[Direct answer]In the Beijing area, it's possible, but only for exemption from compensation, not exemption from cessation of infringement. For those who use, promise to sell, or sell infringing products for production and business purposes, if they can prove that their products have a legal source—that is, they were obtained through legitimate channels at reasonable prices and they did not know subjectively that the products were unauthorized infringing products—they will not bear liability for compensation; but they should still bear the obligation to stop infringement, that is, to stop using, promising to sell, or selling the infringing products. It should be noted that the defense of legal source only applies to users, those who promise to sell, and sellers, not to those who manufacture or import infringing products. Manufacturers cannot exempt themselves from compensation by claiming "they were unaware" or "they had a source". When providing evidence, they should provide sales contracts, invoices, supplier information, payment receipts, etc. to prove that the acquisition channels are legitimate, the prices are reasonable, and they can point to specific suppliers. In summary, the defense of legal source is an important exemption from liability for sellers, but its effect is limited to exemption from compensation, not exemption from the obligation to stop infringement.

1. Problem background and typical scenarios

When a seller is sued by a patent holder, they often defend themselves by saying "the goods were purchased through regular channels and they were unaware of the infringement". A typical scenario is: a distributor purchases products from an upstream supplier and sells them, and the rights holder claims infringement and demands compensation; the distributor hopes to be exempt from liability due to the legal source of the goods. The controversy focuses on the applicable subject of the defense, the conditions for establishing the defense, and the requirements for providing evidence.

II. Key points of contention

First, the scope of application and the subject of the defense of legal source; Second, how to determine "legal source" and "unawareness"; Third, the legal effect of the defense (exemption from liability but not exemption from suspension); Fourth, the burden of proof and evidence requirements; Fifth, the relationship with liability for compensation and punitive damages. In practice, the source of proof and the subjective state are key factors.

III. Professional analysis by Henglue Lawyers

The first layer concerns the applicable subjects. The defense of lawful sources applies to users, those who promise to sell, sellers, manufacturers, and importers, but not to the producers themselves. Therefore, the statement "I produced it myself" not only fails to exempt liability, but may even lead to heavier responsibilities. The second layer focuses on the establishment conditions. These include: (1) obtaining products through legitimate channels and from lawful sources; (2) ensuring reasonable pricing; (3) being able to identify the supplier; and (4) not knowing subjectively that the products infringe intellectual property rights. In practice, this typically requires providing purchase and sales contracts, invoices or payment receipts, supplier information, and payment records to form a complete evidence chain proving the source of the products. The third layer deals with the legal effects. When the defense is successful, the defendant is exempt from liability for compensation, but must immediately cease infringement (such as stopping use, promising to sell, or actually selling infringing products) and may still bear the reasonable expenses incurred by the rights holder in enforcing their rights. If the defendant continues infringement after being notified or knowing about the infringement, they will no longer be exempt from liability. The fourth layer relates to the calculation of compensation. Even if the defense fails, the compensation for infringement is determined based on the rights holder's losses, the infringer's profits, a reasonable multiple of the licensing fee, or statutory compensation. In cases of minor infringement or small-scale operations, the compensation amount is typically reduced accordingly. The fifth layer shares practical experience in comparing with trademark and copyright cases. In a trademark infringement and unfair competition dispute handled by Henglue Lawyers, the court partially adopted the lawyers' arguments, recognizing infringement but significantly reducing the compensation amount. This case highlights that legal authorization and the circumstances of the infringement are important defense points for reducing compensation, but exemption from liability differs from mitigation of liability, which requires specific evidence to support the claim. Henglue Lawyers advises: Sellers should establish a system for inspecting incoming goods and maintaining supplier records, and retain contracts, invoices, and communication records to provide effective evidence in litigation.

This case is handled by Beijing Henglu Law Firm.Liu YuanyuanThe attorney (practice license number: 11101202011201094, subject to the document issued by the judicial administrative organ) acts as the agent.

