Supreme Court issues guideline on IP rights protection

In March 2009 the Supreme Court of China published the Guideline on the Protection of Intellectual Property Law. Although the guideline is not binding, it does have some influence over judicial practice and legislation.

The guideline sets out the following key points: 

• According to Paragraph 5 of the guideline, the remedy of payment of damages should be given more weight and the degree of damages awarded should be increased. Further, liability should be increased in case of serious infringements by bad-faith infringers, repeat infringers and large-scale infringers. This may mean that the damages awarded in the future may rise. 
• Paragraph 6 states that judicial standards should be made uniform. In addition, a system under which prior judgments serve as guidance should be brought in more quickly and the use of discretionary power should be reduced. 
• Paragraph 8 proposes that the abusive use of IP rights should be prohibited and all defences on grounds of prior rights, existing technology and reasonable use should be assessed according to the law in order to avoid any monopoly. The guideline mentions two types of action to be used against monopolies caused by the abusive use of IP rights - actions for non-infringement and a counterclaim for damages. 
• Paragraph 9 provides that the inappropriate expansion of the scope of patent protection should be prohibited as it will suppress creativity and cause damage to the public interest. Strict explanation will be required in patent claims. 
• Paragraph 10 states that when deciding the protection scope of a trademark, the distinctiveness and reputation of the mark should be taken into account. 
• Paragraph 15 provides that new types of infringement cases involving trade names, trade dress and domain names should be accepted actively. All dishonest imitating and free-riding activities are to be prohibited to avoid confusion. Furthermore, cases involving registered trademarks, enterprise names and civil cases concerning conflict with prior rights should also be accepted actively. It appears that the increasing number of unfair competition disputes relating to these new forms have drawn the attention of the Supreme Court. 
• Paragraph 15 also states that, in regard to any anti-competitive act which is not specifically regulated under the law, such act may be considered an act of unfair competition only if it would be considered an act in violation of the the Anti-unfair Competition Law in accordance with recognised trade standards and general knowledge. This is to avoid inappropriately extending the scope of unfair competition acts, resulting in freedom and fair competition being hindered. 
• Regarding trademark and copyright infringement cases, Paragraph 18 recommends that interim measures should be seriously considered. 
• According to Paragraph 20, the administrative and judicial protection of IP rights should be strengthened and the acts of the administrative authorities in relation to infringement activities must be supported in accordance with the laws. Currently, the main option available to infringers following a ruling against them is an appeal to the court. Pursuant to the guideline, the court may tend to support the administrative authorities in such cases. 
• Paragraph 28 stresses the importance of court mediation; it states that judges are likely to prefer settlements to issuing judgments.

Based on the principles expressed in the guideline, the courts are expected to issue some judicial interpretations, covering areas such as: 

• well-known marks; 
• the criteria for patent infringement; 
• civil procedures in anti-monopoly cases; and 
• interim measures in IP infringement cases.

Some general trends of judicial practice can also be anticipated, although they may not be directly and quickly reflected in individual cases, particularly given the unbalanced professionalism of different courts.