2013 was a milestone year for the development of China Intellectual Property Rights. During 2013, copyright, patent and trademark legislation were all revised. The judicial practice picked up speed as well, with cutting-edge precedents that established protections in trade secrets and other IPR fields. In summary, the Chinese IPR regime enjoyed a rapid growth in 2013.
I. New Legislation and Amendments on IP
Amendments to Four Intellectual Property Protection Laws to Adjust Punishment for Infringement
In 2013, the State Council also revised four regulations, including the Regulations for the Protection of Computer Software, the Regulations on the Protection of Right of Dissemination via Information Network, the Regulations of the PRC on Protection of New Varieties of Plants, and the Regulations for the Implementation of the Copyright Law of the PRC. The revision of these regulations is another great improvement for IP legislation as they increase fines on infringers. The higher amount of fines will more strongly deter IPR infringement.
3. The Supreme People’s Court Issued New Provisions to Guide the Trial of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through Information Networks.
On January 1, 2013, the Provisions of the Supreme People’s Court on Certain Issues Related to the Application of Law in the Trial of Civil Cases Involving Disputes over Infringement of the Right of Dissemination through Information Networks became effective. This is the first national judiciary document by the Supreme People’s Court (SPC) that stipulates that infringing the right of dissemination through information network is a tort and ascertains the liabilities of Internet Service Providers (ISPs) for infringements that they know or should have known. In addition, the Provisions require the court to balance the interests of right holders, ISPs, and the public. Special attention should be paid to Article 15 because it stipulates that the Chinese courts even have jurisdiction over infringement cases where the location of the computer the plaintiff used to discover infringing content is in China. That means that the jurisdiction of Chinese courts is quite broad over online copyright infringement.
4. The Supreme People’s Court Delegated the Trial Power of Patent Disputes to Certain District Level People’s Courts.
The first version of Certain Provisions of the Supreme People’s Court on Issues Concerning Application of Law in Trying Cases Involving Patent Disputes was promulgated in 2001. In the 2001 Provisions, only intermediate level courts had jurisdiction over first instance patent dispute cases. After 12 years of judicial practice, on April 1, 2013, the SPC added one paragraph to the jurisdiction article, designating certain district level People’s Courts with the ability to exercise jurisdiction over first instance patent dispute cases.
II. Selected IP Cases for Reference
1. Eli Lilly v. Huang Mengwei The First IP Case that Issued A Preliminary Injunction Order
Eli Lilly & the Company and Lilly China Research and Development Co., Ltd ("Lilly") jointly sued former Lilly China Research and Development Co., Ltd employee, Huang Mengwei (“Huang”). Huang had downloaded 21 of Lilly’s confidential documents onto his own computer without the approval of Lilly. Lilly then sued Huang for theft of trade secret and applied for preliminary injunction on disclosure or use of the confidential documents. The court issued a preliminary injunction order prohibiting Huang from disclosing, using or allowing others to use the confidential information he stole from Lilly.
This case is the first IP case to issue a preliminary injunction order in accordance with the newly revised provision of the Civil Procedure Law (that took effect on January 1, 2013). The SPC summarized this case and listed it into the Eight Typical Cases of Intellectual Property Right Judicial Protection (October 22, 2013). This case illustrates the availability of behavioral remedies for all types of civil complaints, a significant improvement in the China trade secret regime.
2. Ashland Licensing and Intellectual Property LLC, Beijing Angel Chemical Technology Co., Ltd. v. Beijing Response-Chem Specialty Chemical Technologies Co., Ltd., Suzhou Ripu Industrial Additives Co., and Wei Xingguang
Ashland LLC is the owner of the “Water-in-water Polymer Dispersion Manufacturing Process” patent and licensed Beijing Angel to use the patent in mainland China. Wei had previously worked at Beijing Angel and Ashland before becoming the director of Beijing Response-Chem and Suzhou Ripu. Beijing Response-Chem and Suzhou Ripu then manufactured the same product using the patented process. Ashland and Beijing Angel used all possible methods to collect evidence but still could not collect sufficient evidence to prove the infringement. The Court adjudicated that considering the difficulty in collecting evidence on the defendants’ manufacturing process, the defendant shall assume the burden of proof for non-infringement. Since the defendant could not prove non-infringement, the Court held that the defendants used the patented process. In the end, with the mediation of the Court, the plaintiffs and defendants settled with the conditions and terms that the defendants shall cease using the patented process and compensate the plaintiff RMB 15 million for the patent infringement and RMB 7 million for the theft of trade secret.
