Fangda Partners’ Intellectual Property team successfully represented a Microsoft affiliate in a patent infringement dispute filed by a U.S.-based Non-Practicing Entity (NPE) (the “Plaintiff”) before the Shanghai Intellectual Property Court. The court recently issued a first-instance judgment recognizing that the Microsoft affiliate did not infringe the asserted patent and upheld the Microsoftaffiliate’s prior art defense. This decision is a rare and groundbreaking decision in patent litigation in its support of a prior art defense based on public use of second-hand devices.

In early 2023, the Plaintifffiled a lawsuit with the Shanghai Intellectual Property Court, alleging that the Microsoft affiliate had infringed its patent. Following an unfavorable finding in a parallel invalidation proceeding, the Plaintiff drastically altered its infringement claims in late July 2024 — less than two weeks before the court’s scheduled pretrial conference. Faced with this abrupt change, the Fangda team swiftly devised a dual-layered defense strategy combining non-infringement and prior art arguments. On the one hand, the team argued a multilevel non-infringement defense through precise claim interpretation; on the other hand, they established a robust foundation for the prior art defense by submitting a comprehensive body of evidence. By working closely with the court to efficiently complete investigation, site inspections, and hearings, the Fangda team secured a complete victory for the client just eight months after the Plaintiff shifted its claims.

In preparing the non-infringement defense, the Fangda team carefully designed nearly 20 rebuttal tests to demonstrate the fundamental differences between the newly asserted technical solution and the patented solution. These tests ranged from analyzing overall technical concepts to specific feature comparisons. The team leveraged appraisal reports, onsite inspections and other methods to clearly and effectively present a compelling non-infringement case to the court.

In tackling the prior art defense, the Fangda team confronted the well-known challenge of “difficult recognition with low success rate” often associated with public use arguments. In a breakthrough approach, the team identified a second-hand device — running Microsoft Windows 7 and released over 15 years prior to the patent’s priority date — as the core evidence for the defense. Through extensive evidence, the team established a clear and complete evidentiary chain to prove both the device’s public availability date and its technical content. Ultimately, counsel for the Plaintiff was compelled to admit to the court that the prior art was authentic and relevant and could be used for a comparison as a prior art reference.

Following this admission, the court issued a judgment finding that the Microsoft affiliate’s products were outside the scope of the asserted patent and that the prior art defense was valid. As a result, the court dismissed all of the Plaintiff’s claims. This victory not only demonstrates Microsoft’s strong stance in defending its rights and resisting baseless infringement claims from NPEs, but also highlights Fangda’s exceptional expertise in resolving complex IP disputes. Moreover, the case sets a meaningful judicial precedent for similarly situated companies facing patent litigation.

The Fangda team was led by IP litigation partner Alexandra YANG. Team members included Christine DONG, Jennifer GUAN, Ryan GU, ZHU Xiaopeng and Edward ZHOU. LI Jiawei also provided key support.