Overview

A Hong Kong-related e-commerce business faced a design patent infringement claim before the Guangzhou Intellectual Property Court after selling an electric fabric shaver through an online retail platform.

The patent owner alleged that the product sold by the client infringed its registered design patent and sought legal remedies against multiple parties involved in the distribution and supply chain.

Representing the defendant, Yu Yuting, Attorney at NEO-ARK Law Firm, developed a defence focusing on both the substantive comparison between the accused product and the patented design and the client's lawful source of the products.

The plaintiff subsequently voluntarily withdrew the lawsuit. The court approved the withdrawal, and the client was not ordered to pay damages.

Can an E-Commerce Seller Defend a Design Patent Infringement Claim? A China IP Litigation Case

Case Snapshot

Client's Situation

1. Patent Infringement Claim

The plaintiff alleged that the client's electric fabric shaver infringed its registered design patent.

The claim was brought before the Guangzhou Intellectual Property Court and involved several parties within the product distribution chain.

2. Dispute Over Product Design

The defence examined the visual and structural features of the accused product and identified differences in several design elements, including the indicator light, control openings, handle structure, and opening mechanism.

The client therefore disputed the allegation that the accused product was identical or substantially similar to the patented design.

3. Lawful Source of the Products

The client had purchased the products through an established online procurement channel and had paid consideration for the goods.

The defence therefore also examined whether the client could rely on the legitimate source defence available under Chinese patent law.

4. Product Removal

Before the litigation, the client had already removed the relevant product from sale.

This was also taken into consideration as part of the overall defence strategy.

Outcome

The plaintiff voluntarily withdrew the lawsuit during the proceedings.

The Guangzhou Intellectual Property Court approved the withdrawal, with the plaintiff bearing the court acceptance fee.

The client was not ordered to pay damages or other infringement compensation.

The result protected the client's commercial interests while avoiding further litigation exposure.

Why This Case Matters

Online sellers can face intellectual property claims even when they are not the manufacturers of the disputed products.

For e-commerce businesses, a strong response to a patent infringement claim may involve more than simply arguing that the product is different.

The seller's procurement records, transaction history, supplier information, product comparisons, and actions taken after receiving the claim may all become relevant to the defence.

This case demonstrates the importance of responding quickly to a patent claim and developing multiple lines of defence rather than relying on a single argument.

Frequently Asked Questions

Can an e-commerce seller be liable for selling a product that allegedly infringes a design patent?

Potentially, yes.

The seller's liability depends on the applicable patent law, the circumstances of the sale, the nature of the alleged infringement, and available statutory defences.

What is the legitimate source defence in China patent disputes?

Under certain circumstances, a seller may defend against a patent infringement claim by demonstrating that the allegedly infringing products were obtained from a legitimate source and that the statutory requirements are satisfied.

Whether the defence applies depends on the specific facts and evidence.

Why are procurement records important in patent litigation?

Purchase contracts, invoices, payment records, supplier information, and other transaction documents can help establish where products came from and may be important when a legitimate source defence is raised.

Does removing a product from sale eliminate patent infringement liability?

Not necessarily.

Removing a product may help limit continuing commercial exposure, but whether a party remains liable for past conduct depends on the applicable law and circumstances of the case.

Key Takeaways

• E-commerce sellers can face design patent infringement claims even when they are not manufacturers.
• Product design comparison is an important part of defending a design patent claim.
• A legitimate source defence may be available where its statutory requirements are satisfied.
• Procurement and payment records can be critical in protecting an online seller.
• Early legal action can help reduce litigation and commercial exposure.

About the Author

Yu Yuting
Partner | NEO-ARK Law Firm

Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.

Email: [email protected]

Overview

A restaurant management company engaged a construction company to carry out the fit-out of a commercial premises in Mainland China.

The contractor failed to complete the project within the agreed period, while the client had already made payments substantially exceeding the original contract price. Parts of the completed work also remained unfinished or subject to quality issues.

The client commenced litigation seeking recovery of overpaid construction costs, compensation relating to additional expenses, and losses arising from the construction delay.

Representing the client, Yu Yuting, Attorney at NEO-ARK Law Firm, focused on the actual scope of completed works, the parties' payment records, and the contractor's disputed additional-cost claims.

The first-instance court partially supported the client's claims. Following an appeal, the court further reviewed the project accounts and ultimately ordered the contractor to return approximately RMB 300,000 to the client.

Case Snapshot

Client's Situation

1. Construction Contract

The client entered into a fit-out contract with a construction company for the renovation of a restaurant premises.

The project was subject to an agreed construction period and contract price.

2. Significant Payments

During the project, the client made payments substantially exceeding the original contract price.

The parties subsequently disagreed over the amount properly payable for the completed works and various additional expenses claimed by the contractor.

3. Construction Delay and Incomplete Works

The contractor failed to complete the project within the agreed period.

Certain items listed in the project budget remained unfinished, while some completed works were also disputed on quality grounds.

The delay affected the client's ability to open and operate the restaurant as planned.

