Yushu IPO faces "patent sniping" at a critical time? Supreme Court: Plaintiff "carefully calculated"

Recently, the Supreme People's Court made a final ruling on the patent infringement dispute between the daily chemical company LuWeiMei and YuShu Technology (hereinafter referred to as "YuShu"), rejecting all appeals from LuWeiMei and upholding the original judgment. In the judgment, the Supreme Court used rare phrases such as "both meticulously calculated and capricious," clearly stating that LuWeiMei's litigation behavior "violates the principle of good faith and is condemned." This case occurred during a critical period for YuShu's IPO, and the judicial characterization during this time has attracted widespread attention from the capital market and the legal community. Legal professionals analyzed to the Shanghai Securities Journal that the Supreme Court's stern statement not only serves as a decisive ruling in an intellectual property dispute but also provides judicial reference for how technology companies and the capital market can identify, respond to, and curb speculative behavior using litigation as a tool. Court Ruling: Technical Features Do Not Match, Rejection of Infringement Claims The core dispute in this case is whether the Gox robotic dog manufactured and sold by YuShu infringes on the invention patent rights held by LuWeiMei (the invention patent named "An Electronic Dog," hereinafter referred to as "the patent in question"). This patent was first applied for by Zhejiang Jianmou Electronic and Electrical Co., Ltd. in 2016. On January 16, 2025, the patent rights were transferred to an outsider, Hangzhou Lianmou Technology Trade Co., Ltd., and on June 25, 2025, were again transferred to LuWeiMei. Five days after obtaining the electronic dog patent, LuWeiMei filed a lawsuit against YuShu on July 1, 2025. In the first instance, LuWeiMei claimed that its patent claim 1 clearly defined technical features such as "the appearance of the electronic dog is covered with color-changing bionic fur," "liquid level sensor," and "gas sensor." The Gox robotic dog from YuShu completely covers the patent claims in question, constituting direct, equivalent, and indirect infringement. LuWeiMei also stated that YuShu leveraged its own reputation, with hundreds of millions of views on national media and related websites showcasing the Gox robotic dog performing in different colored outfits; the Gox robotic dog used inferior technology, resulting in a performance reduction of over 60%, damaging LuWeiMei's market reputation, encroaching on LuWeiMei's market share, and causing LuWeiMei direct losses exceeding 200 million yuan. YuShu denied the infringement, stating that its product did not include the three key technical features of "liquid level sensor," "gas sensor," and "color-changing bionic fur" in the patent in question. "On the contrary, LuWeiMei's actions constitute malicious litigation aimed at achieving its ulterior motives by leveraging YuShu's reputation." The first-instance court compared the technical claims of both parties and ultimately rejected all litigation requests from the plaintiff LuWeiMei, ruling that LuWeiMei's claim that the Gox robotic dog constituted infringement was not established. Taking "gas sensor" as an example, the court found that the role of the laser radar in the Gox robotic dog is to obtain three-dimensional information about the surrounding environment in real-time and intelligently avoid obstacles during movement, ensuring the safety of the robotic dog and the surrounding environment, which is not equivalent to the "gas sensor" in the patent in question. Dissatisfied with the first-instance ruling, LuWeiMei appealed to the Supreme Court, requesting the revocation of the first-instance judgment and a ruling in favor of all litigation requests made by LuWeiMei in the first instance After examination, the Supreme Court believes that the facts established in the first instance are true and confirms them; it dismisses the appeal and upholds the original judgment. The Supreme Court also specifically pointed out that anyone exercising rights and participating in litigation must adhere to the principle of good faith. In this case, Lu Weimei obtained the patent rights involved from a third party on June 25, 2025, but did not actually manufacture or sell the patented products, and her business scope is clearly unrelated to the patented technology involved. Just five days later, on July 1, she filed a lawsuit against Yushu; in the complaint, she claimed that Yushu's infringement profits amounted to tens of millions, but on one hand, she only claimed a compensation request of 500 yuan, while on the other hand, she requested "subject to the audit of the People's Court." In the second instance, Lu Weimei, after the first instance had determined that Yushu did not constitute infringement and her claims were dismissed, requested the Supreme Court to first rule that Yushu compensate her 80 million yuan, and used this as the amount for her compensation claim, but just one day after the second instance inquiry ended, she confirmed in writing that it was 500 yuan. "The aforementioned actions of Lu Weimei in the first and second instances can be described as both meticulously calculated and capricious. On