Shanghai Intellectual Property Court’s Achievements in IP Protection (2018)

Shanghai Intellectual Property Court’s Achievements in IP Protection (2018)

 

In 2018, under the leadership of the Shanghai Municipal Committee of the CPC, the supervision of the Shanghai Municipal People's Congress and its Standing Committee, and the guidance of higher courts, the Shanghai Intellectual Property Court (hereinafter referred to as SIPC), guided by Xi Jinping's ideology of socialism with Chinese characteristics in the new era and implementing the spirit of the 19th Party Congress in an all-round way, ramped up efforts in innovation of intellectual property trial mechanism, and brought into full play the dominant role of judicature in protecting intellectual property rights. Underpinned by judicial services boasting great credibility and influence, Shanghai will speed up the construction of "Five Centers" (of international economy, finance, trade, shipping, and science and technology innovation) and a socialist modern metropolis.

 

(I) Trial of Cases

In 2018, 2,067 cases of various types of intellectual property rights were accepted, with a year-on-year growth of 1.82%. The number of cases accepted by SIPC increased year by yearamong which there were 1,039 civil cases of first instance, 951 civil cases of second instance, 3 administrative cases of second instance, 23 pre-litigation preservation cases and 51 other cases. (See figure 1)

 

Figure 1 Comparison of Case Number Accepted

 

Among the cases accepted by SIPC, the top five categories in terms of number were copyright cases (excluding computer software copyright), 605 and accounting for 29.27%.; patent cases, 587 and accounting for 28.40%; computer software cases, 396 and  accounting for 19.16%; trademark cases, 237 and accounting for 11.47%; cases of franchise contracts, 82 and accounting for 3.97%. In addition, there were 76 cases of unfair competition, 19 cases of technical contracts, 7 cases of monopoly and 58 other cases. (See figure 2)

Figure 2 Distribution of Case Causes

 

Among the cases accepted in the first instance, 1,005 cases involved patent right, computer software, technical secrets and technical contracts, accounting for 96.73% of the total number of cases accepted in the first instance. Specifically, there were 546 cases of infringement on patent rights, 30 cases of ownership of patent rights, 11 cases of patent contracts, 318 cases of computer software development contracts, 78 cases of computer software ownership and infringement, and 22 cases of technical secrets. (See figure 3)

Figure 3 Distribution of Technical Cases

 

A total of 2,067 cases were concluded with an increase of 1.77 % on year-on- year basis. The case conclusion rate of the entire year was 100%, achieving a virtuous circle of case settlement. A slew of new types of cases were concluded. For instance, the case of dispute over monopoly between Wuhan Hanyang Bright Trade Co., Ltd. and Shanghai Hantai Tire Sales Co., Ltd. has been the first of its kind in China that the defendant was accused of both implementing vertical monopoly agreement and abusing its dominant role in the market; the case of dispute over unfair competition between Beijing Sogou Information Service Co., Ltd. and Beijing iQIYI technology Co., Ltd. involves whether the function of loading "search alternative option" in input method should be construed as unfair competition; the case of dispute over infringement on patent right for invention between Maddison Medical Co., Ltd. and Guilin Pharmaceutical Co., Ltd. involves the application of patent infringement exemption rules in Patent Law, such as "experiment exception" and "generic drug exception". In addition, SIPC concluded a number of cases involving well-known and highly influential Chinese and foreign enterprises and brands, such as the case of dispute over infringement on patent right of design filed by Volvo Rastwegener Company, the case of dispute over infringement on the trade mark between 85℃and Bright Dairy Co., Ltd. v. Gourmet Daren Co., Ltd., the case of dispute over infringement on unregistered well-known trademarks and unfair competition filed by Beijing Didi Infinite Science and Technology Development Co., Ltd., to name just a few. In the past year, a total of 26 cases won industry-wide acclaim. Some made it to the list of typical cases of the Communique of Supreme People 's Court, 10 Major Cases and 50 Typical Cases of Judicial Protection of Intellectual Property Rights of Chinese Courts, 10 Cases of Anti-Monopoly Civil Action of Chinese Courts from 2008 to 2018, 10 Typical Cases of Shanghai Courts, 10 Cases Concerning Judicial Protection of Intellectual Property Rights of Shanghai Courts, and Select Cases of Shanghai Courts while some others won the titles of model trial and excellent documents.

 

(II) Serving and Safeguarding the Implementation of the National Strategy and the Overall Situation of Shanghai’s Work

Focusing on the implementation of the national strategy and accelerating the building of "five centers" in Shanghai, particularly the building of science and technology innovation center, China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as FTZ) and China International Import Expo (hereinafter referred to as CIIE), SIPC was committed to providing top-notch judicial services and effective judicial protection.

