44May 2019
IP LITIGATION AND DISPUTE RESOLUTION ISSUE
Website: www.ccpit-patent.com.cn E-mail: mail@ccpit-patent.com.cn
The best form of defense is attack.
To achieve victory, we must mass our forces at the hub of all power & movement. The enemy's 'center of gravity'
Von Clausewitz, On War
The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy. To secure ourselves against defeat lies in our own hands but the opportunity of defeating the enemy is provided by the enemy himself.
In all fighting, the direct methods may be used for joining battle, but indirect methods will be needed to secure victory.
In war, the way is to avoid what is strong and to strike at what is weak.
Sun Tzu, The Art of War
CONTENTS Newsletter
Part
Profile of CCPIT PATENT AND LAW OFFICE
01
Part
IP Litigation System in P.R. China
05
Part
IP Statistics of P.R. China (2014-2018) 07
Part IV Selected Guiding Cases
10
Part V
The Revised PRC Anti-Unfair Competition Law Took Effect on April 23, 2019
16
Part VI
Amendments to China's Trademark Law will be implemented on November 1, 2019
Part V
References
24
21
Part I
CCPIT PATENT AND LAW OFFICE
Profile
CCPIT PATENT AND TRADEMARK LAW OFFICE is the oldest and one of the largest full-service intellectual property law firms in China. Our firm has 292 patent and trademark attorneys, with 76 qualified attorneysat-law. We provide consultation, prosecution, mediation, administrative enforcement and litigation services relating to patents, trademarks, copyrights, domain names, trade secrets, trade dress, unfair competition and other intellectual property-related matters. Headquartered in Beijing, we have branch offices in New York, Tokyo, Munich, Hong Kong, Guangzhou and Shanghai.
OUR MISSION is to render tailored services to clients with high quality, efficiency and reliability in a costeffective manner. We strive to continually improve the reliability and flexibility of our portfolio management system and the effectiveness of our quality control mechanism. We appoint teams of professionals with complementary expertise and organize brainstorming discussions when necessary. Our professionals are encouraged to be both proactive and creative, providing commentary and guidance and creating valueadded solutions for our clients.
OUR CLIENTS represent every sector of industry and commerce, from start-up businesses to multinational giants. Through decades of practice, we have successfully obtained hundreds of thousands of patents and trademark registrations and enforced thousands of patents and trademarks for our clients. With extensive legal and technological expertise, we are in a position to satisfy the demands of our clients in all aspects of intellectual property protection.
OUR PROFESSIONALS are required to receive continuous professional training and education to keep pace with the development of rapidly changing laws and technologies. We organize in-house academic and experience-sharing activities on a regular basis. We send our professionals to attend training programs or pursue further education in law. Some of our attorneys are active speakers and participants in intellectual property-related conferences and seminars.
01
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OUR PROFESSIONALS
Litigation/Enforcement Team
580
People in Total
7
Working LanguagesChinese, English, Japanese, German, French, Russian, Korean
237
Patent Attorneys
53
Trademark Attorneys
83
Lawyer Qualification
Copyright software registration Domain name registration and dispute resolution Layout-design of integrated circuits applications Recordation of intellectual property with Customs Consulting and litigation on trademark infringement and unfair competition Intellectual property financing and transaction
02
Part I
History
OUR HISTORY goes back to January 1957, when a trademark agency was established within the China Council for the Promotion of International Trade, a non-governmental trade promotion organization, to represent foreign companies before Chinese authorities. The agency was the sole trademark agency in China until the mid-1980s. A patent agency was organized by CCPIT in the early 1980s, when China began to establish its patent system. The patent agency was authorized as the first Chinese intellectual property law firm to have cross-border representation. In 1993, the two agencies merged to form the CCPIT Patent and Trademark Law Office.
03
1957
CCPIT Trademark Agency established
1982
Chinese Trademark Law promulgated
1983
Chinese Trademark Law implemented
1984
Chinese Patent Law promulgated
1984
CCPIT Patent Agency established
1985
Chinese Patent Law implemented
1993
CCPIT Patent and Trademark Law Office established
Honours
OUR REPUTATION for professionalism is widely recognized among peer professionals and clients, both domestically and internationally. Since 1999, we have been ranked among the top Chinese intellectual property law firms in the annual surveys conducted by publisher Managing Intellectual Property and have been nominated time and again as a leading Chinese intellectual property firm by institutes such as Asia Law & Practice, Asia Legal Business, Intellectual Asset Management and Chambers & Partners.
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Ranked Tier 1 both in the Area of "Patent Prosecution" , "Trademark Prosecution" and Tier 2 in the Area of "Patent Contentious", "Trademark Contentious" by MIP
Recognized as Tier 2 Intellectual Property Office in China by Benchmark Litigation (AsiaPacific 2019)
IP Law Firm of the Year 2019China by ALB
Honored China Business Law Awards Winner 2019 by the China Business Law Journal
Intellectual Property Law Firm of the Year 2019 in China by Global Law Expert
Recognized as a TOP-TIER FIRM in China in Intellectual Property
Band 1 Intellectual Property Non-Litigation Chinese Firm by Chambers Asia-Pacific 2019
04
Part II
IP Litigation System in P.R. China
Judicial System
1. Chinese judicial system is generally divided into 4 tiers: Basic People's Courts, Intermediate People's Courts, High People's Courts, and the Supreme People's Court, corresponding with 4 levels of administrative divisions.
2. Basic People's Courts: Each county, county-level city, municipal district has its own people's court. Designated Internet Courts (Beijing, Hangzhou, Guangzhou) fall into the category of Basic People's Courts.
3. Intermediate People's Courts: Each municipal-level city has its own Intermediate People's Court.
05
Designated Intellectual Property Courts (Beijing, Shanghai, Guangzhou) fall into the category of Intermediate People's Courts.