4. Disputed Additional Expenses

The contractor sought to attribute a number of additional expenses to the client.

The client disputed these items, arguing that some had no sufficient connection with the construction project or lacked adequate supporting documentation.

Legal Strategy

Outcome

The first-instance court partially supported the client's claims and ordered the contractor to return a substantial portion of the overpaid construction costs.

The client continued to pursue the dispute on appeal.

After further review of the project accounts and disputed expenses, the appellate court adjusted the amount payable and ultimately ordered the contractor to return approximately RMB 300,000 to the client.

The result substantially protected the client's financial interests and clarified the amount properly attributable to the construction works.

Why This Case Matters

Construction and restaurant fit-out disputes often involve a significant gap between the original contract price, actual completed works, additional expenses, and payments already made.

A contractor's final account or internal calculation should not necessarily be treated as conclusive.

This case demonstrates the importance of carefully reviewing:

• What work was actually completed;
• What payments have already been made;
• Whether additional costs are contractually recoverable;
• Whether supporting documentation is sufficient;
• Whether the contractor complied with the agreed procedures for project settlement.

For restaurant operators, investors, and businesses undertaking commercial fit-outs in China, careful contract management and payment reconciliation can significantly reduce the risk of costly disputes.

Frequently Asked Questions

Can a contractor claim payment for unfinished construction work?

Generally, payment should be assessed according to the contract, the work actually performed, and applicable legal rules. Uncompleted work may not simply be treated as completed for settlement purposes.

Can a contractor charge additional expenses that were not clearly agreed?

Not necessarily.

Additional costs generally need an appropriate contractual or legal basis and sufficient supporting evidence.

Can a contractor's own settlement statement determine the final construction price?

Not automatically.

Where the contract requires particular procedures for confirming completed works or settling the project account, a unilateral statement may not be sufficient.

What should a restaurant owner do when a fit-out project is delayed?

The owner should preserve the contract, payment records, project records, communications, and evidence of unfinished or defective work. Early legal advice can also help determine available claims and reduce further losses.

Key Takeaways

• Construction payments should be reconciled against the work actually completed.
• Unfinished works can materially affect the final contract price.
• Unsupported or unrelated additional expenses should be challenged.
• A contractor's unilateral settlement statement may not be conclusive.
• Early legal intervention can help protect businesses from escalating construction losses.

About the Author

Yu Yuting
Partner | NEO-ARK Law Firm

Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.

Email: [email protected]

Overview

A cross-border divorce dispute arose between a married couple with family and property connections between Mainland China and Hong Kong.

The parties had been married for many years and had two children. Their daughter was born in Hong Kong and required ongoing care and additional medical-related expenses.

After the parties separated, the client initiated divorce proceedings before the Haizhu District People's Court in Guangzhou, seeking divorce, custody of the daughter, child support, and division of the couple's marital property.

Representing the client, Yu Yuting, Attorney at NEO-ARK Law Firm, helped address the interconnected issues of divorce, child custody, child support, and cross-border marital property.

The matter was ultimately resolved through court mediation, with the parties reaching an agreement covering the divorce, custody arrangements, child support, division of multiple properties, and litigation costs.

Case Snapshot

Situation

1. Long-Term Marriage and Separation

The parties registered their marriage in 1999 and had two children.

After years of marital conflict, including serious disagreements concerning family life, the parties began living separately in 2020.

2. Hong Kong-Born Child

Their daughter was born in Hong Kong and remained a central consideration in the divorce proceedings.

The dispute required the parties to establish clear arrangements concerning:

• Custody;
• Child support;
• Additional education and medical expenses;
• Long-term care needs.

3. Cross-Border Property

The couple also owned multiple properties and parking spaces in Guangzhou and Foshan.

The parties needed a practical mechanism for dividing these assets and implementing the agreed property arrangements following divorce.

Legal Strategy

Outcome

With the assistance of the court, the parties reached a comprehensive settlement covering:

• Divorce;
• Custody of the Hong Kong-born daughter;
• Child support and additional expenses;
• Division of three properties and related parking interests in Guangzhou and Foshan;
• Arrangements concerning the sale and distribution of property proceeds;
• Allocation of post-divorce property-related liabilities;
• Litigation costs.

The settlement provided a clear framework for implementing the parties' agreements and resolving the principal financial and family issues arising from the divorce.

Why This Case Matters

Cross-border divorce disputes often involve much more than the question of whether a marriage should end.

Where children have connections to Hong Kong and marital assets are located in multiple cities in Mainland China, a workable settlement must address family arrangements and financial implementation together.

This case demonstrates the importance of designing a divorce settlement that is not only legally acceptable but also practical to implement.

For cross-border families, issues such as child support, special medical expenses, property sales, and post-divorce liabilities should be addressed with sufficient clarity to minimise the risk of further disputes.

Frequently Asked Questions

Can a divorce in Mainland China involve a child born in Hong Kong?

Yes.

