[People’s Daily] Shanghai Intellectual Property Court Hired Experts to Participate in the Trial to Enhance the Professional Support for Technology-related Cases
Technical Investigators Assisted with IPR Protection
April 26, 2018 People’s Daily Page 10
People’s Daily - Reporter Hao Hong
On April 26, the 18th World Intellectual Property Day, IPR protection triggered heated debates among the public again. To protect intellectual property is to protect innovation. In order to meet the needs of innovation-driven development strategy, the Standing Committee of the National People’s Congress adopted the Decision on Establishing Intellectual Property Courts in Beijing, Shanghai and Guangzhou in August 2014. Since their establishment, these intellectual property courts have carried out a series of explorations. So, what new progress has been made in IPR protection in recent years? What development ideas have been explored? What other problems are we facing? To find the answers, the reporter visited Shanghai Intellectual Property Court.
Match the infringement damage compensation with the market value of intellectual property rights
In early March, Judge Wu Yingzhe of Shanghai Intellectual Property Court received a thank-you letter from SAP AG of Germany. In the letter, Kraen K. Williams, Vice President of the company, praised that “We were impressed by your unbiased respect for the intellectual property rights of multinational corporations and China’s determination to establish specialized intellectual property courts to protect the intellectual property rights.”
SAP is a German software company, which filed two lawsuits with Shanghai Intellectual Property Court after discovering that many Chinese training institutions used their copyrighted computer software and training materials in their business activities without its permission.
It’s relatively easy to identify the infringement since the training materials are publicly available. However, how should the amount of compensation be determined when the defendant refused to provide information on its actual business situation? According to the Copyright Law of the People’s Republic of China, the maximum statutory damages is RMB 500,000. Is it fair to SAP? After the trial, Shanghai Intellectual Property Court determined the amount of compensation reasonably according to the data disclosed on the defendant’s website, the training fees, the nature and duration of the infringement, and the loyalties collected by the plaintiff from cooperative organizations, etc. It’s ordered that two defendants should compensate for SAP’s economic losses and reasonable expenses totaling RMB 1.18 million and RMB 1.55 million respectively.
In order to protect the legal rights of intellectual property owners, it’s necessary to match the infringement damage compensation with the market value of intellectual property rights and increase the infringement cost, so as to create a legal environment that no one dares to and wants to commit infringement. Shanghai Intellectual Property Court managed to explore and establish a reasonable compensation mechanism based on the market value of intellectual property rights, degree of innovation and subjective bad faith, etc., which was recognized by the enterprises.
“This is an important link in demonstrating judicial justice. Only by increasing compensation can we effectively protect the legitimate rights and interests of the right holders.” Lu Fang, Legal Director of Semiconductor Manufacturing International (Shanghai) Corporation, said. According to Lu Fang, SMIC’s R&D investment and revenue accounted for as high as 17%, with more than US $500 million spent on R&D in 2017. “A present, damages are mainly determined based on the losses caused by the infringement, or profits obtained by the infringer as a result of the infringement. Many of the R&D achievements made by Chinese enterprises are phased and haven’t been applied to business yet. If such technological achievements are obtained by competitors to shorten their own R&D process, it will be hard for us to prove our market losses.”
In response, Li Shulan, Vice President of Shanghai Intellectual Property Court, suggested establishing a public service system for IPR protection and perfecting the IPR judicial protection chain by introducing various service agencies such as intellectual property value evaluation, quality assessment, and technical appraisal, etc.
Employtechnical investigators to enhance the efficiency of litigation with professional support
With the development of economy and society, intellectual property cases are showing a new tendency. Seen from the FTZ-related intellectual property cases accepted by Shanghai Intellectual Property Court, the number of cases involving new unfair competition practices on the Internet increased obviously. For example, plagiarism of the whole picture of online games, re-creation of online “fan works,” live broadcast of e-sports events...all these cases were related to the new economic form, business model, industrial field and high technology in FTZ. So, how should we clarify the rules of judicial adjudication to provide reference for the trial of similar cases?
Shanghai Intellectual Property Court unified the adjudication criteria by establishing a special trial mechanism, setting up a special collegial panel for FTZ-related intellectual property cases, with the President, Division Heads and Senior Judges serving as the presiding judges, and strengthening the analysis and study of application of laws. Meanwhile, it hired technology professionals as technical investigators and established a “four-in-one” technical fact-finding mechanism that integrates technical investigation, technical consultation, expert jury and technical appraisal to enhance the professional support for the trial of technology-related cases.