1.     Serving and Safeguarding the Building of the Science and Technology Innovation Center

SIPC issued 25 guidelines on providing services to improve the business environment in an effort to create a law-based business environment facilitating science and technology innovation. Underpinned by the Research Base (Shanghai) of Judicial Protection of Science and Technology Innovation of Intellectual Property Rights established by the Supreme People’s Court, SIPC conducted in-depth research, compiled Research and Reference on Judicial Protection of Science and Technology Innovation, promptly reported to the Supreme People's Court on issues and practices related to the protection of intellectual property rights for science and technology innovation, and held a lecture entitled "Science and technology Innovation and Judicial Protection of Trade Secrets", playing the role as a think tank. The Office of National Trial Expert Chen Huizhen worked at full capacity, for example, conducting research and legal publicity in science and technology parks every month, holding themed lectures on the judicial protection of intellectual properties, going on circuit trials, and organizing attendance at trials, to just name a few. On top of that, it issued brochures of typical cases on intellectual property rights to acquaint enterprises with intellectual property laws and enhance the awareness and capability regarding intellectual property protection for innovative start-ups, especially for small and medium-sized micro-venture enterprises.

2.     Providing Service to Guarantee the Building of FTZ

By giving full play to the intensified trial effect of intellectual property cases in FTZ, SIPC succeeded in handling intellectual property cases involving FTZ in a professional and efficient manner. A total of 310 cases were accepted and 291 were concluded. In addition, SIPC participated in forums regarding judicial protection of intellectual property rights in FTZ, joined hands with the IP court in FTZ of  the People's Court of Pudong New Area, Shanghai Municipality, put more efforts in analysis and research on difficult issues arising out of the application of law to unify trial standards. SIPC also deepened cooperation with the management committee of FTZ, held enterprise forums, released Trial of Intellectual Property Rights Cases in FTZ (2015-2017), provided in-depth interpretation of the characteristics of dispute cases involving intellectual property rights in FTZ and put forward suggestions on specific protection measures. Moreover, SIPC handed out brochures of typical cases to business representatives, listening attentively to their opinions and advices, making the intellectual property protection in FTZ better-directed and effective.

3.     Serving and Supporting CIIE

SIPC proposed 15 guidelines on serving and supporting CIIE, set up a panel of experts to deal with cases involving CIIE, and centralized the hearing of intellectual property cases involving CIIE. Working together with primary courts, SIPC established a liaison system for cases involving CIIE, and put great efforts in guiding trial and unify law application. Apart from that, SIPC established a special data analysis platform, actively participated in the research on intellectual property protection issues organized by Shanghai High People’s Court and China International Import Expo Bureau, carried out forward-looking research, analysis and prediction on cases involving CIIE and legal issues that might emerge during CIIE. In the lead up to CIIE, SIPC sorted out the basic information of intellectual property rights involving expos, analyzed common issues that might arise out of the protection of intellectual property rights, and put forward specific suggestions. All these efforts resulted in a report entitled Strengthening the Protection of Intellectual Property Rights Involving Expos and Driving Healthy Development of Expos, which was rated as one of the top ten research reports of people's courts in 2018.

 

 (III). Strengthening Judicial Protection of Intellectual Property Rights

1. Fully Reflecting the Market Value of Intellectual Property Rights

Where the actual loss of a right holder can be ascertained to have exceeded the statutory maximum amount of compensation, the amount of compensation shall be determined according to the specific circumstances such as the value of the product involved in the case, the number of infringed products, the duration of the infringement and the failure of the tort-feasor to provide evidence of profits gained from the infringement. As for the case of dispute over computer copyright filed by Dasuo Systems Co., Ltd., SIPC, after considering all the evidences in accordance with the above rules on determining damages, the unit price listed in the sales contract submitted by the defendant, and the fact that the defendant used the software in larger scale even after being imposed with administrative penalties, ordered the defendant to pay RMB 9 million yuan as compensation, an amount far exceeding the statutory amount of compensation. SIPC also resorted to social organizations and intermediaries specializing in evaluating the values of intellectual property rights so as to determine the amounts of compensation based on the market values of intellectual property rights. Take for example the case of dispute over infringement on patent right for invention filed by Honda Technology Industry Co., Ltd., the profits gained by the defendant from infringement was determined according to the opinion of an accounting firm on the sales of products accused of infringement, and the defendant was ordered to pay RMB 2.4 million yuan as compensation.

