——selected as one of the "2024 Top Ten Cases Advancing the Rule of Law in the New Era"

Case Brief

The case involved the enforcement of a dispute over the infringement of know-how between the enforcement applicant, Sichuan X Rui Chemical Industry Co., Ltd. (hereinafter referred to as X Rui Company) and the enforcement respondent, Shandong X Sheng Chemical Industry Co., Ltd. (hereinafter referred to as X Sheng Company). On December 26, 2022, the Supreme People's Court issued a legally effective judgment, ordering X Sheng Company to immediately cease the sales of melamine products produced using the know-how involved of X Rui Company, destroy the equipment related to the know-how involved in its Melamine Project with Annual Production Capacity of 100k Tons (Phase I), and pay the damages of RMB 98 million.

On February 6, 2023, the People's Court of Tianfu New Area, Chengdu City, Sichuan Province initiated enforcement proceedings for the case and oversaw the enforcement of the monetary payment obligation by X Sheng Company. However, X Sheng Company had not voluntarily fulfilled its obligations of conduct, including the destruction of equipment as determined in the legally effective judgment. With the need for high specialization means and the potential risks, the dismantlement and destruction of the equipment involved in the case would render enormous costs and cast significant impacts on staff employment, business operations, financial stability, and economic development. The execution process might be entangled in a deadlock.

The Supreme People's Court thus placed special oversight over the case under supervision, making coordinated efforts to develop synergy among the nine courts involved in the case across the three provinces of Sichuan, Guangdong, and Shandong to advance progress in the case. Later, the Chengdu Intermediate People's Court of Sichuan Province escalated the enforcement of the case, with the president of the court serving as the chief judge. The court intensified enforcement efforts by various means, including providing judicial recommendations, legally summoning the legal representative of the enforcement respondent, and publicly issuing an invitation to bid for dismantlement. Meanwhile, higher courts and relevant government departments strengthened communication and collaboration to facilitate the parties in reaching an enforcement settlement. On January 28, 2024, after multiple rounds of negotiations organized by courts at three levels, both parties reached an enforcement settlement and signed an agreement, establishing a full range of solutions to the enforcement of the case and a patent infringement case handled by the Guangzhou Intermediate People's Court of Guangdong Province, and to the promotion of the resolution of another two related litigation cases. On August 5, 2024, X Rui Company submitted a case closure application, confirming the full performance of the settlement agreement.

Significance of Selection

As one of the intellectual property cases with the largest enforcement targets nationwide, the case provides a replicable and promotable template for solving conduct-based enforcement cases based on the cross enforcement mechanism, and typically exemplifies the roles of the people's courts in the new era in comprehensively promoting cross enforcement, deepening the reform of separating trial from enforcement, and helping "effectively solve enforcement challenges".

(Source: the Supreme People's Court of the People's Republic of China)