Including tiers of specialized intellectual property (IP) courts within its court system, China has divided judicial and administrative procedures for those seeking to protect and enforce patent infringement. The court route is more commonly used first, which would see a case go through the Intermediate People’s Courts, High People’s Courts and ultimately the Supreme People’s Court.
The administrative route is through a local IP office or, if the matter is of national importance, through the China National Intellectual Property Administration (“CNIPA”) to request an administrative application, such as requests for cessation of infringement and imposition of administrative penalties, but including no damages are awarded by this route. A patentee or an interested party can take the administrative route first and then the judicial route, but they cannot be undertaken simultaneously. An administrative procedure is much shorter and less expensive than a legal procedure.
Below, we take a closer look at some key points of intellectual property cases that have come to court over the past 18 months.
Insight
In 2021, the intellectual property court within the Supreme People’s Court received more than 2,500 new civil intellectual property cases and concluded 2,023 cases. About a quarter were computer software cases involving artificial intelligence, e-commerce or internet-based patents, demonstrating the direction of travel in today’s market and the important role technology plays in the property landscape. intellectual.
The average time for a patent case to reach a decision in 2021 was 134 days, a relatively short time compared to other key patent enforcement jurisdictions, but an increase from 2020.
The Supreme People’s Court also heard 1,290 intellectual property administrative cases relating to previous cases of dismissal or invalidation of patent lawsuits challenging the decisions of the Patent Office and closed 971 cases. It should be noted that more than 10% of these files concerned an international entity, an increase of 16.2% compared to 2020.
Patent litigation
- Pro-patented change: In the past, patent holders in China often struggled to prove damage caused by infringement; however, recent cases have shown a growing shift in favor of patentees.
- High Damage Rewards: Chinese courts have awarded unusually high damages in cases in recent years. Awards have been ordered of up to 160 million Chinese yuan ($26 million), which is the highest amount of damages in China’s home appliance industry.
Trade secrets
The key cases examined whether a licensee can disclose or use trade secrets after the expiration of the confidentiality period stipulated in a license agreement, as well as the use of customer information by former employees for divulge trade secrets from their former employers. Additional considerations include:
- Maintain good confidentiality clauses: Agree on the obligation of confidentiality during the confidentiality period and after the expiry of the confidentiality period.
- Minimize trade secret theft:
- Develop trade secret policies and procedures.
- Conduct trade secret audit and inventory.
- Educate your employees, business partners and contractors.
- Limit exposure to liability when hiring: Prior to commencement of employment relationship, including provisions requiring protection of trade secrets of previous employer.
- Understand the employee’s contractual and legal obligations regarding non-disclosure or use of information and “unavoidable disclosure” issues, if any.
- Exit interview: Keep solid records
- Recall confidentiality obligations.
- Obtain a written agreement to honor the obligations.
- Ensure the return of confidential documents and confirm their return in writing.
- Evaluate behavior and assess likelihood of compliance.
- Ask questions such as “Why are you leaving? What is the new position and where is it? »
- Consider sending a letter to the new employer.
Copyright
Some interesting cases have come to light in the area of copyright, including violation of a General Public License (“GPL”) agreement by abusing open source code, highlighting the importance of understanding, monitoring and tracking an open source software (OSS) license, and selecting the one that best suits a business. Further, with respect to the copyright protection sought for game cards, the courts have found that a game card can be protected as a graphic work, along with its game scene thumbnail, and that a game’s spatial layout structure is the core offering in many cases, especially for shooters.
Trademark
2021 has seen significant trademark decisions, ranging from disputes over the look and feel of packaging, to the use of certain terms to describe food and drink. Each provides important guidance for those seeking to enforce trademark infringement cases.
Our team discussed these and other questions in the IP Year in Review: Important Chinese Cases Decided in 2021 session of our 2022 series on Technology Innovation in Asia. Contact Bhavisha Arora for more information and a copy of the slides or recording.