IV. Practical suggestions and legal basis

The first step is to establish a purchase inspection system to verify the supplier's qualifications and the product's ownership status. The second step is to keep complete records of purchase and sales contracts, invoices, payment records, and logistics documents. The third step is to immediately stop sales and secure evidence of the source after being sued for infringement. The fourth step is to assert the defense of lawful source to avoid compensation, while assessing the risks of continuing sales. The fifth step is to resolve the dispute through negotiation or litigation and strive to reduce compensation. The main legal basis is Article 77 of the Patent Law of the People's Republic of China regarding the defense of lawful source, and the relevant provisions of the Tort Liability Chapter of the Civil Code of the People's Republic of China. The specific application shall be subject to the currently effective regulations.

5. Henglu Law Firm's Advice

The three defenses of legal source: They only apply to sales, use, and promises of sale, and manufacturers cannot use them. It is necessary to prove that the channels are legitimate, the prices are reasonable, and the suppliers can be identified, and the buyer was unaware of the infringement. If the defense is successful, the seller will be exempt from liability but still required to stop the infringement. If the seller continues to sell after knowing about the infringement, they will still be liable for damages. For matters involving intellectual property and defenses against infringement, you can consult the following channels:Intellectual property protection and corporate lawWe can provide a comprehensive solution for services, which includes integrating contractual and supply responsibilitiesBusiness and contract disputes in enterprisesFor reference, the sections related to the enforcement of judgments and the recovery of funds are as follows:Creditor's rights and debts, and enforcementFor columns related to difficult intellectual property disputes, you can seek advice from usSpecial servicesTeam.

VI. Frequently Asked Questions

Q1: Under what circumstances can one claim the defense of legitimate source?

As a user, a seller who has made a promise to sell, or a seller, if they can prove that the product was obtained through legitimate channels at a reasonable price, can identify the supplier, and subjectively did not know that it was an infringing product, they can claim the defense of legitimate source. This defense does not apply to manufacturers or importers. If the defense is established, they are exempt from compensation, but they should stop the infringement.

Q2: Do I still need to pay compensation even after the defense of legal source is established?

Generally, no compensation is required, but the infringement should still be stopped. The effect of establishing a defense is to exempt from liability for compensation, but not to exempt from the obligation to stop using, promising to sell, or selling infringing products; in addition, the defendant may be required to bear the reasonable expenses incurred by the right holder in protecting their rights. If the defendant continues to infringe after being notified or knowing about it, they will lose the basis for exemption from liability and should bear compensation.

Q3: What evidence do I need to provide?

The following documents should be provided: sales and purchase contracts, invoices or receipts, payment vouchers, the supplier's basic information, logistics or delivery notes, and materials that can prove that the prices obtained are reasonable. If necessary, the supplier's proof of rights or authorization documents should also be provided. The evidence should form a complete chain, demonstrating that the source is legitimate, the prices are reasonable, and the specific supplier can be identified.

Q4: I produced it myself. Can I say I'm not responsible for any technical issues?

No. The manufacturer cannot invoke the defense of legitimate source. "Not knowing the technology" or "not aware of the infringement" cannot exempt them from liability for compensation. Manufacturing infringing products is usually regarded as having obvious subjective fault, and the responsibility is heavier. If it is indeed entrusting others to process or there is an upstream supply relationship, they should review the legal nature of their own role and then decide on the direction of the defense.

Q5: If the defense fails, will the compensation be very high?

It depends on the circumstances. Compensation is usually determined based on the rights holder's losses, the infringer's profits, a reasonable multiple of the license fee, or statutory compensation; for small-scale sales, short durations, or low profits, the amount is generally lower. Even if the defense is not successful, it is possible to reduce the amount of compensation by proving that the infringement was minor or that the infringer stopped the infringement in a timely manner.

The above answer is based on the judicial practice in Beijing. The adjudication standards in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the necessary evidence to avoid missing the statutory time limit. →Intellectual property protection legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In case of disputes, please consult a practicing lawyer in time.