Shanghai Intellectual Property Court’s Judicial Protection over Intellectual Property Rights 2017

Shanghai Intellectual Property Court’s

Judicial Protection over Intellectual Property Rights

2017

In 2017, under the leadership of CPC Shanghai Municipal Committee, the supervision of Shanghai Municipal People’s Congress and its standing committee and the guidance of higher courts, Shanghai Intellectual Property Court fully implemented the guidelines from the Party's 18th National Congress and its plenary sessions, further studied and implemented the Party's 19th National Congress, actively advanced innovation of trial working mechanisms, and gave full play to the leading role of judicial protection over intellectual property right, providing powerful judicial guarantee for implementing the state’s intellectual property strategy and innovation-driven development strategy and boosting Shanghai’s economic and social development.

I. Giving Full Play to Judicial Functions to Create a Sound Law-based Business Environment

1. Trying Cases in a Fair and Efficient Manner. In 2017, the court accepted and heard a total of 2030 intellectual property cases, an increase of 8.15% year on year, (See Figure 1) including 763 first-instance civil cases, 1198 second-instance civil cases, 5 first-instance administrative cases, 2 second-instance administrative cases, 30 pre-trial preservation cases, 3 cases of review of retrial application, and other 29 cases. 2031 cases were concluded, an increase of 8.2% over the previous year.

            

Figure 1 Comparison of Case Numbers

Among all the cases accepted, 1186 cases were related to copyright (including 275 cases concerning computer software copyright), 444 to patent right, 172 to trademark right, 70 to unfair competition, 82 to franchise contracts, 17 to technical contracts, 3 to monopoly and 56 other cases. (See Figure 2)

            

Figure 2 Distribution of Case Causes

Among all the first-instance cases accepted, technology-related cases accounted for 96.06%, including 351 cases related to patent right infringement, 49 to patent ownership, 44 to patent contracts, 202 to computer software development contracts, 73 to compute software ownership and infringement, 13 to technical secrets, and 1 to integrated circuit layout design. (See Figure 3)

Figure 3 Distribution of Technology-related Cases

Over the last year, Shanghai Intellectual Property Court accepted and closed a number of intellectual property cases with great influence and new-type intellectual property cases. I. Cases Involving Large Amount of Money: the case of dispute over copyright license contract among Hongwu Singapore Private Limited Company Contact Co., Ltd. and Qifei International Development Co., Ltd., etc. involved an amount of RMB 1 billion. II. Cases with Great Social Impact: case of dispute over patent for invention— Hu v. Mobike Beijing Mobike Technology Co., Ltd.; case of dispute over infringement upon patent for invention— Baoyu (Beijing) Intelligent Technology Academy Co., Ltd. v. Shenzhen Dji-innovations Co., Ltd.; case of dispute over trademark infringement— Hugo Boss Trade Mark Management Gmbh & Co.Kg v. Shenzhen Yarnboss Garment Co., Ltd.; appeal in the dispute over trademark infringement and unfair competition— Fendi Adele S.R.L v. Shanghai Yilang International Trade Co., Ltd.; appeal in the dispute over trademark infringement— Shanghai Sanlian (Group) Co., Ltd. v. Nanjing Wuliangcai Glasses Co., Ltd.; case of dispute over trademark infringement— Lafite Rothschild and Shanghai Mellowines Development Co., Ltd. III. New-type Cases: appeal in dispute over unfair competition— Shanghai Hantao Information Consulting Co., Ltd. v. Beijing Baidu Netcom Science and Technology Co., Ltd.; appeal in dispute over copyright infringement and unfair competition— Guangzhou Hugenstar Information Technology Co., Ltd. v. Shanghai Zhuang You Information Technology Co., Ltd.; appeal in dispute over unfair competition — Zhejiang Taobao Network Co., Ltd. v. Shanghai Zaihe Network Technology Co., Ltd.

