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12-08-2020

Latest Developments on Judicial Protection of Intellectual Property in China

On June 15, 2020, the Supreme People's Court of China (the “SPC”) issued Provisions on Evidence in Intellectual Property Civil Procedures (Exposure Draft) (the “Provisions”) and Opinions on Enhanced Sanctions on Intellectual Property Infringements (Exposure Draft) (the “Opinions”). These two exposure drafts aim at further strengthening the judicial protection of intellectual property ("IP") and promoting new developments in the Chinese judicial protection system. Below we will brief on the highlights in the two exposure drafts.

Increased Protection of Trade Secrets
The increased protection of trade secrets is the most prominent development in the two exposure drafts.

In trade secret cases, the risk of second leakage is not unusual because confidential requirements are missing in procedures like evidence exchange, cross-examination, and court hearing. The Provisions formulates several rules to minimize such risk:

  • Where the evidence to be preserved involves trade secrets, the other parties involved shall not attend the preservation and only the lawyers, the patent agents and the persons with expertise could attend after signing a confidentiality commitment (Art.19, para.2);
  • Where the evidence to be cross-examined or exchanged involves trade secrets, the other parties involved shall not consult, extract, duplicate or take photos and only the lawyers, the patent agents and the persons with expertise could consult with the permission granted by the Court (Art. 31 to 33);
  • The parties involved are allowed to challenge on whether the evidence involves trade secrets by submitting the counter evidence (Art.35).

The Opinions, on the other hand, provides that in the criminal cases where the trade secret is infringed on behalf of foreign entities, organizations or people, a heavier sanction shall be imposed (Para.20).

Ease the Restrictions on Foreign Evidence
Under current Chinese civil procedures, the foreign evidence, before submitting to the Court, it has to be notarized where the evidence was formed or comply with related legalization procedures. To respond to the practical needs of judicial protection for IP rights, the Provisions eases such restrictions to some extent through Article 9 and 10.

  • The counter parties shall not challenge the foreign evidence, only on the grounds that the evidence is not legalized, where the counter parties recognize the evidence expressly, or where the parties involved provide a testimony of witness, who confirms the authenticity of the evidence and expressly agrees to be punished if the evidence is found false (Art. 9).
  • The counter parties shall not challenge the foreign evidence, only on the grounds that the evidence is not notarized or legalized, where the evidence has been confirmed by effective court rulings or arbitral awards, or where the evidence can be obtained from official or public publications and patent retrieval literature, or where the authenticity of the evidence can be verified by other means.(Art. 10)

These provisions avoid cumbersome procedural requirements and therefore offer greater convenience in foreign-related IP litigations.

Adjustments to Evidence Rules
The Provisions also makes adjustments to certain evidence rules in IP litigations.

  • In a patent dispute where the patent for invention involved is not a process for the manufacture of a new product, the right owner shall bear the burden of proof that the alleged infringer produces the products in the same way as the right owner does and is highly likely to conduct the patent methods, after which, the alleged infringer may then defence himself by proving his methods differ (Art.3).
  • Financial books, accounting documents, annual reports for listed companies, company websites or brochures, industry profits, evaluation reports, licensing contracts for the use of IP rights, and records from the departments of industry and commerce, taxation and finance may be used as evidence to determine the compensation amount for infringing IP rights (Art.5).
  • The rule of self-admission is not applicable in determining the right owners, the status of right, and the comparison of technical features in patent disputes (Art.6).

IP Protection on “Hot Issues”
The Opinions emphasises the application of preliminary injunction in the litigations involving core technologies, well-known brands and hit shows, and the criminal sanctions against passing off the registered trademarks of commodities such as emergency rescue, disaster relief and epidemic prevention materials during specific periods These provisions were concluded by the judicial practice during the outbreak of COVID-19 since such “hot issues” usually attract widespread social attention and thus are easier to be infringed in the perspective of IP rights. Furthermore, the infringement usually will cause great loss to the right owners and could have a bad influence on society.

Summary
Before the Provisions and the Opinions were drafted and issued, the procedures applied in IP litigations did not differ from other civil litigations. We believe the two exposure drafts issued by the SPC release a signal that China will move on to a greater judicial protection against the IP infringement.

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