protection of intellectual property rights in china

zhonglin he

supreme people’s court, prc

january 19-20, 2006,  san francisco

agenda

brief introduction of development of the chinese ip law system

mechanism of ip enforcement

judicial protection of ip

patent infringements

future perspective

development

short history but speedy development – compliance with international standards

in very ancient china: skill of type printing

ineffective for 70 years: legislation in the end of the qing dynasty; before & after the founding of the prc

1978: the policy of reform & opening up

three major ip legislative campaigns:

1982 – 1984: trademark law and patent law

1990 – 1993: copyright law and  revision of tl/pl

2000 – 2001: amendment of laws for wto accession

subject matters

copyright and related rights including computer programs

patents: invention, utility model & design

trademarks for goods & service: certification marks and collective marks, geographical indications; 3-d marks & color marks v. sound & smell marks

new varieties of plant

layout-designs (topographies) of integrated circuits

unfair competition: trade secret, goodwill, trade names, package and decoration of well-known commodity, domain names on the internet

major aspects of ip legal system

procurement of iprs:

recognition of copyright

granting and maintenance (or revocation) of industrial properties

enforcement of iprs:

mainly dealing with infringements

acquisition & maintenance of ipr
- authorities

sipo / cpo & prb: patents & integrated circuits

saic / tmo & trab: trademarks

nca: copyright / no formality requirement /  voluntary registration

ministry of agriculture & national administration of forest / nvpo & nvprb: nvp

acquisition & maintenance of ipr
-basic procedure

application for patents, tms, nvps & integrated circuits

examination: grant or rejection

re-examination: revocation or maintenance

administrative litigation:

1st instance in no.1 intermediate courts of beijing

2nd instance in the high court of beijing

maybe launching a retrial proceeding in the supreme people's court

enforcement mechanism

dual-track system

administrative approach

active investigation and punishment of administrative liability for serious infringements

passive intervention: handling infringements upon parties’  request

judicial approach

civil action: infringee v. infringer

administrative action / judicial review: infringee or infringer v. administration

criminal action: prosecutor v. infringer

administrative approach

designated ip administrations for dealing with infringements

local ip (patent) administration: patents, in big cities

aics: trademarks, trade name and unfair-competition, at all levels above county

agricultural administration & forest administration: nvp, above provincial level

sipo: integrated circuits

nca and local cas in provincial level & big cities: copyright

other administrations: customs, mpc & psb, aqsiq & tsb, mc & cb

administrative approach (cont’d)

performance

patent ads

1/3 cases in total since 1985

aics

20,000-30,000 cases per year

copyright ads

about 10,000-20,000 piracy cases per year

administrative approach (cont’d)

pros and cons:

actively investigate & punish ip infringements

cost effective and less time consuming

two sets of contentious proceedings and may lead to contradictory decisions

time and cost: uncertain

judicial approach
- general court system

supreme people’s court (nationwide, 1)

high people’s courts (provincial, 31)

intermediate people’s courts (big cities, 404)

primary people’s courts (counties and districts, 3135)

ip divisions & judges

ip divisions within courts

spc (1996)

all high courts

most intermediate courts in provincial capital & advanced big cities

15 district courts

patent court or ip court of appeal ???

scope of ip divisional jurisdiction:

judicial review for revocation of iprs in beijing courts

ipr infringements

unfair competition

technology contracts

non-infringement declaration

specialized ip judges

designated jurisdiction

exclusive jurisdiction over judicial review for revocation cases

non-exclusive but designated jurisdiction over ip infringements

51 intermediate courts for patents

37 intermediate courts for new varieties of plant

43 intermediate courts for integrated circuits

all intermediate courts for trademarks, copyright, unfair competition, technology contracts, etc.

case load & trend

continuously and rapidly increasing

increased yearly by 20-30% in recent years

10,654 of 2004 (↗ 26.07%)

12,700 of jan-nov, 2005 (↗ 26.94%)