2.Cracking down on Severe Infringements

For those cases involving source infringement, repeated infringement, malicious infringement or other serious circumstances, the degree of harmfulness and subjective maliciousness will also be taken into account, and the maximum compensation will apply according to the law, thus increasing the cost of infringement and effectively deter the infringements on intellectual property rights. SIPC will impose more vigorous punishment over the manufacturers of infringing products so as to prevent infringing from the source. In the case of dispute over infringement on trade secrets filed by Magnetic Control System (Shanghai) Co., Ltd, in light of the fact that the appellees, both the individual and the company, were the sources of tort, and evaded the legal responsibility out of subjective malice by making use of the independent legal personality of the company, SIPC upheld the first instance judgment that the infringer should compensate RMB 3 million yuan for economic losses. Another typical example is the case of dispute over infringement on trade mark and unfair competition filed by 3A Compound Co., Ltd. The loss of the right holder and the profits gained by the infringer were difficult to determine. In view of the fact that the trademark involved enjoys a high reputation, and the infringer counterfeited in an all-round manner out of subjective malice, SIPC decided to uphold the first instance judgment that the infringer should compensate RMB 2.5 million yuan for economic losses

3. Providing Support for the Right Holders’ Expenses on Protecting Their Legal rights

As for the cases whose infringement facts and reasonable expenses were certain, the claims by the right holders for compensation of reasonable expenses were supported in order to reduce the cost of safeguarding their rights and encourage the right holders to safeguard their rights. For example, in the case of dispute over infringement on patent right of invention filed by Canon Co., Ltd., given the fact that the plaintiff provided evidence for reasonable expenses such as notarization fees and attorney fees, and in consideration of the amount of work of the attorney accepted by the court, SIPC supported the claim of the plaintiff and ordered the defendant to pay compensation for the reasonable expenses at RMB 140,000 yuan in full amount. In the case of dispute over infringement on trade mark filed by Amore Pacific Co., Ltd., in view of the fact that the plaintiff paid a large amount of investigation fees, notarization fees and other reasonable expenses to prove that the trademark involved in the case was a well-known trademark, and provided corresponding evidences, and the fact that the trademark involved in the case was indeed a well-known trademark, SIPC fully supported the claim by the plaintiff for compensation of reasonable expenses at RMB 50,000 yuan .

4.Strengthening the Procedural Guarantee for Realization of Rights

SIPC brought to full play temporary litigation measures such as property preservation, evidence preservation and behavior preservation. In case the concerned parties applied for temporary litigation measures before or during litigation, SIPC actively accepted, promptly reviewed, ruled in accordance with the law and executed promptly, so as to lay a solid foundation for the effective trial of cases and the settlement of disputes. In 2018, there were 104 cases in which SIPC supported the applications by the concerned parties for litigation preservation. SIPC actively guided the concerned parties to take on the burden of proof. However, if the concerned parties were unable to collect evidence by themselves due to objective reasons, and if the requirements of the application for an order of investigation weremet, court investigation orders would be issued to their lawyers. In 2018, SIPC issued 36 investigation orders, effectively reducing the burden of proof on the right holders. If a party refused to submit or intentionally destroyed evidence or submitted fake evidence to interfere with the proceedings without justifiable reasons, SIPC would accept as true the facts claimed by the applicant according to the law, and impose punishments such as fines and detention on the interferer. During the hearing of the case of dispute over infringement on utility model patent filed by Dongguan Hongbang Precision Machinery Technology Co., Ltd., part of the sealed-up equipment placed at the defendant’s place was dismantled and moved due to the neglect of duty of the person in charge of the accused unit, resulting in damages to the seized evidence. Thus SIPC ruled that the person in charge of the accused unit shall be punished according to law.

 

 (IV) Constructing a New Mechanism of Intellectual Property Protection

1. Deepening the Diverse Mediation Mechanism for Intellectual Property Disputes

SIPC further cooperated with mediation organizations and trade associations to build a professional mediation platform and a team of professional mediators conforming to standards & regulations. Entrusted mediations were utilized to the full before and during trials to efficiently resolve conflicts for the parties concerned. In 2018, 86 cases entered pre-trial mediation with the consent of both parties, and 34 cases were successfully settled with a success rate of 39.5%; 304 cases entered mediation during trial with the consent of both parties, and 123 cases were successfully settled with a success rate of 40.46%. In a case of dispute over infringement on patent right, due to the flexible adoption of pre-trial and during-trial mediation, the defendant and the plaintiff were reconciled with each other in court, and both parties sent thank-you letters to SIPC afterwards.