2. Serving the Implementation of National Strategies. The Court released the Opinions on Providing Judicial Service and Guarantee for Building Shanghai Into an International Trade Center during the 13th Five-year Plan to protect the intellectual property right of Chinese and foreign parties equally and try to provide quality judicial service and guarantee for creating a law-based, international and convenient business environment. By making full use of the special collegial panel for intellectual property cases in the free trade zone, the Court accepted a total of 286 related cases, among which 259 were concluded. Focusing on serving the state’s innovation-drive development strategy and the initiative to build Shanghai into a technology innovation center, the Court made in-depth investigations and actively offered suggestions. The Supreme People’s Court established the Technological Innovation Research Base of the Supreme People’s Court (Shanghai) for Intellectual Property Judicial Protection in the Court in order to improve the accuracy and effectiveness of technological innovation service. The Court deepened cooperation with the management committee of Zhangjiang High-tech Park, had communications focusing on serving innovation and entrepreneurship, and expanded the service area of “National Trial Expert Chen Huizhen’s Studio.” The Court strengthened cooperation with China (Pudong) Intellectual Property Protection Center and Pudong Intellectual Property Station, founded “National Trial Expert Ding Wenlian’s Studio” and know about the latest demands for judicial protection over intellectual property in such fields as biomedicine and high-end equipment manufacturing.

3. Intensifying the Uniform Application of Law. The Court gave full play to the functional role of the special intellectual property court in unifying trial standard and establishing adjudication rules. It released the Guide on the Trial of Trade Secrets Infringement Cases to set the adjudication rules for similar cases, held seminars and study activities including “First Seminar on IPR Judicial Guarantee for Technological Innovation”, “Study on Legal Issues Concerning Franchise” and “Symposium on the New Anti-Unfair Competition Law”, and unified the trial procedures and thoughts of relevant cases. The development of intelligent assist systems for the trial of cases including those concerning computer software development contract was promoted. Supervision and guidance over lower courts was strengthened. Forums on law application of districts under the Court’s jurisdiction were held, effectively unifying the trial thoughts, opinions and law application of lower and upper courts. A series of trial standards were established by trying cases with significant social impact, cases that draw great attention and complex cases, playing a demonstrative and guiding role on industrial development. In the case of dispute over trademark infringement and unfair competition appealed by Fendi Adele S.R.L, the Court clarified the reasonable scope and boundary of authentic product sellers’ fair use of others’ trademark, guiding the operation of relevant operators. In the case of dispute over the right of communication through information networks appealed by Shanghai Quantudou Culture Communication Co., Ltd., the court through trial defined the factors that should be considered for determining whether a network service provider has subjective fault for the infringing work communicated on the platform, guiding the accurate determination of network service providers’ civil liabilities.

II. Focusing on Solving the Difficulties in Compensation to Fully Realize the Market Value of Intellectual Property Rights

1. Making Efforts to Address the Problem of Low Infringement Cost and High Right Protection Cost. The Court established an infringement compensation judicial determination mechanism oriented by the respect of intellectual property rights and encouragement of innovative application and guided by the market value of intellectual property that meets the market expectation of obligees, and actively explored the role of market value factors such as intellectual property popularity in the determination of damage compensation. In the case of dispute over copyright and unfair competition appealed by Guangzhou Hugenstar Information Technology Co., Ltd., the Court determined that the infringer should compensate RMB 4 million for the obligee’s economic loss based on the popularity of the game involved and other factors. The Court also determined that the obligee’s reasonable expenses for right protection should be included in the compensation and losing party should bear the obligee’s cost for right protection. In the case of dispute over trademark infringement appealed by Ningbo Fuda Blades Co., Ltd., the Court through trial amended the original judgment and was in favor of the obligee’s claim for reasonable expenses, lowering the cost for right protection.

2. Determining the Amount of Compensation at Judicial Discretion Based on Statutory Limit of Compensation. When it’s hard to prove the exact amount of loss or gain due to the infringement but it’s able to prove the aforementioned amount obviously exceeds the ceiling of statutory compensation, the Court determined the amount of compensation above the ceiling of statutory compensation based on all the evidence of the case. In the action of dispute over computer software copyright brought by SAP, the Court held through trial that although it’s hard to determine the actual loss of the plaintiff and illegal gains of the two defendants, the existing evidence already can prove the loss of the plaintiff incurred from the infringement exceeded the ceiling of statutory compensation. Therefore, given all the evidence of the case, the price of training fee, infringement nature, subjective state, infringement circumstances and duration of the two defendants, the Court determined at its discretion that the compensation amount should be RMB 1.55 million by referring to the plaintiff’s charge of royalties from its partners.