It’s learned that in 2017, technical investigators of Shanghai Intellectual Property Court participated in the trial of 67 cases, appeared in 91 court sessions, issued 16 technical examination opinions, and participated in 212 preservations, investigations and consultations; expert jurors participated in the trial of 158 cases. With the timely help of technical experts, the efficiency of litigation has been improved effectively and a number of intellectual property cases with guiding significance and social influence have been handled.
In the famous case of dispute over invention patent infringement - Hu Mouv. Mobike (Beijing) Information Technology Co., Ltd.in 2017, Professor Level Chief Engineer of China Telecom Shanghai Research Institute was invited to participate in the investigation and trial of the case as a technical investigator. Whether “unlocking by scanning QR code” used by Mobike constituted an infringement would be determined by a professional.
Also last year, the case of dispute over trademark infringement, copyright infringement and unfair competition - Shanghai Zhuangyou Information Technology Co., Ltd. v. Hugen Star Information Technology Co., Ltd. triggered a discussion in the legal circle. It’s first recognized that the original whole picture of role-playing online games constituted assimilated works expressed by a process analogous to cinematography and should be protected by law.
“Online game industry is developing very fast. According to the industry report released by Chinese Games Association, the total output value of online games reached more than RMB 200 billion in 2017, with nearly 600 million users, but IPR protection in the industry is seriously deficient. This case plays a good role in guiding the trial of similar infringement disputes.” Li Yulong, Legal Supervisor of Shanghai Zhuangyou Information Technology Co., Ltd., said.
Difficulty in application of law and enforcement remains the pain points in IPR protection
The surge in intellectual property cases has also brought new challenges to the judiciary. According to the data released by Shanghai High People’s Court on April 25, the total number of civil, administrative and criminal intellectual property cases accepted and concluded by Shanghai courts in 2017 has increased markedly, with 15,809 cases accepted and 15,715 concluded, up 40.76% and 38.47% respectively from the same period last year. The number of cases with high subject matter value, new type and great social impact also increased significantly. The courts have responded positively to the demand for IPR judicial protection by further unifying the adjudication rules, reforming the trial mechanism, and developing intelligent auxiliary system for handling cases, etc., but difficulty in application of law and enforcement remains the pain point in IPR protection.
The White Paper on the Intellectual Property Inspection in Shanghai (2017) shows that there are difficulties in applying the law when trying cases involving crime of counterfeiting patent. In 2017, most of the criminal IPR cases handled by Shanghai procuratorial organs were cases involving crime of selling commodities bearing counterfeit registered trademarks, accounting for more than 60% of both the examination over arrest cases and examination over prosecution cases. Cases involving crime of counterfeiting registered trademark took the second place, while those involving the crime of trade secret infringement and crime of counterfeiting patent haven’t been found yet. It’s very difficult to obtain evidence and classify the case when handling cases involving the crime of trade secret infringement, and difficult to apply the law when handling those involving the crime of counterfeiting patent.
“Articles 84 of Rules for Implementation of the Patent Law of the People’s Republic of China stipulates the specific acts of counterfeiting other people’s patents. These four acts specifically refer to unauthorized use of other’s patent number or counterfeiting of other’s patent certificates, patent documents, etc. However, the law doesn’t make it clear how to define the numerous acts of counterfeiting and infringing upon other’s patents in practice.” Xiao Kai, Chief of Financial Crime Section of Shanghai People’s Procuratorate, said. “At present, with the rapid growth of annual patent volume in China, protecting the legal rights and interests of patent innovators is becoming increasingly important, and the laws should be amended to get a balance on fighting against crimes, promoting innovative development and protecting the rights and interests of rights holders.”
For some enterprises, enforcement is more difficult. In the past two years, LEMO Electronics (Shanghai) Co., Ltd. has encountered more than 30 intellectual property cases, mostly involving trademark infringement and unfair competition. All these cases, except concluded by court mediation, basically ended with LEMO as the winner. However, enforcement was ineffective in most of the cases. “Some people against whom enforcement is sought have the ability to fulfill their obligations, but enforcement is very difficult.” Pan Runqing, a senior partner at Shanghai Alshine Law Firm, said that her team handled many intellectual property cases on behalf of LEMO Electronics. Except two defendants satisfied the judgments, all cases were subject to difficult enforcement. “We are concerned that in the course of enforcement, whether legal procedures have been strictly followed, and whether measures that can advance the enforcement, such as inclusion in a list of dishonest persons/enterprises subject to enforcement, have been fully utilized. Only when the enforcement is really carried out can we effectively crack down on the infringement and protect the intellectual property rights.”