2. Introducing the Pre-judgment Mechanism

The pre-judgment mechanism was introduced to reduce the time-consuming trial process of intellectual property case. For those cases whose nature of infringement could be determined but other facts entailed further investigation, SIPC would make pre-judgment to stop the infringement first, thus improving the effectiveness of judicial relief. In the case of dispute over infringement on patent right of invention filed by Valeo Systemes D’Essuyage, the plaintiff held that the infringement would continue in the process of trial, affecting the business of the plaintiff, and thus requested SIPC to make pre-judgment that the defendant should stop the infringement immediately. The collegial panel asked the parties concerned to provide, cross-examine and debate the technical facts of the case, and the expert jurors and the technical investigation officers jointly inspected the infringing products. It was finally determined that the product sued for infringement fell into the patent protection scope enjoyed by the plaintiff. Accordingly, SIPC made a pre-judgment of first instance and ordered the defendant to immediately stop the infringement on the patent right of the invention involved.

3.Improving the Multiple Mechanism for Ascertaining Technical Facts

In response to the advanced technologies and expertise involved in intellectual property cases, more efforts were put into the implementation of the "four in one" technical fact investigation and confirmation system, namely technical investigation, technical consultation, expert jury and technical appraisal. Appropriate ways to investigate technical facts would be chosen according to the actual circumstances of a case. Priority was given to the mechanisms of technical investigation, technical consultation and expert jury, and a system of 45-day notice, 60-day notice after and feedback for appraisal was established to improve the efficiency and effectiveness of judicial appraisal. For those cases concerning intellectual property rights involving multiple disciplines and fields, a collaborative mechanism of technical investigators, technical consulting experts, expert jurors and appraisers had been actively explored. In the case of dispute over infringement on patent right of invention filed by Beijing Sogou Science and Technology Development Co., Ltd., the technical investigation officers and technical experts of appraisal institutions participated in the investigation, while expert assistants and appraisers appeared in court to cross-examine the case, jointly helping to find out about the technical facts of the case. In 2018, technical investigators participated in 131 technical investigation cases, up 84.5% from the previous year. Last year also saw 412 times of technical consultations, technical preservations, investigations and court appearances, a year-on-year increase of 36.4 %, achieving good results.

4.Expanding the Mechanism of Smart Supporting Technologies

SIPC had been actively promoting synchronous generation and in-depth application of electronic dossiers, constantly expanding its functions, and integrating modern technology with judicial work, pushing forward the application of modern technology to judicial work. SIPC adopted online case handling during the whole process of trial, among others: digital collection of litigation materials, circulating electronic dossier between the upper and lower courts, realizing paperless trial evidence presentation in the process of trial evidence presentation and cross-examination which enabled the collegial panels to review electronic dossier materials, add online notes and make appraisals online, and make judgment documents online. SIPC adopted the intelligent voice transfer system in court trial, and attempted to use audio and video recording to replace the traditional way of clerk recording. SIPC also participated in the "206" project initiated by Shanghai High People's Court and the construction of big data analysis database of patent cases.

 

 (V) Creating a Sound Environment for Intellectual Property Protection

1. Stepping up Efforts in Promoting Intellectual Property Rights Protection

With stress laid on the theme of publicity, the features and highlights of intellectual property rights protection were fully manifested. For instance, in-depth reports on the operation of technical investigator system were published on state media such as People's Daily and Xinhua News Agency; articles regarding how to effectively solve the "three major difficulties" of intellectual property protection were published in series on Liberation Daily; comprehensive reports such as China Attaches Importance to Intellectual Property Rights and Enhances Innovation Capacity were published in the overseas edition of Xinhua News, the overseas edition of People's Daily and China Daily. Trials of foreign-related cases were covered on Legal Daily and other professional law media; the basic information of SIPC’s judicial protection of intellectual property rights was covered in an all-round way on Chinese Intellectual Property Right News, Power of Intellectual Property and other IP media. Moreover, SIPC made innovations in terms of the forms of publicity and combined traditional and new media to launch a publicity campaign. For instance, on the World Intellectual Property Day of 2018, a public service program of intellectual property was broadcast on Morning News of Shanghai People's Broadcasting Station; the presiding judge of SIPC was invited as a special guest to a live interview TV program called "Looking at the World with Legal Eyes -the Chief Judge is Now Online" during which he exchanged ideas with the host, audience and netizens about the protection of intellectual property rights; SIPC compiled and distributed 3 collections of cases concerning judicial protection in business environment and collections of common cases of intellectual property rights, set up a column named "Case Study" on the official website of SIPC, organized 10 times of public open days, and assigned judges to participate in public lectures on copyright protection in China.