3. Imposing Severer Punishment upon Willful and Repeated Infringement. For repeated infringement, willful infringement and infringement with other serious circumstances, the Court gave severer punishment and increased the amount of compensation to make infringers pay heavy prices and effectively deter intellectual property infringement. In the suit of dispute over trademark infringement filed by Lafite Rothschild, the Court held through trial that the defendant had obvious subjective malice, thus ordered the defendant to compensate RMB 2 million for economic loss including reasonable expenses in order to effectively deter infringement. In the action of dispute over trademark infringement brought by Kanatsu Co., Ltd, through trial, the Court held the infringer, who implemented similar practice to infringe the obligee’s right which is the same as that in the previous case when there was a prior ruling that had adjudged relevant infringement, committed repeated infringement and should be imposed with greater compensation liability, thus ruling the amount of compensation shall increase from the RMB 30,000 in the first instance to RMB 120,000. In the action of dispute over patent brought by Shanghai Xin Bai Qin Vehicle Co., Ltd., the defendant deliberately applied for giving up patent to State Intellectual Property Office when a ruling given in another case determined that the patent belonged to the plaintiff, rendering the loss of the plaintiff’s patent. The Court held through trial that the defendant’s behavior was a malicious waiver of patent and it should compensate for the plaintiff’s corresponding loss.

III. Putting Forth Efforts to Solve Difficulties in Producing Evidence to Relieve Obligee’s Burden of Proof

1. Giving Full Play to the Efficacy of Preservation Measures. The Court established a preservation mechanism with standard procedures and powerful protection. As IP litigation preservation requires expertise and technology, the Court explored and improved the “judge + enforcement, officer + technical, experts + technical investigator” litigation preservation enforcement mode. In 2017, the Court granted judgment in favor of 198 applications for litigation preservation, including 30 pre-trial preservations and 168 on-trial preservations, laying a solid foundation for effective trial of cases and dispute resolution. In the case of pre-trial preservation applied by a management software Co., Ltd., the Court’s judges, enforcement officers, technical investigators and the employed technical experts made full cooperation and preserved the infringing software in hundred computers used by the respondent in a timely manner. Based on this, the parties reached a reconciliation agreement on compensation and license, effectively protecting the legitimate rights and interests of the obligee. In the action of dispute over computer software copyright brought by Mexxen Technology (Shanghai) Inc., the Court made full use of the function of online check and control upon application of one party, and preserved the RMB 8.5 million in full upon receiving property preservation application. As a result, the parties reached an accommodation, the plaintiff withdrew the lawsuit, and the dispute was resolved successfully.

2. Bringing into Full Play the Role of Measures such as Investigation Order in Investigation and Evidence Collection. Given that it’s difficult for infringers to produce evidence for gains from infringement and it’s not easy to acquire some evidence from the third party in intellectual property cases, the Court gave full play to the role of such mechanisms as investigation order and ex officio investigation and evidence collection, reducing the obligee’s burden of proof within a reasonable extent. In disputes involving employee inventors, design reward, remuneration, patent licensing contract, etc., as it’s hard for the inventor to obtain the sales contact and invoice, etc. from his employer and the licensee, the Court reasonably allocated the burden of proof and guided inventors’ employers to proactively submit the sales invoice of relevant patent, laying a good foundation for finding out the accurate amount of remuneration of the employee inventor. For sales data and other information mastered by the third party, the Court facilitated evidence collection by issuing court investigation order and letter of entrusted investigation, etc. In the action of dispute over design patent brought by the Dutch company Philips,  upon application of the patentee, the Court issued an investigation order for the plaintiff to obtain the defendant’s sales record from Taobao.com and produce evidence. The Court ascertained such facts such sales size of the alleged-infringing products and profit margin, and confirmed the claim that defendant’s gains from infringements were more than the plaintiff’s, and accordingly granted judgment in favor of the obligee’s compensation claim in full amount. In the action of dispute over patent for invention brought by Brother Industries, the Court acquired the relevant sales invoices of the defendant from Yinzhou District Office, SAT by right of office, and ultimately ordered the defendant compensate RMB 1 million.

3. Promoting Good Faith in Intellectual Property Proceedings. The Court explored a system of good faith litigation notice in trials to reinforce the litigation parties’ duty of being honest and providing assistance and guide them to tell the truth, tell true stories in proceedings and give punishment on dishonest litigation behaviors. In several actions of dispute over jurisdiction brought by applicants that are obviously without reasonable grounds, after the explanation of the Court, the applicants withdrew on their own initiative the objection to jurisdiction and thus avoided unreasonable delay of trial due to objection to jurisdiction. In the action of dispute over design patent brought by Beijing Ganten Food & Beverage Co., Ltd., the defendant clearly expressed during the trial that the domain name involved didn’t belong to the defendant, while the plaintiff proved through preservation notarization that the domain name belonged to the defendant who paid for the notarization. Therefore, the Court held that the defendant violated the principle of good faith in litigation in the circumstance that the court had clearly notified the parties should tell the truth about the case, thus ruling the defendant should bear the plaintiff’s expenses for preservation notarization. The Court explored the application of evidence impairment removal rules to make the party refusing to submit evidence bear the adverse consequences. In the action of dispute over patent for invention brought by Nanjing Ecoway Energy Technology Co., Ltd., the defendant failed to provide accounting records for ascertaining infringement scope and gains from infringement after the Court’s explanation, the Court was in favor of the plaintiff’s claim for compensation in full amount according to the plaintiff’s claims and evidence produced by it.

