Intellectual Property Protection by Chinese Courts in 2018

Introduction

In 2018, under the strong leadership of the Central Committee of the Communist Party of China (CCP) with Xi Jinping as the leadership’s core and guided by the underlying precepts of Chinese socialism for the new era, the People’s Courts have applied the principles and implemented instructions decided at the 19th National Congress of the Communist Party of China (“Party Congress”), the second and third plena of the 19th CCP Central Committee and the Central Political and Legal Work Conference. They studied and applied the ideals of General-Secretary Xi Jinping’s key addresses, and fostered the “four aspects of consciousness”—consciousness in political correctness, in serving the broader interests, in following the core leadership, and in staying aligned with the central party leadership; the “four matters of confidence”—confidence in the path of Chinese socialism, in the theoretical foundation of the path, in the system of Chinese socialism and in the Chinese culture; and the “two pillars to safeguard”—safeguarding the core status of General Secretary Xi Jinping, and the central and unified leadership of the CCP Central Committee. The People’s Courts adopted a steady and progressive approach to work, keeping in mind their earliest aspirations and the current mission, and discharging adjudicatory responsibilities as conferred by the Constitution and the law. Our judges have been our trusted achievers, as they endeavoured to deliver for the people a sense of equality and justice in every case handled by the judiciary. Reforms in intellectual property adjudication have deepened, and supervision and guidance for adjudicatory operations have increased. And as the courts strive to make the courtroom the principal forum for intellectual property protection, they are also providing effective judicial safeguards, in the process of working tenaciously toward the “two centennial goals”, and toward achieving the China dream of the great rejuvenation of the Chinese nation.

I. Buttressing judicial protection and leveraging

the judicial process

In a speech delivered at the conference celebrating the 40th anniversary of China’s reform and opening-up, General-Secretary Xi Jinping emphasised the importance of following through the innovation-driven development strategy by creating a more enabling eco-system for innovation and accelerating proprietary innovation of key technologies to forge new socio-economic growth engines., Given China’s strategic thrust of elevating technological innovation capabilities and promoting high-quality economic development, strengthening protection of intellectual property is a natural and necessary option. Last year was marked by soaring case-load, with massive increase in new types of cases and cases of gravity and complexity. Adjudication was thus more challenging. Law enforcement and adjudication is and will always be the people’s courts’ top priority, where civil adjudication is the primary focus of the courts’ adjudication practice, followed by administrative and criminal adjudication, both of which being equally important. The fact-finding process is rigorous, law-application prudent and judicial policies elucidated to ensure lawful and efficient adjudication of intellectual property disputes.

Last year, the People’s Courts accepted a total of 334,951 intellectual property cases, including first instance and second instance cases and applications for extraordinary legal remedy to reopen cases, and concluded 319,651cases (including carried forward cases), representing a respective year-on-year increase of 41.19% and 41.64%.

(1) More effective adjudication of civil disputes to ensure sustained and sound socio-economic development

Throughout the past year, the People’s Courts have directed efforts to meeting the new goals and new demands on the intellectual property judicial protection under the comprehensive deepening of reform agenda, delivered fair justice, and strengthened civil adjudication to better protect intellectual property rights and the full interests of the rights holders.

In 2018, the local people’s courts accepted 283,414 and concluded 273,945 civil intellectual property cases of first instance, and the respective year-on-year increases were 40.97% and 41.99%. Among the newly accepted cases, 21,699 were patent cases, an increase of 35.53% from last year; 51,998 trademark cases, a 37.03% increase; 195,408 copyright cases, a 42,36% increase; 2,680 technology contract-related cases, a 27.74% increase; 4,146 unfair competition cases (including 66 monopoly cases), a 63.04% increase. Other intellectual property disputes constitute 7,483 cases, 44.60% increase from last year.

The local people’s courts accepted 27,621 (26.60% year-on-year increase) and concluded 26,288 (28.08% year-on-year increase) civil intellectual property cases of second instance. For extraordinary legal remedies to reopen cases terminated by a final judgement (zaishen), the local people’s courts accepted 223 cases and concluded 221 cases, representing a increase of 189.61% and 301.82% respectively.

