China's Highest Court Opines on Implementation of National Intellectual Property Strategy: Courts Urged to Protect the Interests of Intellectual Property Rights Holders

09 April 2009 Publication

Legal News Alert: China

On March 30, 2009, the Supreme People’s Court (SPC) of the People’s Republic of China (PRC), China’s highest court, issued its Opinions on the Implementation of the National Intellectual Property Strategy (Opinion). The Opinion provides the framework for effectively implementing within the court system the National Intellectual Property Strategy Outlines (Strategy) published by the State Counsel on June 5, 2008. The Opinion, which re-emphasizes the importance of intellectual property rights (IPR) and seeks to enhance the judicial protections of such rights, is therefore likely to affect the protection of IPR in China significantly. 

Pursuant to the Opinion, China’s judicial bodies shall take a leading role in intellectual property (IP) protection, thereby contributing to China’s transformation into an “innovation-oriented nation,” one of the central tenets of the PRC government’s most recent five-year plan.  Specifically, the SPC urges all courts to utilize actively comprehensive remedies to protect the interests of IPR holders, including both monetary and non-monetary remedies. In addition, the SPC particularly encourages all courts to enhance damages awards in IP-infringement cases, especially for those with serious circumstances (i.e., willful infringement) so as to effectively prevent repeated infringement by the same infringer(s) and more widespread infringement. Finally, the Opinion also states that it will (1) expedite the establishment of a quasi-precedential reporting system for IP-related cases in order to unify judgment standards; (2) intensify the judicial re-examination of the activities of granting and affirming IPR by administrative authorities in order to unify the examination standards for grant of IPR; and (3) promote the publication of all IP-related court decisions. 

While general guidance on handling various IPR infringement cases has been provided, the Opinion also emphasizes the balance between IP protection and public interest, and cautions against the abuse of IPR. For instance, the SPC’s Opinion notes that (1) the scope of a patent claim should be interpreted accurately and the doctrine of equivalents should be applied more narrowly; (2) well-known trademarks shall be recognized passively and prudently by the courts on both a case-by-case and a need-to-have basis; (3) in trade secret cases, the courts also shall protect the alleged infringer's own trade secrets from being inappropriately acquired by the plaintiff; (4) the courts shall be very cautious when adopting pre-litigation interim measures for invention and utility model patent cases (i.e., injunctive remedies), though for trademark and copyright infringement cases, the interim measures shall be adopted more actively; and (5) acts constituting unfair competition shall be recognized based on the Anti-Unfair Competition Law’s general principle that “market competitors shall not violate the principle in good faith and honesty” and shall not be made simply on the ground of utilizing or damaging competitive advantage. 

The SPC notes its intention to study carefully the necessity and possibility of establishing a special unified IPR tribunal to address civil, administrative, and criminal IPR cases as well as an IP appeal court, although no further details have been provided in this Opinion. 

With respect to legislation, the SPC states in the Opinion that it very soon will issue the Judicial Interpretations on Protections of Well-Known Trademarks and in the very near future will roll out the Judicial Interpretations on Patent Infringement Assessment Standard and the Judicial Interpretations on Civil Procedures for Anti-Monopoly Lawsuits. Considering the technical aspects of many IP cases, the SPC also will establish certain legal procedures concerning judicial appraisals, expert witnesses, and technical investigations, among other issues.   

In summary, the Opinion provides general guidance to all PRC courts in terms of IPR protections and touches on several important issues relating to such protections in China. With the issuance of such an Opinion, enhanced IPR protections and more uniform and transparent court decisions can be expected.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:

Sharon R. Barner
Chair, Intellectual Property Department
Chicago, Illinois

Catherine Sun
Chair, Asia Practice
Shanghai, China
86 21 6100 8900

Yan Zhao     
Senior Counsel, Intellectual Property Department
Shanghai, China
86 21 6100 8900

Foley & Lardner LLP is licensed to operate in China as a foreign law firm. Under Ministry of Justice regulations, foreign law firms in China are permitted to advise clients on certain aspects of international transactions and to provide consultation concerning the impact of the Chinese legal and regulatory environment; foreign law firms in China are not permitted to practice Chinese law. The content of this communication does not constitute an opinion on Chinese law nor does it constitute legal advice, but is based on our research and our experience advising clients on international business transactions in China.

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