one hand, her intention was to avoid paying the case acceptance fee required for claiming high compensation, and on the other hand, to exert additional litigation pressure on the opposing party. Lu Weimei's litigation actions violate the principle of good faith, and this court condemns them," the Supreme Court pointed out. Lawyer Interpretation: How is the patent attack profitable? What judicial signals does it release? It should be noted that the timing of Lu Weimei's lawsuit coincided with Yushu's special period of advancing its IPO. Choosing to strike at this time is seen as "profitable." Fang Xiao, director of the Intellectual Property and Frontier Technology Committee of Shanghai Junyue Law Firm and deputy director of the Intellectual Property Training Base (Wuhan) in Hubei Province, believes that the "chip value" of a patent lawsuit during the IPO stage is far higher than at ordinary time points, and the Supreme Court's response has clearly revealed the essence of this lawsuit. "In practice, the initial cost of launching a patent attack is extremely low, and the risk of losing is often just a court ruling of non-infringement, returning to the starting point. However, for companies planning to go public, once faced with a lawsuit, they may encounter enormous pressures such as delays in issuance, multiple inquiries from the review committee, increased risks for investors, and decreased issuance prices. If the sued company, under the pressure of the IPO window and public opinion, chooses to compromise and settle, the plaintiff can leverage this to achieve huge profits of millions or even tens of millions at a very low cost," Fang Xiao said. Chen Jun, a partner at Tianhe (Shanghai) Law Firm, which specializes in intellectual property, added that the acceptance fee for the first and second instances is only 50 yuan. The IPO of a company is a "time-sensitive" window period, and once faced with a lawsuit, it may lead to a halt in review or failure to go public. The initiator intends to use this "procedural leverage" to force the company to settle at a high price to avoid obstacles to its listing. Regarding the business model involved, Fang Xiao explained that its core is to acquire dormant peripheral patents at a low cost and frequently shuffle them between related shell companies with low registered capital. In mature industrial stages, such institutions precisely target high-valued leading companies with concentrated technology paths, rapid product iterations, and high market shares that are at critical nodes in the capital market, launching surprise attacks and using broadly vague patent claims to engage in "patent trolling," aiming to achieve high "extortion-style settlements." In recent years, Chen Jun has participated in handling multiple intellectual property litigation cases for companies planning IPOs. He suggests that the core strategy for companies to deal with such "patent sniping" is "to strike fast against slow, and to stop litigation with litigation." Legally, it is necessary to request a quick judgment to obtain an effective ruling of "non-infringement" as soon as possible to clear the listing obstacles; at the same time, file for patent invalidation and counterclaim for malicious litigation damages. Financially, a special litigation reserve fund should be established, and high-priced settlements should be refused. The Supreme Court has clearly pointed out that the plaintiff's "careful calculation" and "capriciousness" are characterized as violations of the principle of good faith, and condemned. In Fang Xiang's view, this releases three strong judicial signals: First, the judicial authorities are clearly distinguishing between normal patent rights maintenance and behaviors such as "litigation hostage-taking" and "system arbitrage" that exploit sensitive nodes; Second, it clearly conveys the direction that "patent rights are not tools for extortion, and litigation is not a bargaining chip"; Third, from recent judicial practices, the courts have increased the intensity of technical reviews, such as the "comprehensive coverage principle," allowing for quick resolution of frivolous lawsuits lacking necessary technical features, which will significantly reduce the success probability of malicious rights protection and its negative impact on the investment environment. Chen Jun believes that this releases a strong signal of the judicial system's shift from "formal legality" to "substantive integrity." The Supreme Court's public condemnation and use of the "motive based on opportunity" method for malicious determination indicate that the courts are beginning to deeply examine the subjective intentions of the plaintiffs. For hard technology companies and the venture capital institutions behind them, the Supreme Court's statement expresses a determination to defend the essence of innovation. Companies can focus more on innovation rather than responding to baseless harassment, and venture capital institutions reduce the probability of misjudging quality projects due to abnormal litigation, which helps to solidify confidence in scientific innovation and market expectations. Risk Warning and Disclaimer The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investing based on this is at their own risk