This was a typical case to illustrate the burden of proof reversal, which occurs where the evidence proving infringement is impossible to get. In such cases, the Court would hold that there is patent infringement where the defendants cannot prove otherwise. This method lightens the burden of proof on plaintiffs and makes it easier to protect patent owners’ rights.
3. Deere & Company v. JOTEC International Heavy Industry (Qingdao) Co., Ltd. and JOTEC International Heavy (Beijing) Co., Ltd.
Deere & Company is an American corporation which sells vehicles used for agriculture globally. Deere registered a Color Combination Trademark with green for the vehicle body and yellow for the wheels on March 21, 2009 in China. They then discovered that JOTEC used the same color combination for their farm vehicles. In June 2013, Deere lodged a lawsuit in the Beijing Second Intermediate People’s Court against JOTEC International Heavy Industry (Qingdao) Co., Ltd and JOTEC International Heavy (Beijing) Co., Ltd for color combination trademark right infringement. The Court held that the co-defendants’ usage of the color combination with the same colors, positions, and order as the plaintiff’s constituted infringement and that the co-defendants shall immediately stop the infringing acts and compensate Deere for the damages.
This is the first color combination infringement case since 2001, the first year in which color combination can be registered as a trademark. In reality, there is not a lot of registration for color combination trademarks and as such, infringement occurs less frequently as well. However, the case is still a milestone for the China trademark development.
4. Adidas v. Adivon Sports Goods (China) Company
Adivon is a sportswear company that was established in Quanzhou, Fujian Province, China. Its logo appears to be an upside down striped triangle and its Chinese name, “阿迪王”. The first two characters are identical to the first two in Adidas’ Chinese name, “阿迪达斯”. In August of 2008, Adidas filed a lawsuit against Adivon and two other defendants in Yingkou Intermediate People’s Court of Liaoning Province. Adidas also brought other suits against Adivon. After more than five years of legal fight, Adidas and Adivon finally reached a settlement on May 7, 2013. While the majority of the settlement agreement details remain confidential, the two sides announced that Adivon shall no longer use its Chinese character trademark “阿迪王” and the triangle trademark. However, Adivon can still use its English trademark and Adidas shall not claim the damages.
This case is the first result of a globally famous brand versus a Chinese copycat. It illustrates the difficulties in solving trademark disputes and may give some hints to other similar cases later. Currently, there is a famous case ongoing between Michael Jordan and Qiaodan Sports Co., Ltd. Results from these other cases may give some indication as to the trend in Chinese court judgments.
III. Hot Issues in 2013
US and China Agree On IPR Measures, Including the Training of Chinese Officials
In the China-US bilateral meeting of December 19-20, 2013, the two countries reached an agreement on a series of measures to strengthen intellectual property rights (“IPR”) protection in China. On trade secret, China committed to a program to improve trade secret protection and enforcement, which will include “concrete enforcement actions, improvements of public awareness about the importance of not infringing trade secrets and the penalties for infringement, and requirements for strict compliance with all laws, regulations, rules, and other measures on trade secrets protection and enforcement by all enterprises and individuals.” China also agreed to improve the patent application regime, combat of IP infringement regime, and the trademark registration regime.
Accompanying the agreements, a Memorandum of Understanding (“MOU”) on IPR training aimed at “increase[ing] the capacity and commitment of Chinese government agencies, courts, and legislature to ensure that IP is adequately protected and enforced” was signed between the US and China. According to the summary of the MOU, “the U.S. Trade and Development Agency is offering a series of four technical workshops and a U.S.-based training program that will share U.S. experience in order to help China further strengthen the protection of intellectual property. The workshops will be part of a larger program of assistance that is supported across the U.S. government, including United States Trade Representative and the Department of Commerce’s Patent and Trademark Office.”
With the agreements and the MOU, we expect more progress in China IP legislation, judicial protection, and enforcement in 2014.