IV. Solving the Problem of Long Cycle to Make Judicial Protection More Convenient and Effective

1. Deepening the “Four in One” Technical Facts Ascertaining Mechanism. The Court kept improving the comprehensive rules for applying the “four in one” (four: technical investigation, technical consulting, expert jury and technical evaluation) technical facts ascertaining mechanism, standardized the mechanism for technical investigators to participate in trials and released the Rules for Technical Investigators Appearing before Court to stabilize the turnover of resident technical investigators. The Court also kept expanding the application coverage and depth of the “four in one” technical facts ascertaining mechanism in specific cases. Technical investigators, technical consultants and expert jurors took part in pre-trial on-site inspection, software demonstration, on-trial technical fact investigation and answering to technical facts in pre-trial mediations. In 2017, technical investigators participated in the trial of 67 cases, appeared in the court for 91 times, issued 16 technical review opinions, took part in preservation, inspection and consulting totaling 212 times; expert jurors participated in 158 trials, expert consulting for 42 times and technical evaluation for 32 times. The Court gave full play to the role of technical experts in ascertaining facts and greatly improved litigation efficiency. The number of days of trial averaged 113.07 days, 16.19 days less over the previous year.

2. Deepening Diversified Dispute Resolution Mechanisms. The Court gave full play to the role of social organizations and industrial associations in diversified dispute resolution and engaged resident mediators for mediation on a regular basis, in order to advance and deepen pre-trial and on-trial mediation work in intellectual property cases. In 2017, the parties agreed to pre-trial mediation in 115 cases, up by 18.56% over the previous year. Among them mediation worked out in 31 cases, accounting for 26.96%. The Court formulated the Plans for Advancing the Implementation of On-trial Entrusted Mediation, actively promoted on-trial entrusted mediation, especially entrusted mediation in second instances, and facilitated the separation of complex cases from simple ones. In the 31 actions of dispute over patent agency contract brought by Evergreen Enterprises Inc., upon application of the parties, the Court entrusted the People’s Mediation Committee of Shanghai Pudong Intellectual Property Association to conduct on-trial mediation for the case. During the mediation, the mediators fed back on the consensus reached between the parties and the focus of dispute to the collegial penal in time. Based on the feedback, the judge handling the case gave a detailed explanation to law application, trial process, etc. of the case to the parties. Then the mediation committee put forward suggestions on mediation plans to the parties. Eventually, the plaintiff and the defendant reached a package mediation agreement and performed the agreement in court. The case was solved successfully. The litigation cost of the parties was saved, and the dispute was resolved in a timely manner.

3. Strengthening In-depth Application of Information Technologies. Aiming to build a data court and an intelligent court, the Court embraces big data, artificial intelligence and other modern technologies with synchronous generation and in-depth application of electronic files as the main line to improve informatization development and application level. The Court developed and improved 19 application software and 23 hardware programs. File scanning procedures were optimized, electronic files were applied more extensively, pinyin-to-character conversion was explored, first-instance judgment document generation aided system was established, and the intelligence level of trial management, court hearing and litigation service kept increasing. To reduce litigation period, save litigation cost and improve trial efficiency, the Court upon the application of the parties opened court, conducted mediation, convened technical hearing, and addressed inquiries on technical expertise in the form of remote video in several cases, realizing “let data run more and people run less.”

4. Establishing the Mechanism of Service by Entrusted Notaries. Difficult service of documents has been a problem puzzling intellectual property trials. In order to improve the efficiency of intellectual property case trials, the Court established a mechanism to entrust Shanghai Oriental Notary Public with service. For cases that can’t be served via postal delivery, the Court entrusted a notary office with personal service to avoid the use of service by publication that takes a long time, increasing the rate of successful service, reducing trial period and notarizing the service process. Since the cooperation mechanism was established, the Court has entrusted 65 services, among which 33 worked out. In the appeal over copyright infringement brought by Shanghai Huange Culture Media Co., Ltd., the postal service to respondent Shanghai Shimeng Property Co., Ltd. was returned for several times. To ensure the legitimate rights of the litigation participants, the Court entrusted a notary office with the service. Ultimately, Shanghai Oriental Notary Public served successfully.

