A Beijing court ruled on Wednesday that Sony Mobile Communications (China) infringed on the patent of a lesser-known Chinese internet company and ordered the Japanese-funded company to pay more than 8.6 million yuan ($1.3 million) in damages.
Xidian Jietong, a wireless network communications company headquartered in Xi'an, capital of Shaanxi province in Northwest China, filed the lawsuit against Sony in June 2015, claiming the latter had violated its patent rights relating to wireless local area network technology.
The patent in question relates to the security of mobile devices and data encryption services. It serves as a standard-essential patent in China's wireless communications field, meaning cellphone manufacturers need it for WLAN authentication and privacy infrastructure tests to access the internet on the Chinese mainland.
Xidian Jietong was granted the patent in China and won the country's top patent award, presented by the State Intellectual Property Office and the World Intellectual Property Organization, in 2005.
To date, the company has obtained patents for the technology in more than 10 countries, including the United States, Japan, South Korea, Germany and Britain.
Thirty-five Sony phone models, including the L39h (Xperia Z1) and L50T (Xperia Z2), use the patented technology, according to the plaintiff.
The Beijing Intellectual Property Court ruled against Sony and told the company to compensate Xidian Jietong for economic losses, pay more than 474,000 yuan in other expenditures and cease the production and sale of mobile phones equipped with the technology.
Neither the plaintiff nor the defendant presented relevant evidence to prove the damages or gains in court, Legal Daily reported.
In the absence of proof of losses and gains, damages are considered to be three times the income of licensing the patent, according to the current patent law.
Xidian Jietong presented the court with four patent license contracts with other parties, showing it collects 1 yuan in licensing fees for each item sold.
More than 2.87 million cellphones from the defendant were authorized for internet access between January 2010 and December 2014, according to an electronic device certification center at the Ministry of Industry and Information Technology.
The ruling on the damages and other expenditures in the case shows China's increased protection of IP rights owners, industrial insiders said.
"The case involves the protection of a standard-essential patent, which remains a thorny and hot issue in the judicial world," Chen Jinchuan, vice-president of the court, said at a news conference.
The ruling on this case will likely help to adjust the development direction of the industry, drive the innovation capacity of the entire sector and provide a reference for rules on international cooperation, Chen said.
Xidian Jietong also filed a patent complaint against two trade companies specializing in Apple electronics in Beijing and Shanghai with the Shaanxi High People's Court in April 2016. The final ruling is still pending.