In the same year, the Supreme People’s Court accepted 913 new civil intellectual property dispute cases (81.51% year-on-year increase) and concluded 859 (74.24% year-on-year increase). The number of newly accepted and concluded second instance cases were 24 and 21, and the number of newly accepted and concluded reopened cases were 798 and 759, representing year-on-year increases of 76.55% and 71.72% respectively; among the certiorari (tishen) cases, 77 were newly accepted cases and 65 concluded cases.

High profile civil disputes involving intellectual property heard and concluded by the people’s courts during the year include: Wuxi Guowei Ceramic Electrical Appliances Co., Ltd (plaintiff/ appellant/ petitioner), Jiang Guoping (plaintiff/appellant/petitioner) vs. Changshu Linzhi Electrothermal Devices Co., Ltd (defendant/ appellant/petitionee), Suning.com Co., Ltd (defendant/appellee/ petitionee) involving a dispute on utility patent infringement; Guangzhou Compass Conference and Exhibition Service Co., Ltd (plaintiff/appellant,) vs. Fast Retailing Trading Co., Ltd. (UNIQLO) (defendant/ appellant) involving trademark infringement dispute; Beijing Baidu Network Technology Co., Ltd (defendant, appellant) vs. Beijing Sogou Technology Development Co., Ltd (plaintiff, appellee) involving an invention patent dispute; Beijing Microvision Horizon Technology Co., Ltd (plaintiff) vs. Baidu Online Network Technology (Beijing) Co., Ltd (defendant) et al. involving infringement of the right of dissemination via the information network; Beijing Dehong Seed Industry Co., Ltd (defendant/appellant/petitioner) and Henan Academy of Agricultural Sciences (defendant/appellant/petitioner) vs. Henan Goldoctor Seed Co.,Ltd (plaintiff/appellee/petitionee) involving infringement in new plant variety; Canon Inc. (plaintiff) vs. Shanghai MUMING Electronic Technology Co., Ltd (defendant) involving an invention patent dispute; 3M Company (plaintiff/ appellee) vs. Shanghai Yuanjia Plastic Co., Ltd (defendant/appellee) and Shanghai Yushuaiwei Industrial Co., Ltd (defendant/appellee) et al. involving invention patent infringement; Activision Publishing, Inc. (plaintiff/appellant) vs. Huaxia Film Distribution Co., Ltd (defendant/ appellant) involving infringements of copyright and trademark, unauthorised use of the unique names of well-known goods, and false advertising; and Crosplus Home Furnishings (Shanghai) Co., Ltd (plaintiff/appellant) vs. Beijing Zhongrong Hengsheng Wood Co., Ltd et al. (defendant/appellee) involving copyright infringement.

(2) More effective adjudication of administrative disputes to promote and supervise law enforcement by administrative agencies with regard to intellectual property

The newly amended Administrative Litigation Law and its judicial interpretations were rigorously applied during the past year. By stepping-up judicial review for cases involving the granting and validation of intellectual property rights, and exercising stronger oversight to support the administrative authorities to administer according to law, administrative law enforcement is further regulated.

In 2018, the local people’s courts accepted 13,545 administrative intellectual property cases of first instance, 53.57% more than last year. Specifically, 1,536 were patent cases (76.15% year-on-year increase), 11,992 were trademark cases (51.20% year-on-year increase) and 17 were copyright cases (no change from last year). 9,786 first instance cases were concluded, 53.15% more than last year. 3,565 administrative intellectual property cases of second instance were accepted by the local people’s courts (304.20% year-on-year increase), and the number of concluded cases totalled 3,217 (180.72% year-on-year increase), of which, the courts upheld the decisions of 2,708 cases, amended the first instance judgement for 446 cases, remanded 9 cases for retrial, dismissed 45 cases, overruled the decision in 1 case, and disposed of 8 cases through other methods.

The Supreme People’s Court accepted 642 and concluded 581 administrative intellectual property cases, representing an increase of 64.19% and 41.02% respectively. Specifically, 537 cases were reopened (55.20% year-on-year increase) and 484 concluded (32.24% year-on-year increase); 99 certiorari cases were newly accepted during the year and 89 concluded.