V. Actively Extending Judicial Functions to Enhance People’s Sense of Gain

1. Promoting the Invention, Protection and Application of Intellectual Property. To solve the problems found in intellectual property invention, protection and application of enterprises and public institutions during trials, the Court sent 7 pieces of judicial advice to Shanghai Xuhui Notary Office, Eastday.com, etc. and received positive feedback from them. The Court visited 14 enterprises and public institutions including National Eastern Tech-transfer Center and Yangpu Venture to learn their demands for intellectual property protection in their development. “National Trial Expert Chen Huizhen’s Studio” carried out IPR publicity in Zhangjiang Hi-tech Park and organized representative of enterprises in the park to audit trials for 24 times. It also gave a thematic lecture on enterprises’ intellectual property management and protection in the perspective of judicial practice, which attracted over 500 participants from more than 200 management organizations and enterprise representatives of Zhangjiang Hi-tech Park.

2. Laying Emphasis on the Rule Significance of Judicial Adjudication. The Court enhanced model awareness, improved the work mechanism of model cases, and got through links of case trial, conclusion and publicity of model cases, successfully creating a batch of model cases, excellent instruments and model trials. 34 cases including the case of dispute over design patent between plaintiff M&G Chenguang Stationery Co., Ltd. and defendant Deli Group tried by presiding judge President Wang Qiuliang were listed into Chinese Courts IPR Judicial Protection Cases Top Ten, national and Shanghai court typical cases, model cases, demonstration trials, excellent instruments, etc., and concluded judicial standards with universal guiding significance from the cases and gave full play to the guiding role of new, complex and complicated cases in judicial direction and industrial development.

3. Regularizing Legal Publicity. The Court continuously carried out intellectual property protection publicity, conducted publicity on all media, and publicized the results of the Court’s reform and development in an all-round way. The Court did well in uploading judgment documents, and all judgment documents that should be uploaded online as required by law were uploaded. The Court released the yearly judicial protection over intellectual property, patent case trials in 2015-2016, the trials of computer software copyright and typical cases. The Court innovated its official WeChat column, and added new columns such as “Man Zhi Shi Jie” to increase readability and influence. The Court’s official WeChat account was rated as the most dynamic WeChat account of Shanghai court in 2016. The Court broadcast 63 cases live on the Internet and organized “public open day” for 15 times, attracting nearly 300 people from all walks of life including staff in state organs, enterprise representatives, lawyers, school staff and students and community residents to visit, audit and communicate. The Court gave full play to the role of Chinese Courts International Exchange Base (Shanghai) for Judicial Protection of Intellectual Property Rights. More than 100 people from international organizations and professionals from foreign countries, Hong Kong, Macao and Taiwan visited the Court for exchange. The Court organized more than 20 international forums and seminars, fully displaying the good image of Chinese courts and judges.

In 2017, the Court’s Intellectual Property Tribunal No. 1 received a collective second-class merit. Nine judges and judge assistants won titles including National Courts International Exchange and Cooperation Advanced Individual, Shanghai Women Pace-setter, Individual First-class Merit, Individual Second-class Merit, and Shanghai Courts Trial Core Member, etc. The Court completed subjects such as Status Quo, Problems and Countermeasures of Cases of Disputes over Computer Software Development Contract and The Legal Nature and Judicial Application of Trademark Prior Use and published more than 60 articles. Several cases and papers won prizes in the appraisal of excellent case studies in national court system of 2017, national courts on-line publicity effect appraisal and Shanghai court system seminars.

Year 2018 kicks off our efforts to put all the guiding principles from the Party’s 19th National Congress into action. It is the 40th anniversary of reform and opening-up, and it is a crucial year for securing a decisive victory in building a moderately prosperous society in all respects and for continuing to implement the 13th Five-Year Plan. Shanghai Intellectual Property Court will take President Xi Jinping’s thought on socialism with Chinese characteristics for a new era as guidance, adhere to fair justice and justice for people, continue to do well as a pacesetter for judicial reform and a forerunner for innovation-driven development, and bring into play the role of justice in serving and guaranteeing the development of a power country in intellectual property and science & technology and the acceleration of Shanghai’s development of “Five Centers”.

 

 

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