Judicial Protection of 

intellectual Property in China

and Its Prospects

--by Zhipei Jiang

The judicial protection of intellectual property in China was launched under such a background that people's courts make profound judicial reform, emphasize seriousness, fairness and justice of execution of law, provide reliable judicial guarantee for reform and opening up, construction of socialist market economy in China.

Generally speaking, it is a common understanding of Chinese judges that the judicial protection of intellectual property means to protect intellectual property through judicial channels. Such as, the IPR owner or the public prosecutor raises a criminal or civil lawsuit to investigate and affix criminal or civil responsibility of infringer, the unsatisfied party of an IP administrative punishment brings administrative law suit to the People's court, judicial review of the execution of law, etc. All of these are for the justified applying laws or correct the wrong decisions to enable the adequate protection to the lawful right and interest.

The scope of judicial protection of intellectual property includes the protection of patent, trademark, copyright, related rights, anti-unfair competition, and the property right and human right of all intangible assets of human creativity. The protection scope and level of Chinese law are quite similar to that of relevant International Treaties and will be positively influenced by various international Treaties, such as " Agreement on Trade-Related Aspects of intellectual Property Rights, Including Trade in Counterfeit Goods". Besides, a lawsuit relating technology contract, such as a technology transfer or a technology cooperation, also fall within the jurisdiction of the intellectual Property Trial Chambers.

Chinese courts execute mainly on the basis of written law, while follow the judicial Explanations and Cases of Supreme People's Courts. The judges' trail experience also plays a role therein. Therefore, when bringing or responding to a lawsuit in Chinese courts, it is well worth to pay special attention on the intellectual property laws stipulated by States and the judicial explanations of Supreme Court. Meanwhile, providing powerful evidence, arguing adequately during a court session is also very important. Because all of these are critical to make a judge fully understand the case.

Lately, Chinese people's courts at various levels have accepted and decided a number of IPR related cases. Statistics shows that between January of 1996 and June of 1998, people's courts accepted 9,53 1 IP civil cases and decided 9,018 of them . Among them, 2,948 were patent disputes and decided 2,642; 858 were trademark disputes and decided 780; 1126 were copyright disputes and decided 1105; 2,720 were technology contract disputes and decided 2,678; and 1,879 were infringement of trade secrets and other IP related disputes and decided 1,813. During the same period of time, the court have accepted 435 criminal cases relating to intellectual property and decided of them.

The accepted intellectual property cases have the following features: first of all, the cases are comparatively concentrated in areas and cities with more developed economy and culture, the numbers of accepted cases between areas are not balanced with noticeable differences. Secondly, the total amount of accepted cases are steadily going up, and a large proportion of them is infringement cases. Thirdly, the involved cases are complicated in legal relationships with the infringement, the disputes of ownership and the contract disputes tangled therein. The intellectual property hold by plaintiff conflicts with that of defendant. There are both concurrence and compatibility of legal responsibility. The collective lawsuits have increased. Fourthly, the illegal infringers inside and outside the borders collaborate with each other. Pirating and impostures become internationalized. Some illegal doers outside the borders cheat or conspire with the doers inside the borders to transfer the parent pirated edition, and establish underground production lines, or directly smuggle a lots of infringing duplicates and conduct infringement wantonly. Their actions devastated the intellectual property market order of China. The above-mentioned features make the judicial protection of intellectual property more complicated and difficult.

Chinese court have increased the judiciary protective power of intellectual property against various IP infringement conducts and acts of tort that wrecked the order of science and technology market, such as plagiarizing, illegally coping, passing off and breaching of contract, etc.:

1. Taking "the Criminal Law of PRC" as a powerful weapon, applying criminal punishments to IP criminals, punishing the conducts of passing off and pirating, and protecting IP effectively.