2,761 patent (↗ 13.48%)

increase of ip civil cases since 1999

cases distribution 1985 - 2004

cases distribution in 2004

cases distribution jan-nov, 2005

geographical distribution

ip civil cases in 1st instance were concentrated in 6 provincial areas (economically advanced areas):

guangdong

beijing

shanghai

jiangsu

zhejiang

shandong

account for 65.83% in total (31 provinces) in 2004

time & costs

statutory period of trial for domestic cases

1st instance: 6 months + 6 months extension

2nd instance: 3 months + extension

no such statutory period for foreign related cases, but same as domestic cases in practice, generally can be concluded within a reasonable term 

less than in many other countries in practice, but patent cases maybe longer than others

fair trial

no real statistics for wrong decisions

no.1 intermediate court of beijing in 2005

 6 foreign related patent infringement cases concluded

won 5 v. lost 1

remedies & civil penalties

most important civil remedies

preliminary injunction (pre-trial provisional measures)

compensation of damages

civil penalty measures

admonition

pledge of repentance

confiscation (the property used in carrying out illegal activities and the illegal income obtained therefrom)

fines

detention

pre-trial provisional measures

china

preliminary injunction

pre-trial preservation of property

pre-trial preservation of evidence

uk &

interlocutory injunction

freezing injunction (mareva injunction)

search order (anton piller order)

legal basis

pre-trial provisional measures

established in 2000 -2001

time for filing application

before an action

filing the case

in the course of proceedings

guarantee, supplementary guarantee & counter-guarantee

application for reconsideration

implementation

preliminary injunction

grounds for application provided by law

on-going or imminent infringement

irreparable harm

factors for consideration set down by ji

likelihood of infringement

irreparability of losses

guarantee

public interests

spc’s basic attitude

actively but cautiously

particularly stress on the likelihood of infringement

preliminary injunction
- likelihood of infringement

jiangsu huasheng v. eli lilly

particularly stress on the likelihood of infringement

patent: no literal infringement and complicated technical comparison needed, generally no preliminary injunction

non-infringement declaration or invalidation filed in advance, cautiously decide on preliminary injunction

national conference on ip trial in 2005

likelihood of infringement is a precondition and should be considered firstly

it is relatively easy to judge the likelihood of infringement in trademark and copyright cases, so that the court should more actively grant the injunction

preliminary injunction
- irreparability of losses

national conference on ip trial in 2005

monetary losses can be a serious harm to right holder, but the court should pay more attention to losses in relation to business reputation, moral rights and preponderance of market competition

any delay by the claimant may be fatal

whether it would cause greater hardship (financial or otherwise) to grant or refuse the injunction

more actively grant injunctions to on-going infringements, e.g. exhibitions and advertisements

lv & xiao v. shanghai changjiang habiliment factory

the claimant holds an utility model patent, injunction ordered by no.1 shanghai intermediate court

stop publicizing and selling of the alleged infringing goods in china international fair for sewing equipment in 2003

preliminary injunction
- guarantee

national conference on ip trial in 2004

credit guarantee provided by companies of good reputation can be recognized

sum of guarantee should be reasonable and in the limit of recovering losses of respondent and paying expenses for implementation of the injunction

national conference on ip trial in 2005

sum of guarantee for pre-trial preservation of evidence should be limited to the value of the seized goods and paying expenses for implementation of the order

preliminary injunction
-public interests

national conference on ip trial in 2005

to evaluate the public interests in an application for injunction, the court should not only consider whether it would harm to public interests if granting the injunction, but whether it would simultaneously harm to public interests when causing losses of the claimant if refusing the injunction

pre-trial preservation of evidence

grounds for application provided by law

in order to stop infringement

evidence will possibly be destroyed or lost or difficult to be obtained again in the future

factors for consideration set down by ji

likelihood of infringement

having evidence or giving reasonable explanation to show the evidence controlled by the accused is impossible to be collected by the claimant but it is crucial for the case and may be destroyed

spc’s basic attitude

taking into account the difficulties for parties to collect evidence, the courts should be more actively to give the order and implement it immediately

enforcement of preliminary injunction

up to oct, 2005:

totally 300 applications received, 296 concluded (foreign related 25)