2.Continuously Increasing the Influence of Intellectual Property Trial

Efforts were stepped up when it came to judicial research on intellectual property rights, realizing outstanding achievements. A total of 46 papers and case reviews were published in journals such as Application of Law, People's Judicature and Shanghai Trial Practice; five papers and case analysis including Functional Positioning and Institutional Coordination of Technical Investigators in Intellectual Property Trial won awards in competitions such as the 2018 Essay Competition held by the Trial Theory Research Institute of China Law Society, and 2018 Excellent Case Competition of the National Court System, etc.; 9 research subjects were completed, among which Reform and Innovation in the Field of Intellectual Property Trial -- from the Perspective of Establishing Rules for Litigation Evidence in Line With the Characteristics of Intellectual Property Cases was awarded as an outstanding key research subject by Shanghai High People’s Court in 2018. In addition, SIPC actively participated in international exchange programs, making China’s voice for judicial protection of intellectual property rights heard globally. 12 groups of overseas experts and peers from the EU Intellectual Property Bureau, the International Trademark Association, Japan, the Republic of Korea and ABU Dhabi, United Arab Emirates were received by SIPC. It also sent delegates to the Forum on International Trade Rules and Intellectual Property, the 15th Shanghai International Forum on Intellectual Property and the Global Conference on Intellectual Property Protection and Innovation, and the Seminar on Intellectual Property Protection and Competition in the Era of Technology Revolution. Four judges were invited to exchange programs abroad and several judges were invited to teach in WIPO-Tongji University Intellectual Property Master's Degree Program. SIPC was highly praised by organizations and enterprises both at home and abroad for fairness and high efficiency of trial. For instance, Beijing Didi Infinite Science and Technology Development Co., Ltd. thanked SIPC for its unremitting efforts to protect the legitimate rights and interests of enterprises and maintain a fair competition in the market; SAP Co., Ltd., Orekang Textile Co., Ltd. and Volvo Rastwegener Company, etc. appreciated SIPC for showing equal respect for the intellectual property rights of multinational companies and for protecting their intellectual property rights, and according to them, SIPC "builds a highly efficient judicial environment in China and becomes a model worldwide."

3. Continuously Improving the Satisfaction Degree of Intellectual Property Lawsuits

Trials of cases involving intellectual property rights had been much more convenient than before. Pre-trial meetings, online mediation and online trial of intellectual property cases were applied to trial of intellectual property cases, and a total of 187 cases were held via online remote video in the whole year. In a case of dispute on computer software development contract, the witnesses who could not make it to the court were asked to complete the process of witness testimony and cross-examination with the parties via remote video. More efforts were made to build litigation service centers, the 12368 litigation service platform and online lawyers service platforms, so as to make the litigants and lawyers more satisfied with litigation services. Apart from enabling lawyers to review dossiers online, special efforts were put into popularizing online filing, with a total of 190 cases registered online. The entrusted notarization service mechanism worked effectively. Through the "notarization cloud" data storage platform, the whole process of delivery was able to be tracked down, not only improving the success rate of delivery, but also realizing notarization preservation in case of failed deliveries. 64 pieces were successfully delivered in this way. The trial of intellectual property cases were more transparent. SIPC made more efforts to broadcast trials live on an average of 2 cases per week on China's Court Trial Live Broadcast Network, and made public all the effective judgments that should be made public according to the law, so as to effectively guarantee the people's right to know, to participate, to express and to supervise. SIPC also subjected itself to the supervision of the public. A total of nearly 40 people in 3 batches, including members of the National People's Congress, the Shanghai Municipal People's Congress and CPPCC, visited SIPC to conduct investigation and inspection, and they gave due recognition to the work of SIPC.

 

In 2018, the first intellectual property tribunal of SIPC was honored as an advanced collective of national intellectual property trial, and the Party Branch of the first intellectual property tribunal was rated among one of the advanced Party branches of the municipal organizations. The second intellectual property tribunal won First-class Merit of Shanghai Courts. Judge He Yuan was awarded as Advanced Individual of National Intellectual Property Trial as well as Model Judge of National Courts. 10 judges and assistant judges were awarded third-class merits and won the honorary titles of Good Judge, Good Cadre, Model Judge of Shanghai Courts and Advanced Individual like Zou Bihua, and many more.

 

In 2019, we will, under the guidance of Xi Jinping's ideology of socialism with Chinese characteristics in the new era and in accordance with the arrangements of the Shanghai Municipal Party Committee of the CPC, the Supreme People's Court and Shanghai High People’s Court, ramp up our efforts in judicial protection and deepen judicial reform. We will make bigger strides towards the goal of building a world-class intellectual property court so as to provide excellent service and solid guarantee for the implementation of the national strategy and drive the economic and social development of Shanghai.

 

 

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