The section 7 of China Criminal Law, which is amended and adopted at the third session of the fifth National People's Congress in March of 1997 and effected as of October of 1997, defines the crime of IP infringement. This section includes eight articles, from Article 213 to 220. Article 213 of China Criminal Law stipulates: " anyone who uses a trademark identical to a registered trademark on the same toe of goods without the permission of the owner of the registered trademark, where the circumstances are serious, shall be sentenced to fixed term imprisonment of not more than three years or criminal detention, and/or be sentenced to a fine . If the circumstances are exceptionally serious, such person shall be sentenced to fixed term imprisonment of not less than three years and not more than seven years, and a fine." Article 214 stipulates that knowingly selling passing off products in large monetary amount should be sentenced to fixed term imprisonment of not more than three years, and a fine. Article 215 stipulated that " anyone who forges or manufactures without authorization representations of the registered trademark of another person or sells representations of a registered trademark that have been forged or manufactured without authorization, where the circumstances are serious, shall be sentenced to fixed term imprisonment of not more than three years, criminal detention or control, and/or be sentenced to a fine. If the circumstances are exceptionally serious, such person shall be sentenced to fixed term imprisonment of not less than three years and not more than seven years, and a fine". Article 216 stipulates that passing off other's patent product, when circumstance is serious, shall be sentenced to a fixed term of imprisonment of not more than three years, and/or a fine. Article 217 stipulated that " Anyone who, for the purpose of obtaining profit, infringes copyright in any of the following ways, where the amount of illegal income is relatively large or there are other serious circumstances, shall be sentenced fixed term imprisonment of not more than three years or criminal detention, and/or be sentenced to a fine; if the amount of illegal income is very large or there are other exceptionally serious circumstances, such person shall be sentenced to fixed term imprisonment of not less than three years and not more than seven years, and a fine: (l) reproduction and distribution of another person's written work, musical cinematographic, television or videographic work, computer software or other work without the permission of the owner of the copyright therein; (2) publication of a book to which another person enjoys exclusive publishing rights; (3) reproduction and distribution of an audio or video recording without the permission of the recording's producer; or (4) production and sale of a work of art passed off under another person's signature". Article 218 stipulated that " Anyone who knowingly sells and infringing reproduction as specified in Article 217 hereof for the purpose of obtaining profit, where the amount of illegal income is very large, shall be sentenced to fixed term imprisonment of not more than three years or criminal detention, and/or be sentenced to a fine". Article 219 stipulated that " anyone who infringes a business secret in any of the following ways, thereby causing serious losses to the holder of rights thereto, shall be sentenced to fixed term imprisonment of not more than three years or criminal detention, and/or be sentenced to a fine; if the consequences are exceptionally serious, he shall be sentenced to fixed term imprisonment of not less than three years and not more than seven years, and a fine: (1) obtaining a business secret of the holder or rights thereto by theft, enticement by promise of gain, coercion or other improper means; (2) divulging, using or permitting another person to use a business secret of the holder of rights thereto which has been obtained by a method as set out in the preceding item; or (3) divulging, using or permitting another person to use a business secret in one's possession, where such divulgence, use or permission is in violation of an agreement or in breach of the confidentiality requirements of the holder of rights in respect of the business secret. Anyone who obtains, uses or divulges another person's business secret that they are well aware or ought to be aware to have been infringed by an act as described in the preceding paragraph shall be treated as having infringed a business secret." Article 220 stipulated that if a work unit commits any of the offenses of infringing intellectual property, the work unit shall be sentenced to a fine and the main persons directly responsible for the work unit and the other directly responsible persons shall be punished in accordance with the provision of the Criminal Law.

According to Criminal Procedure Law of the PRC and relevant judicial explanation, the sufferer may accuse of a crime of infringing intellectual property to public securities who will be responsible for placing a case on file for investigation and prosecution. The sufferer also may bring a lawsuit to People's courts directly and People's courts should accept the case according to law. If the court find there were not enough evidence for placing a criminal accusation and the instance may be accepted by the public security, or the accused person may be sentenced for a fixed term of three years of imprisonment, this case should be transferred to the public security. Civil law suit can be attached with these cases. During the litigation of civil IP cases, if the court finds that there is suspicious IP crime, this case should transferred to the public security for further investigation. If the sufferer brings the IP criminal law suit, the court should accept the case. We hope that all the IP owner should send the IP criminal suspects to the court if they find there is suspicious IP criminal conduct. If the IP administrative body finds suspicious IP criminal conducts when executing its responsibility, they should transfer the case to the public security. They should not simply impose a fine and let the criminal suspect at large.

2. According to Patent Law, Trademark Law, Copyright Law and Anti-Unfair Competition Law, giving full play to characteristic functions of combining punishment and compensation, fully investigating civil responsibility of infringer, and ultimately protecting the intellectual property right.

According to relevant laws, the judicial remedy for intellectual property infringement includes: termination of infringements, elimination of unhealthy effects, public apology, rehabilitation of reputation, paying compensation, etc. The above measures may be applied exclusively or concurrently. As for other serious infringement, in addition to applying the above measures of bearing civil liability, people's courts may confiscate the illegal income, impose fines, etc. When ordering compensation for IPR infringement, People's Courts shall consider not only the economical loss of the owner, but also the mental anguish.

Judges noticed that termination of infringement and paying compensation are not only the core and key link of various stipulated civil responsibilities, but also the fundamental interest the sufferer is looking for. Chinese judges use their successful experience in general civil tort law on the intellectual property litigation. In the case where termination of infringements, removal of immediate threaten become necessary, Chinese courts may make an advanced order upon the request of applicant or on the basis of their authority. That is to say that, in an intellectual property litigation, judges may not only issue an order similar to permanent injunction of infringement, but also issue an order similar to temporary injunction during the litigation, including at the very beginning of the law suit. Even in the preparation period of infringement, the courts may issue orders to eliminate a threaten of the infringement.