176 granted, 23 dismissed, 97 withdrawn or other

actual approval rate: 88%

200 applications for patent injunction, 197 concluded (foreign related 19)

109 granted, 14 dismissed, 74 withdrawn or other

actual approval rate: 88%

enforcement of pre-trial preservation of evidence

up to oct, 2005:

totally 470 applications received, 445 concluded (foreign related 7)

301 granted, 21 dismissed, 123 withdrawn or other

actual approval rate: 93%

215 applications for patent cases, 199 concluded (foreign related 5)

165 granted, 11 dismissed, 23 withdrawn or other

actual approval rate: 93%

calculation of damages

principle of compensation

compensatory rather than punitive

full compensation of damages in ip cases

methods of calculation

loss of ip owner

gains of infringer (shifting burden of proof)

referring to royalty (1-3 times in patent infringements)

statutory damages (no more than rmb 500,000 =us$ 60,000)

calculation of damages (cont’d)

statutory damages

can be directly claimed, but should adduce evidence or give reasonable explanation

the sum of statutory damages should be separately decided against each infringing act referring to different works, marks or patents in same case, but the total sum should not exceed the possible gains of infringer

reasonable expenses and attorney’s fees

the necessity of expenses and proportion of upheld claims should be taken into account

attorney’s fees should also be appropriate expenses which have been actually paid and with official receipts

new trend: “10:1” damages clause of a film distribution agreement upheld by the spc in 2002

patent enforcement

substantive criteria of adjudicating patent infringement

compromise interpretation of claim

full coverage of the essential technical features (all elements)

doctrine of equivalents

forbidding reversal (estoppel)

designating redundancy (refused to apply)

prior art defense

ip criminal protection

7 kinds of ip crime (criminal code 1997)

art. 213  crime of counterfeiting registered tm

art. 214  crime of selling merchandise under a faked tm

art. 215 crime of forging or manufacturing representations of a registered tm or selling such representation

art. 216  crime of counterfeiting patent (maximum 3 years imprisonment)

art. 217  crime of infringing copyright

art. 218  crime of selling infringed duplicate works (maximum 3 years imprisonment)

 art. 219  crime of infringing trade secret

no more than 7 years imprison

ip criminal protection (cont’d)

public prosecution:

claimant      police      prosecutor       court

ip administrations     police      prosecutor      court

private prosecution:

claimant      court

jurisdiction (criminal divisions) :

1st instance in primary courts

2nd instance in intermediate courts

ip criminal protection (cont’d)

judicial interpretations on ip crimes (2004): lower down the thresholds

complementary ji on audio-visual products (2005)

jan–nov 2005

3250 ip related criminal cases received by courts (↗28.21% )

judicial interpretations

civil law system & no doctrine of precedent

spc is authorized by the constitution to interpret laws

interpretations themselves are applied as laws.

1978-2005, spc has issued about 50 jis on ip protection and the most remain in force.

judicial interpretations (cont’d)

under drafting jis

unfair competition

new varieties of plants

mtv

conflicts of iprs

criteria of adjudicating upon patent infringement

prosperous future:
demand for ip protection

“the patent system has added the fuel of interest to the fire of genius" (abraham lincoln )

no ip protection, no innovation

not only the need for china to build up the international credit and to expand the international co-operation

but more essentially, the domestic demand to inspire independent innovations.

high urge

president hu jintao: turning china into an innovation-oriented country in 15 years

to reinforce the strength of ip protection

to improve the national ip system,

to enhance the ip judicial & administrative enforcement

to severely punish ip infringers

government efforts

special campaign on ip protection:

aug, 2004 - 2005

national working group for ip protection of the state council

established in 2004

drafting the national strategy of ipr

judiciary echoes

xiao yang (chief-justice & president of spc) reaffirmed

the courts across the country must try their best to intensify ip judicial protection

judicial interpretations on ip crimes & others

research on improvement of the judicial system for protection of ipr

building up a more transparent and powerful ip judicial protection

publishment of judgements and decisions on www.chinacourt.org.

thank you ！

hezhonglin@vip.sina.com

www.chinaiprlaw.cn

no.27, dongjiaominxiang, beijing 100745, prc