On 8 April, the Shanghai Higher People's Court (hereinafter referred to as the Shanghai Higher Court) reached the final judgment on the infringement of the design patent after the mediation agreement was reached, and the defendant in the first instance was judged to have infringed the design patent right of the patentee Shimano (New) Private Co., Ltd. (hereinafter referred to as Shimano Company), and should jointly compensate its economic losses and reasonable expenses totaling 1 million yuan.

The plaintiff company sued to the court in January 2015, claiming that the defendant company infringed its design patent right. During the trial, the two companies reached a mediation agreement. The defendant admitted the infringement and promised to stop manufacturing, selling, promising to sell any products that fall within the scope of patent protection involved, deleting all publicity materials of the infringing products, or otherwise paying Shimano a penalty of 1 million yuan.

In May 2016 and May 2017, the plaintiff Company found that the defendant and its affiliated companies once again displayed infringing products at a bicycle exhibition. The plaintiff brought the defendant to court again, and the Shanghai court supported the plaintiff's claim and determined that the defendant should compensate for the losses in the amount agreed in the mediation agreement.

During the trial, the defendant claimed that it had stopped the production of all the infringing goods in 2016 and did not need to bear liability for infringement. Even if its action constituted infringement, the compensation amount could not be determined directly according to the mediation agreement of another case. The liquidated damages agreed in the mediation agreement were the calculation method of liability for breach of contract, not the calculation method of compensation for infringement damages.

However, the Shanghai court held that:

(1) The penalty of 1 million yuan agreed in the mediation agreement is an agreement on how the infringer should bear the liability for subsequent infringing act.

(2) After signing the mediation agreement, the defendant transferred the production equipment and trademark to the affiliated company, and the defendant's senior management personnel also transferred to the post of the affiliated company, with the obvious purpose of evading the compensation liability agreed in the mediation agreement.

Therefore, the Shanghai Higher Court held that in this case, the defendant and his affiliated companies committed infringement act intentionally and repeatedly, and there were circumstances of intentionally evading the infringement liability. According to the mediation agreement of the previous case, the damages in this case were decided to be 1 million, which protected the legitimate rights and interests of the plaintiff and did not exceed the reasonable expectations of all parties.