Depending on the circumstances, Mainland Chinese courts may handle divorce proceedings involving children born in Hong Kong. Child custody and support arrangements should be considered based on the child's circumstances and applicable law.

How are child support and additional medical expenses handled in a divorce?

Regular child support can be addressed together with responsibility for significant additional expenses. Where a child has particular medical or care needs, these expenses may require specific arrangements in the settlement.

How should multiple properties be divided in a divorce settlement?

The parties may agree on ownership, transfer, sale, or other appropriate arrangements. Where property is to be sold, clearly defining the sale process and distribution of proceeds can help make the settlement more practical and reduce future disputes.

Why is mediation useful in cross-border divorce disputes?

A negotiated settlement can allow the parties to address custody, support, property, and financial responsibilities together, rather than resolving each issue separately through prolonged litigation.

Key Takeaways

• Cross-border divorce may involve complex child custody and property issues.
• A child's special medical or care needs should be addressed specifically where relevant.
• Property division should be structured around practical implementation.
• A comprehensive settlement can reduce the risk of further post-divorce disputes.
• Early legal advice can help families address cross-border issues before they become more difficult to resolve.

About the Author

Yu Yuting
Partner | NEO-ARK Law Firm

Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.

Email: [email protected]

Overview

A couple preparing to marry sought legal advice on how to structure and protect their respective assets located in Mainland China and Hong Kong.

Their assets included a wholly owned Hong Kong company, Mainland Chinese real estate, bank deposits, and other financial assets. Given the cross-border nature of their property and the potential legal consequences of marriage, the couple wished to establish clear rules regarding ownership, management, and liabilities before registering their marriage.

Representing the couple, Yu Yuting, Attorney at NEO-ARK Law Firm, advised on the structure of a cross-border marital property agreement designed to clarify the ownership of premarital assets, establish rules for property acquired during the marriage, and address potential liabilities arising during the marriage.

Case Snapshot

Situation

1. Cross-Border Assets Before Marriage

The couple held assets in both Mainland China and Hong Kong, including:

• Shares in a Hong Kong company;
• Real estate in Mainland China;
• Bank deposits and financial assets in different jurisdictions.

The parties wanted to clearly distinguish their respective premarital property from assets that might be acquired jointly after marriage.

2. Need for Clear Property Rules

Without a clear agreement, questions could arise regarding:

• Ownership of premarital assets;
• Appreciation and other proceeds derived from those assets;
• Ownership of property jointly acquired during the marriage;
• Responsibility for marital debts;
• Management of cross-border assets.

3. Cross-Border Legal Considerations

Because the parties' assets were located in different jurisdictions, the agreement also needed to take into account the potential application of different legal systems and the legal characteristics of different types of assets.

Legal Strategy

The legal work focused on establishing a clear and practical framework for the couple's financial relationship.

Outcome

NEO-ARK Law Firm completed a cross-border marital property agreement addressing the couple's assets and financial interests in Mainland China and Hong Kong.

The agreement provided a structured framework for:

• Protecting premarital property;
• Clarifying ownership of business interests and real estate;
• Managing jointly funded assets;
• Allocating household expenses;
• Addressing marital debts;
• Reducing uncertainty concerning cross-border property rights.

Rather than waiting for a property dispute to arise after marriage, the parties established their respective financial arrangements in advance.

Why This Case Matters

Cross-border marriages can involve significantly more complicated property issues than domestic marriages, particularly where one or both spouses own assets in different jurisdictions.

A well-structured marital property agreement can help couples clarify their financial expectations before marriage and reduce uncertainty over the ownership and management of assets.

For couples with Hong Kong and Mainland China connections, issues involving company shares, real estate, financial assets, jointly acquired property, and marital liabilities should be considered together rather than addressed separately.

The objective is not simply to divide assets, but to establish a clear legal framework before disputes arise.

Frequently Asked Questions

Can couples with assets in Mainland China and Hong Kong enter into a marital property agreement?

They may be able to establish contractual arrangements concerning their marital property, subject to the applicable laws and the nature and location of the relevant assets.

Because cross-border property arrangements may involve different legal systems, professional legal advice is important before signing an agreement.

Can a prenuptial agreement protect a company owned by one spouse?

A marital property agreement can clarify the intended ownership of business interests and related property rights. However, the legal treatment of company shares and related interests should be assessed separately under applicable company and property laws.

Why should cross-border couples address property issues before marriage?

Clarifying ownership and financial responsibilities before marriage can reduce uncertainty and help prevent disputes concerning assets, investments, and liabilities later in the relationship.

Key Takeaways

• Cross-border couples should consider marital property issues before marriage.
• Premarital business interests and real estate should be clearly identified.
• Jointly acquired assets can benefit from clearly defined ownership rules.
• Marital debt arrangements should be addressed in advance.
• Cross-border property agreements require careful consideration of applicable law.

About the Author

Yu Yuting
Partner | NEO-ARK Law Firm

Lawyer Yu focuses on foreign-related litigation, cross-border disputes, commercial matters, and legal services for overseas individuals and businesses in China.

Email: [email protected]