Hualu Hengsheng lost the first-instance patent dispute; melamine production facilities may cease operations

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Hualu Hengsheng lost the first-instance trial in a patent dispute; melamine production may cease. Author/Source: Coal Chemical Industry 114 Forum Date: July 6, 2020 Clicks: 17 On July 1, Shandong Hualu Hengsheng released a statement regarding the progress of the lawsuit; it lost the first-instance trial due to an intellectual property dispute, and the court ordered the company to pay compensation for economic losses and reasonable costs related to rights protection, totaling 80 million yuan. 　　Lost the first-instance trial; losses could reach 80 million. On July 1, Hualu Hengsheng released a statement on the progress of the litigation. Sichuan Jinxiang Sairui Chemical Co., Ltd. (Jinxiang Sairui) and Beijing Yejing Technology Co., Ltd. (Yejing Technology), as holders of the patent rights for inventions numbered ZL201110108644.9 and ZL201010216437.0, sued four defendants: the company in question, Ningbo Chemical Research and Design Institute Co., Ltd. (Ningbo Design Institute), Ningbo Yuandong Chemical Group Co., Ltd. (Ningbo Yuandong), and Yin Mingda. According to the announcement, these four defendants collaborated to carry out the engineering design, manufacturing, and construction of the melamine project. They also used the pressure vapor quenching process, combined heat exchangers, and fluidized bed reactors, thereby infringing on Jinxiang Sairui’s exclusive rights to its invention patents and causing damage to Jinxiang Sairui as a result of such infringement. 　　Recently, the Guangdong Provincial High Court issued a first-instance civil judgment ordering Hualu Hengsheng, Ningbo Design Institute Company, and Ningbo Yuandong Company to immediately cease manufacturing amine production systems that infringe upon the patent rights held by the plaintiffs Jinxiang Sairui and Yejing Technology, with patent number ZL201110108644.9 and title “Energy-saving and cost-reducing vapor quenching method for amine production systems and related processes”, as of the date when the judgment takes effect ； The defendant, Hualu Hengsheng, shall immediately cease using the melamine production system that infringes upon the patent rights related to this product ； As of the date the judgment takes effect, Hualu Hengsheng shall immediately cease any acts that infringe upon the patent rights held by the plaintiffs Jinxiang Sairui and Yejing Technology, namely the invention patent with patent number ZL201110108644.9 and title “Energy-saving and cost-reducing gas-phase quenching method for melamine production system and its process”; in other words, it must stop using this patented method as well as selling melamine products obtained directly through this method. 　　Regarding economic compensation, the judgment orders Hualu Hengsheng to compensate the plaintiffs Jinxiang Sairui and Yejing Technology for their economic losses and reasonable costs associated with pursuing their rights within 10 days from the date the judgment takes effect; the defendant Ningbo Design Institute and Ningbo Yuandong are required to bear joint and several liability for 40 million yuan of this amount. 　　Investment projects may be restricted. Jinxiang Sairui is a local chemical enterprise in Sichuan; it has established a comprehensive industrial network in Sichuan, Xinjiang, Jiangsu and other regions. It is the world’s largest producer of melamine and Asia’s largest producer of nitro compound fertilizers. 　　Jinxiang Sairui states that, with the support of a research team from Tsinghua University, it has successfully developed the third-generation vapor-pressure processing technology. The capacity of each unit of this equipment has increased from 20,000 tons initially to 50,000 tons, and now to 80,000 tons, making it the largest such unit in the world. This advancement has pushed the level of melamine production far forward. The increase in the size of a single set of equipment has led to a reduction in energy consumption. Compared to similar companies, Jinxiang Sairui consumes only half as much electricity as them. 　　If a judgment is rendered to ultimately stop the use of this patented method and to halt the sale of melamine products obtained directly through that method, it will have a certain impact on Hualu Hengsheng. 　　According to Hualu Hengsheng’s 2019 annual report, the company completed the self-inspections for environmental compliance as well as the special inspections conducted by environmental authorities for projects such as the 100,000-ton per year melamine production facility (Phase II) and the energy-saving renovation project for the air separation unit. It also submitted the relevant reports on the website of the Ministry of Environmental Protection, as required. 　　On December 28, 2018, Hualu Hengsheng announced the commissioning of the project. Therefore, if it loses the lawsuit in the end, the 100,000-ton per year melamine project (Phase 2) will be unable to continue operating, and the company will lose a significant amount of its investment.