This time it's for..., it's pinching again! Dong Mingzhu "Tears" AUX Patent | Administrative Penalty | AUX

The patent dispute between Gree Electric Appliances and AUX, the two major Chinese home appliance giants, over 220 million yuan in compensation, has not yet been resolved, and a new plot has emerged.

Recently, Gree Electric filed another lawsuit against AUX, with the focus of the dispute involving "trade secrets" and a claim amount of 99 million yuan.

"Old grudges" add "new grudges", how do we calculate this time?

Screenshot of the People's Court Announcement Network.

Claim 99 million yuan, caused by "digging corners"?

According to the announcement website of the People's Court recently, the Guangzhou Intellectual Property Court has accepted the case of the plaintiff Zhuhai Gree Electric Appliance Co., Ltd. and the defendants AUX Air Conditioning Co., Ltd., Ningbo Ausheng Trading Co., Ltd., Shang Bin, Liu Juan, Gu Tangtang, Wu Qingzhuang, and Huang Jiabai infringing on trade secrets dispute.

The announcement shows that Gree Electric Appliances first demands that the seven defendants immediately stop infringing on the plaintiff's trade secrets, that is, immediately stop disclosing, using, or allowing others to use the plaintiff's trade secrets, permanently delete electronic data containing the plaintiff's trade secrets, and destroy air conditioning products, molds, technical drawings, and other carriers made using the plaintiff's trade secrets.

At the same time, Gree Electric Appliances requested an order for AUX to transfer 8 patent rights to its name; And demand that the seven defendants be ordered to compensate the plaintiff for economic losses and reasonable rights protection costs of 99 million yuan, as well as bear all litigation costs in this case.

Zhang Liang, Director of Beijing Yunjia Law Firm, stated that in cases of trade secret disputes, it is relatively rare for companies like Gree Electric to request patent transfer based on practical experience, but it can be said to be reasonable. He judged that Gree Electric Appliances may not have publicly available evidence to prove that their patent was used first, and thus the "counterattack" against Ox's patent was invalid. Therefore, they could only sue on the basis of a trade secret dispute.

Public information shows that Ningbo Aosheng Trading Co., Ltd. is a holding subsidiary of AUX. And five natural individuals, including Gu Tangtang, Wu Qingzhuang, and Huang Jiabai, have all invented patents related to air conditioning and registered them under the name of AUX.

A reporter from Zhongxin Finance searched for the name of Gu Tangtang on the official website of AUX and found that its most recent appearance was in December 2020, attending a roundtable seminar as the Vice President of AUX Home Appliances Group.

According to media reports in 2019, a large group of about 50 R&D personnel led by Gutang Tang from Ox have previously worked in the R&D department of Gree Electric Appliances. When Dong Mingzhu succeeded Zhu Jianghong as the new chairman of Gree Electric Appliances, this group of R&D personnel were poached by Ox with high salaries.

Afterwards, Dong Mingzhu responded at the extraordinary shareholder meeting of Gree Electric Appliances in January 2019, stating that AUX "dug people and patents every day" and "stole our technology". She said at the time, "In order to create an innovative atmosphere in the manufacturing industry in the future, we must fight.".

Aux has also responded that the company's recruited personnel have never had any labor arbitration with Gree Electric regarding non compete. They have been recruited through normal recruitment channels and will focus on understanding whether the talent has a confidentiality agreement and non compete.

Both sides have accumulated long-standing grievances, mostly around patent infringement

Talking about the "struggle" between Gree Electric and AUX is no longer a new thing. In addition to the "poaching" conflict that can be traced back more than a decade, the two sides have also frequently engaged in disputes and lawsuits around patent infringement issues, involving dozens of pieces of legal litigation information.

The most well-known of them is the "reporting gate" incident that caused a sensation in the home appliance industry in 2019. In June 2019, Gree Electric Appliances publicly released a report letter, pointing out that after testing by a third-party organization, there was a significant gap between the energy efficiency values of some of the AUX air conditioners and their advertised and nominal values, and the testing conclusions of the energy efficiency ratio and refrigeration consumption power were unqualified.

Oaks responded that this was a clear act of unfair competition, but the counterattack was not recognized. In the end, the Ningbo Municipal Administration for Market Regulation issued an administrative penalty of ordering correction and a fine of 100000 yuan for the false promotion of Oaks air conditioning using energy efficiency labels. Oaks also issued an apology statement.

The earliest confrontation between the two regarding patent disputes can be traced back to 2015. Gree Electric sued Ox in court, pointing out that Ox was suspected of infringing on three utility model patents of Gree Electric. In the end, Gree Electric won the lawsuit, and Ox was sentenced to compensate Gree Electric for economic losses of 2.3 million yuan.

The most eye-catching amount involved is the compressor patent dispute of over 220 million yuan between the two parties. The case began in December 2018 when AUX acquired a compressor patent for Toshiba air conditioners and later sued Gree Electric for infringement.

In August 2022, the Hangzhou Intermediate People's Court made a first instance judgment, sentencing Gree Electric Appliances to compensate approximately 55 million yuan; In addition to the judgment made by the Ningbo Intermediate People's Court in December 2021, the amount of compensation awarded to AUX has exceeded 220 million yuan. Gree Electric Appliances is dissatisfied with all the verdict results, and AUX Company is dissatisfied with one of the verdict results and has filed an appeal.

The latest progress is that this series of disputes was publicly heard in the Supreme People's Court in April this year.