High profile administrative disputes involving intellectual property heard and concluded by the people’s courts during the year include: Christian Dior Perfumes LLC (plaintiff/ appellant/ petitioner) vs.

Trademark Review and Adjudication Board (TRAB) of the State Administration for Industry and Commerce (SAIC) (defendant/ appellee/ petitionee) involving the rejection of a trademark application; Shenzhen QVOD Technology Co., Ltd (plaintiff/ appellant) vs. Shenzhen Market Supervision Administration (defendant/ appellee) and Shenzhen Tencent Computer System Co., Ltd (third party in original instance) involving a dispute on copyright administration penalty; E Italian (Langfang) Electronic Engineering Co., Ltd (petitioner/ third party in original instance) vs. Wang He (plaintiff/appellant/ petitionee), Yao Peng (plaintiff/ appellant/ petitionee) and Patent Re- examination Board (PRB) of the State Intellectual Property Office of the PRC (defendant/ appellee/ petitionee) involving an administrative dispute over the invalidation of an invention patent; Guangzhou Sealy Electronic Technology Co., Ltd (petitioner/ third party in original instance), Jinan Qianbei Information Technology Co, Ltd (petitioner/ third party in original instance) vs. Poker City Network Technology (Shanghai) Co., Ltd (plaintiff/ appellant/ petitionee) and Trademark Appeals Board of the State Administration of Industry and Commerce (defendant/appellee) involving an administrative dispute on trademark opposition review; Andis Company (plaintiff/ appellant/ petitioner) vs. Trademark Review and Adjudication Board (TRAB) of the State Administration for Industry and Commerce (defendant/ appellee/ petitionee) and Ningbo Brofa Hairdressing Appliance Co.,Ltd (defendant/appellee/petitionee) involving an administrative dispute on trademark opposition review; Trademark Office of the State Administration for Industry and Commerce (defendant/ appellant) vs. Anhui Huayuan Pharmaceutical Co., Ltd (plaintiff/ appellee) involving a trademark administrative dispute; Trademark Office of the State Administration for Industry and Commerce (defendant/ appellant) vs. Shenzhen Tencent Computer System Co., Ltd (plaintiff/ appellee) involving an administrative dispute over the review of a rejected trademark application.

(3) More effective adjudication of criminal offences to sanction intellectual property infringement

The People’s Courts exercised their official powers of criminal adjudication as a powerful lever to deter criminal infringement of intellectual property rights and to maintain a positive legal environment that protects intellectual property.

In 2018, the local people’s courts accepted 4,319 intellectual property-related criminal cases of first instance, 19.28% higher than last year. Among the accepted cases, 4,117 were related to criminal infringement of registered trademarks (20.20% year-onyear increase), and 156 were criminal copyright infringement (7.69% year-on-year decrease).

The local peoples’ courts concluded 4,064 intellectual propertyrelated criminal cases of first instance in total, 11.59% higher than last year. 1,434 cases involved manufacturing and selling counterfeit or substandard goods, 30.36% higher than last year. Of the concluded first instance cases, 1,852 cases were related to the counterfeiting of registered trademarks, 9.78% higher than last year; 1,724 cases involved selling goods bearing counterfeit registered trademarks, 15.39% higher than last year; 305 were cases of illegal manufacturing or sale of goods bearing illegally produced registered trademarks, 17.31% higher than last year; 2 cases involved counterfeiting patents; 136 cases were related to the criminal infringement of copyright, 20% lower than last year; 6 cases involved selling infringing reproductions, 50% higher than last year; and 39 cases involved crimes of trade secret infringement, 50% higher than last year. ¹

For intellectual property-related criminal cases of second instance, the local people’s courts accepted 683 cases, 28.17% higher than last year; 668 cases were concluded, representing an increase of 23.70%.

High profile criminal cases involving intellectual property heard and concluded by the people’s courts during the year include:

Li Gongzhi and Wu Qin’s illegal production of registered marks; Jushi Online (Beijing) Technology Co., Ltd and Huang Ming, who were involved in a copyright infringement crime.

