation in the industry.
It is understood that there are few manufacturers of magnetrons for electrical appliances in China, and the price of magnetrons is almost transparent within the industry, with the market price for a single magnetron being around ¥30-¥40. Galanz’s evidence submitted to the court includes evidence of externally purchased magnetrons at a price of ¥39.94. In addition, based on the “Toshiba Import Customs Declaration” for 2020, the sales price of Toshiba magnetrons in 2020 was approximately ¥40 (including import duties), indirectly confirming the accuracy of this figure. Clearly, this price aligns more with reality and fairness than the court’s determination that Galanz sells a single magnetron for ¥70. As a legal expert mentioned, “The appellate court was clearly misled.”
Professionals unanimously assert that Galanz does not sell magnetrons to any microwave oven manufacturers. The ¥70 selling price provided in Galanz’s evidence is for magnetron aftermarket components. If both the ¥70 selling price and ¥27 cost price, as established in Galanz’s evidence, are accurate, the profit per unit stands at ¥43. This implies that, with Galanz’s sales volume of 30 million units, the magnetron business alone contributes nearly ¥1.3 billion to Galanz’s total profit, significantly exceeding the realistic average profit in the microwave oven industry. Li disclosed that during the trial process, both sides did not have sufficient time for a detailed discussion and argument on the aforementioned evidence. Li added that Galanz could prove the validity of this data if they could provide tax evidence based on the calculation formula.
Meige states, “Meige has always operated in accordance with the principles of legal business and respects the court’s final judgment. (All monetary units in this article are in Chinese yuan.)”