According to law and the judicial explanation of the Supreme People's Court. there are three methods of calculating compensation for intellectual property infringement: The first one is taking the actual losses of the intellectual property owner caused by infringement as a standard for computation of compensation. The second one is taking the illegal income of infringer as a standard for computation of compensation. The third one is taking more than a fair and reasonable royalty or transfer fee for the infringed intellectual property as a standard for computation of compensation.

Besides, Chinese judges have also created and accumulated other methods of calculating compensation during hearing intellectual property infringement cases. For example, when calculating the loss for trademark infringement we may take the result of the number of infringement products multiplying the reasonable profit per each brand product of the trademark owner. It is worth to mention that we have used the concept of "statutory damages" to decide a fixed amount as compensation when both the actual loss of intellectual property owner and the profits of infringer are too difficult to be proved. The fixed amount of compensation is ranging from 5,000RMB to 500,000RMB at court's discretion in view of the toe of and appraised value of the infringed intellectual property, the time frame of the infringement the damages suffered by the intellectual property owner, etc. Under certain conditions, Chinese judge may also award IP owner a reasonable amount of attorney fee and the costs of stopping and eliminating the infringement.

Chinese judges have improved and enriched their theory of intellectual property infringement during the judicial practice and paid great attention to using the presumptive tort doctrine on confirmation of the civil compensation responsibility of the infringer. Chinese judges have gradually reached the following common view in the trial of intellectual property infringement cases: l) When IP owner requests to stop an infringement, this IP owner needs not to prove that the infringer has a bad faith, the judge may issue a temporary injunction order or even a substantive judgment of terminating the infringement without considering whether or not the infringer is wrong intentionally, as long as the infringer has conducted the infringement defined by law. 2) When IP owner requests the infringer to take civil responsibility, such as compensation of loss, the infringer shall be presumed wrong in mind as long as it is proved that the infringer has executed infringement prohibited by laws. However, the infringer will not take civil responsibility, such as compensation, only if he can successfully prove that he did not have bad faith. In another word, if the infringer can not prove or failed in proving, he will be judged to take civil responsibility. 3) According to laws, regulations, rules or agreements between parties, the seller has an obligation of taking reasonable care not to sell or counterfeiting goods. The seller shall take a corresponding civil responsibility as long as he sold the infringing goods, even if he has only a light fault in mind. 4) If the seller who sold the infringing goods can provide enough evidences to prove that he had not intention or negligence, he will not have to take a responsibility of compensation. If the seller continues his sale after he is informed the fact he shall take the responsibility for intentional infringement. 5) If someone has conducted an action prohibited by intellectual property law, even if he has evidences to prove that he did not know or he should not know the wrong doing, the judges may still order him to return the improper income, or make a reasonable fixed amount of compensation, or take both under a certain condition.

3. Strictly implementing Civil Procedure Law and the judicial explanation of Supreme People's Court regarding trial procedure, ensuring justified execution of judicial protection of intellectual property by establishing special judicial organ and improving litigation procedure, etc.

Recently, Chinese courts have made positive efforts on establishing special trial chambers of intellectual property. Up to now, special IP trial chambers have been established in Higher People's Courts in Beijing, Shanghai, Tianjin, Guangdong, Fujian, Jiangsu, Hainan, Sichuan, Cbongqing, Henan, Liaonnig, etc. as well as in Intermediate People's Court of a number of cities. This type of IP trial chamber has also been established in the district court of a certain number Hi-tech economy development zone, focusing on the IP cases and disputes of technology transfer contract. The Supreme People's Court also set up its IP trail chamber in October of 1996. In those courts without IP trail chamber, a fixed panel has gradually handled all IP related cases. This is a signal showing that the IP judiciary field is taking off along the specialization road.

In order to higher level of IP judiciary protection, considering the comparative fewer case number, intermediate People's Court has become the first instance court for civil IP cases in the area without IP trail chamber. For patent disputes, the designated intermediate People's Court has jurisdiction as trail court. In order to perfect the jurisdiction system of IP cases, the Chinese judges has proposed that the courts of the selling place have jurisdiction over the infringement cases involving selling of infringing goods. If the plaintiff is after the manufacture rather than the seller, the courts in the area where the manufacture taking place (normally the residence place of the manufacture) has jurisdiction while the manufacturing place is not the selling place. When the manufacture and the seller are co-defendant in a lawsuit in the selling place of the infringing goods, the courts of the selling place has jurisdiction. When the seller of infringing goods is affiliated organ of the manufacture its selling conduct is considered as the selling conduct of the manufacture. When the plaintiff pursues the manufacture's conduct of selling and manufacturing, the courts in the selling place has jurisdiction. All the foreign related IP cases should strictly follows the Chapter 25 of the Civil Procedure.