In 2018, intellectual property protection by the judiciary exhibits five key features.

Considerable increase in case numbers: In 2018, the number of civil, administrative and criminal intellectual property cases newly accepted by the People’s Courts was 334,951, 97,709 cases and 41.19% more than last year. First instance administrative and civil disputes increased substantially, by 53.57% and 40.97% respectively.

Most notably, Guangdong Province’s first instance administrative cases went up by 77.78% year-on-year, and Beijing accepted 52,463 new cases, 47.40% more than last year. Beijing, Shanghai, Jiangsu, Zhejiang and Guangdong continued to operate under a heavy caseload, having accepted 185,337 civil cases of first instance and accounting for 65.39% of the national total for the same category, with Shanghai increasing by 49.77% and Jiangsu Province by 45.48% year-on-year. Zhejiang Province’s new first instance patent cases grew by 79.53%.

1. The above publicised figures exclude the total number of first-instance intellectual property-related criminal cases, the number of cases involving the manufacturing and sale of counterfeit and substandard goods, the number of cases relating to illegal business operations involving infringement of intellectual property rights, and the number of other intellectual property infringement cases.

Many other provinces also witnessed an explosive year-on-year increase. For example, the case-load for Gansu Province grew by 290%, Guizhou Province by 157.22%, Qinghai Province by 155%, Shaanxi Province by 89.4%, Tianjin Municipality by 82.3%, Sichuan by 67.57%, Guangxi autonomous region by 40.05%, and Hainan Province by 156.16%. Also, Hebei Province’s newly accepted first instance cases grew by 156.44% and Heilongjiang Province’s newly accepted first instance civil cases increased by 130.71%. Shanxi Province’s newly accepted first instance cases grew by 65.6%, of which cases involving copyright disputes increased by 199%, and second instance cases increased by 155%.

Significantly greater case impact: By hearing different types of cases fairly and efficiently, a digest of cases with significant impact has been created, and intellectual property adjudication by the People’s Courts have received increasing attention from home and abroad. For example, for Christian Dior Perfumes LLC vs. Trademark Review and Adjudication Board (TRAB) under the State Administration for Industry and Commerce (SAIC), an administrative dispute concerning the refusal of TRAB to accept a trademark application by the plaintiff, the Supreme People’s Court conducted open hearing and pronounced the verdict immediately after submissions. The outcome of the case reflects the principle of equal protection for local and foreign rights holders, and features prominently the value orientation of complying with international conventions and strengthening international cooperation. Through the case, the court also reinforces the demand for due administrative processes and embodies the values of prompt relief and comprehensive protection. This is of exemplary significance in terms of making known China’s accomplishments in intellectual property protection, and for making Chinese courts a “preferred forum” for resolving international disputes.

The courts have also adjudicated disputes involving trademark disputes, where famous companies sought to protect their brand interests and market share, and copyright disputes involving the transmission of cinematograph films and television works through the Internet. These cases involved large claims and attracted wide social attention. For example, in Zhejiang Geely Holding Group Co Ltd vs. WM Motor heard by the Shanghai High People’s Court, the claim was CNY 2.1 billion; in Shenzhen QVOD Technology Co., Ltd vs. Shenzhen Market Supervision Administration, the Guangdong High People’s Court ordered an “astronomical fine” of CNY 260 million, which received much public attention. Shanghai Pudong Court heard the Liu Santian v. Zhou Meisen copyright infringement case, which was also a highly publicised case involving In the Name of the People (Renmin de Mingyi) a renowned anti-corruption TV drama.

Adjudication becoming increasingly challenging: As China presses ahead with the development of a market economy and the implementation of the innovation-driven development strategy, technology-based disputes involving finding of complex technology facts or other new types of disputes are increasingly emerging, and new adjudication challenges for intellectual property disputes confront the courts. For example, the Beijing courts heard and concluded the case of Xi’an Xidian Jietong Wireless Network Communication Co., Ltd vs. Sony Mobile Communications (China) involving standard essential patents, Jaguar Land Rover Automotive PLC vs. Jiangling Motors Group Co., Ltd, an administrative case involving the invalidation of a design patent, and the first administrative lawsuit involving the rejected application of “DiDiDiDiDiDi” sound trademark.

