China's Highest Court Opinion Addresses Impact of the International Financial Crisis on Intellectual Property

In the face of the international financial crisis, China continues to focus on the importance of intellectual property (IP). On April 21, 2009, China’s highest court — the Supreme People’s Court of the People’s Republic of China (PRC) — issued its Opinion on Certain Issues With Respect to Intellectual Property Judicial Adjudication Under the Current Economic Situation (Opinion) within the court system in China.

The Opinion, among various other issues, provides explicit guidance as follows:

1. That courts shall strictly apply the doctrine of equivalents to avoid inappropriate broadening of patent scope
2. That prior use rights shall be reasonably recognized in patent lawsuits
3. That the courts shall recognize defenses based on prior art (the doctrine of which has been codified into the Third Amendment to the PRC Patent Law; See http://www.foley.com/publications/pub_detail.aspx?pubid=5766)
4. That courts shall recognize well-known trademarks under strict conditions based on necessity
5. That courts shall appropriately balance between trade secret protection (including non-compete issues) and employee career development
6. That courts shall improve the system for declaratory judgments of non-infringement in order to restrain abuse of IP rights
7. That courts shall be cautious in issuing pre-suit preliminary injunctions
8. That courts shall explore the possibility of relying upon experts such as accountants, auditors, and professional evaluation agencies when deciding damages

Consistent with the National Intellectual Property Strategy Outlines published by the State Counsel on June 5, 2008, the Opinion emphasizes the balance between IP protection and public interests, and will certainly impact the protection of IP rights in China.

A full Chinese version of the Opinion is available at http://news.xinhuanet.com/legal/2009-04/24/content_11247180.htm.

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 alert or would like to discuss the topic further, please contact your Foley attorney or the following individuals:

Sharon R. Barner
Chair, IP Department
Chicago, Illinois
312.832.4569
[email protected]

Catherine Sun
Chair, Asia Practice
Shanghai, China
86 21 6100 8900
[email protected]

Yan Zhao
Senior Counsel, IP Department
Shanghai, China
86 21 6100 8900
[email protected]

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.