Because the IP rights are granted from various administration and the ultimate granting power is not in the People's Court. There are IP cases where both plaintiff and defendant owns conflicted IP rights. These cases are: 1) Conflicting IP rights belong to the same type of IP, such as patent for invention against patent for invention, utility model against utility model, etc. 2) Conflicting IP rights belong to different categories of D, such as design patent against trademark, trademark against copyright, trademark against the prior used goods in packaging and trade name, trademark against corporate name, etc. When taking such cases, the People's Court should let the parties to resolve the conflicting rights in the administrative body according the revocation or invalidation procedures, and then, handle the IP infringement disputes. If the conflicting of IP rights remain unsolved after the relevant revocation and/or invalidation procedure, or the relevant administrative authority has not made a decision over the conflicting IP rights within 3 months from the date of filing request by the party without justified reason, the People's Court will take the principles of honesty and protecting of lawful right of citizen and legal person, and provide the protection to the earliest granted IP owner or the prior user the lawful civil right of continuing using the related property.

In view of the strong professional requirement of the IP cases, Chinese Courts require the parties to submit supporting evidence before the opening of hearing. The submitted evidences are exchanged among the parties. The evidences relating to facts finding, including professional opinion has to be interrogated in the court before them to be accepted by the court. The Supreme People's Court has recently ruled the relevant Higher People's Court to form a different panel and re-try the IP case involving submission of evidence without interrogating in court.

Prescription of IP related cases should follow that of civil law and relevant authorities. However, generally speaking, IP infringement is a continuing conduct. Some of them are lasting even quite a long time. IP owners may have not pursued infringement within the 2 years prescription time counting from the date of knowing or should have known the infringement. When the IP owner brings infringement lawsuit, his IP right is still valid, the infringement is still happening. Under such a circumstance, we believe that applying the 2 years prescription time should not exclude these cases. In the entire valid period of the IP right the court should order the termination of the infringement. The compensation should be calculated starting from 2 years prior the filing of the lawsuit. Any infringement earlier than that 2 years should not be considered.

As the highest judiciary body, the Supreme People's Court has paid attention to IP protection. So far, the Supreme People's Court has heard and ruled a bunch of appeal IP cases, including cases with impact nationwide. In the firs half of this year, The Supreme People's Court has ruled on 46 IP cases, as well as made quite a few judicial explanation. It worth to mention that the Supreme People's Court has looked into three IP cases with final decision were made by relevant Higher People's Court, and found that there were clear error in both facts finding and applying of law. Therefore, the Supreme People's Court ruled to stop the execution of the final decisions and re-try the case by different panel in those Higher People's Court. I believe that these rulings clearly reflect the determination of the Supreme People's Court on strengthening the judicial supervision.

We are about to come into a new century. Chinese judges fully appreciate the task in front of them. The Chinese IP protection system is confronting the 'challenges of Hi-tech. In order to meet these challenges, quite a few IP laws are undertaking revision. Chinese judges will take in part of these assignments actively, make the necessary judicial explanations, ruling principles and experiences a part of relevant statutes, and constitute their efforts in making the IP protection mechanism the most effective part of building up the legal system and democracy. While continuing the establishment of the specialized judicial organ, Chinese courts will broaden the IPR protection scope and strengthen the enforcement of IPR. Chinese judges are closely monitoring the impact of the digitized information on IP protection, as well as the protection of network literatures by copyright. The IP trail chamber of the Supreme People's Court is cooperating with the Patent Re-examination Board in solving the issues of delaying infringement litigation by re-examination of utility model patent and supporting the China Intellectual Property Bureau to set up a utility model related prior litigation searching body. If litigation is brought to the court with confirmation of the validity of utility model patent the court will no longer declare the suspending of the litigation on the basis of patent invalidation procedure.

Chinese judges hold the position of full scope IP protection. Legislative, judicial, administrative, and social effort should be cooperated with that of IP owner in realizing the full scope IP protection. We firmly support the suppression of IP infringement conduct such as pirating and passing off. We fully appreciate that the judicial IP protection is the most important part of the P protection system. We are devoted to our duty. We also understand that the Chinese courts have formidable task in facing the IP infringement. There are many improvements need to be done in the judicial system. We believe that the internationalized infringement has brought IP advocates all over the world together. We are willing to discuss and exchange . views on all IP issues, with our foreign colleagues, help each other and make our cooperation mutual beneficial.