The Shanghai Intellectual Property Court concluded the case of Wuhan Han yang Guangming vs. Shanghai Hankook Tire Sales, where the defendant is accused of entering into vertical monopoly agreements and of abusing its market dominance. This was the first vertical monopoly dispute that the court has heard. The same court also adjudicated several cases involving genetic technology or genetic data, such as the DNA Genotek Inc. vs. Chinese National Human Genome Center (Shanghai), an invention patent dispute involving the infringement of a patented genetic testing technology for human genes; Huashan Hospital (a teaching hospital affiliated to Fudan University) vs. Jonathan Flint, a case of infringement of the exclusive ownership of information of human genetic resources, which involves the attribution of ownership of human genetic data. The Shanghai Pudong Court also concluded Youku Information Technology (Beijing) Co., Ltd vs. Shanghai Qianshan Network Technology Development Co., Ltd, which involved the issuance of a cease and desist order before an unfair competition trial, targeting at the defendant’s video aggregation platform.

Adjudication quality progressively improved: First, significant increase in the number of concluded cases. On a year-on-year basis, the percentage of cases concluded by the Hainan courts in 2018 grew by 161.76%; first instance cases concluded by the Hebei courts was 2,608, representing a 156.44% increase; in Hunan, 9,545 cases were concluded, 69.08% more than last year. In Beijing, 49,596 first instance cases were concluded, 56% more than last year; for Tianjin, the figure was 4.410, with a year-on-year increase of 68.3%; for Sichuan Province, 7,331 cases were concluded, representing an increase of 67.34%.

Second, the percentage of cases accepting the courts’ decision as final continued to be encouraging. In Shanghai, with significant increase in new acceptances and disposals, 94.13% of the cases accepted the first instance decision. In Xinjiang with zero petition and complaints through the Xinfang (“Letters and Visits”) channel.

Third, significant increase in rate of post-mediation discontinuance. Ningxia courts achieved a post-mediation discontinuance rate of 92%. In Liaoning, 74.87% of the cases were discontinued after mediation; the figure for Jiangxi was 69.81%. In Shandong, 68.7% of first instance intellectual property cases were discontinued after mediation; Heilongjiang’s figure was 66.2%. In Anhui Province, postmediation discontinuance rate was 61.86%. The high post-mediation discontinuance rate and high rate of acceptance of the courts’ decision have generated good social outcomes.

Protection continued to strengthen: The People’s Courts have continued to award damages based on market value to increase the severity of punishment for intellectual property infringement. This will also raise the cost of breaching the law and keep the damages quantum on par with the market value of intellectual property to effectively protect the interests of rights holders. In an unfair competition case involving the “Laoban ‘老板’” brand of electrical appliances, the Zhejiang High People’s Court which heard the appeal referred to the sales figures submitted as evidence in another case, the selling prices showed in the infringing website and the operating profits indicated in the annual financial statements of the rightsholder’s listed company. The court determined that the gains from infringement had exceeded the rightsholder’s claim of damages, and went on to award the entire claim of CNY 10 million, which the demonstrated the value orientation of stepping up intellectual property protection. While civil adjudication is the predominant means of resolving intellectual property disputes, the People’s courts have continued to focus on using criminal sanctions as deterrence. In the case of He Wei et al. heard by the Hubei High People’s Court, where six people were involved in counterfeiting registered trademarks and selling goods with counterfeit marks and where the criminal proceeds was almost CNY 16 million, the Ministry of Public Security gave the case priority focus to supervising the investigation phase. The case, which attracted much public attention, was difficult in the application of law. The court eventually sentenced He Wei, the principal offender, to seven years in prison on the charge of counterfeiting registered trademarks and three years in prison on the charge of selling goods with a counterfeit mark, thus, totalling 10 years, and a fine of CNY 3.71 million. The punishment meted out to the offender clearly demonstrates the capabilities and level of criminal protection for intellectual property.

photo from: Chinese Court