4. High People's Courts: Each province, autonomous region, direct-municipality (Beijing, Shanghai, Tianjin and Chongqing) as well as the Xinjiang Production and Construction Corps. has its own high people's court.
5. The PRC Supreme People's Court
6. "Three in One" Adjudication The Chinese courts are undergoing
a reform that combines IPrelated administrative, civil and criminal adjudications into the responsibilities of IP-specialized judges if the given cases involve administrative, civil and criminal law so as to increase the efficiency of the legal proceedings.
7. Cross-Region Jurisdiction Some Basic People's Courts and Intermediate People's Courts have cross-region jurisdiction over IPrelated cases in accordance with the guidelines of the Supreme People's Court.
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Jurisdiction
Basic People's Court:
Unless designed by the local High People's Courts, Basic People's Courts does not have the jurisdiction over IP cases. Basic People's Courts selected by local High People's Court have jurisdiction over non-technologyrelated IP cases, i.e. trademark, copyright, design patent, unfaircompetition, technology contractsrelated disputes. Internet Courts (Beijing, Hangzhou, Guangzhou) have jurisdiction over Internet-related copyright/neighboring right cases.
Intermediate People's Court:
General Intermediate People's Courts as well as the Intellectual Property Courts (Beijing, Shanghai, Guangzhou) have jurisdiction over non-technologyrelated IP cases, i.e. trademark, copyright, unfair-competition, technology contracts-related disputes, and appeals from lower courts regarding such disputes Intellectual Property Courts, Intermediate People's Courts and/ or their IP Tribunals selected by the Supreme People's Court (43 in total) have jurisdiction over technologyrelated IP disputes, i.e. disputes related to invention, utility model, know-how, layout-design of integrated circuits, computer software copyright, new varieties of plants and monopoly etc. Beijing Intellectual Property Court
Supreme Peoples Court (IP Tribunal)
High Peoples Courts
Selected Intermediate Peoples Courts and/or its IP
Tribunal
Designated IP Courts (Beijing, Shanghai &
Guangzhou)
Regular Intermediate Peoples Courts
Technology Related IP Cases (Invention, Utility
Model, Know-how, Monopoly, etc. )
Selected Basic People's Courts
Internet Courts (Beijing, Hangzhou & Guangzhou)
Non-Technology Related IP Cases (Trademark, Copyright, Design, Unfair Competition, etc. )
Internet Related Copyright Cases
has the exclusive jurisdiction over administrative lawsuits related to opposition/invalidation decisions made by the Trademark Review and Adjudication Board (TRAB)
High People's Courts:
High People's Courts have jurisdiction over non-technology-related IP cases that have major impacts within their jurisdiction. They can hear appeals from aforesaid Intermediate People's Courts (or their IP Tribunals), Intellectual Property Courts with regard to non-technology-related IP cases, and have the discretion to reopen such IP cases first heard by Basic People's Court.
Supreme People's Court
The IP Tribunal of the Supreme People's Court has the exclusive
jurisdiction over appeals from courts all over China regarding technologyrelated cases i.e. invention, utility model, know-how, layout-design of integrated circuits, computer software copyright, new varieties of plants, monopoly and etc. It also can exercise the discretion to reopen IP cases first heard by Intellectual Property Courts and Intermediate People's Courts. Supreme People's Court The IP division of the Supreme People's Court enjoys the exclusive jurisdiction over appeals from all over China for technology-related cases i.e. invention, utility model, knowhow, layout-design of integrated circuits, computer software copyright, new varieties of plants, monopoly. It also enjoys the discretion to reopen IP cases first heard by intellectual property courts and intermediate people's courts.
06
Part III
IP Statistics of P.R. China
Chart 1: Patent Applications Accepted by SIPO
Invention
Utility Model
Design
Unit: ten thousand
2014
2015
2016
2017
2018
92.8 110.2 133.9 138.2 154.2
86.8 112.8 147.6 168.7 207.2 56.5 56.9 65.0 62.9 70.9
Chart 2: Trademark Applications Accepted by CTMO
Quantity
Annual Growth Rate
Unit: ten thousand
55.72%
21.47%
25.85%
28.35%
28.23%
2014
2015
2016
2017
2018
228.5
287.6
369.1
574.8
737.1
Chart 3: Copyright Registration by CPCC
Copyrightable Work Unit: ten thousand
Computer Software
{2014
99.20 21.88
{2015
134.82 29.24
{2016
159.95 41.00
{2017
200.10 74.53
{2018
235.20 110.48
Chart 4: Intellectual Property Rights Registration for Customs Protection
Filed
Approved
{2014
7003 5306
{2015
7459 5703
{12050
2016
8844
{11991
2017
9199
{14319
2018
11488
Above four chart data sourcesThe Annual White Paper on IP Protection in China Released by SIPO 07
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Chart 5: IP-related Civil Lawsuits at Trial Courts
Accepted Cases Concluded Cases
Annual Growth of Accepted Cases Annual Growth of Concluded Cases
7.83% 7.04%
14.51% 7.22%
24.82% 30.09%
47.24% 46.37%
40.97% 41.99%
Chart 6: IP-related Civil Lawsuits at Appellate Courts
Accepted Cases Concluded Cases
Annual Growth of Accepted Cases Annual Growth of Concluded Cases
9.81% 9.58%
37.55% 35.34%
4.97% 0.95%
26.62% 28.10%
2014
2015
2016
2017
2018
95,522
109,386
136,534
201,039 283,414
94,501
101,324
131,813
192,938 273,945
Chart 7: Retrial of IP-related Civil Lawsuits
Accepted Cases Concluded Cases Annual Growth of Accepted Cases Annual Growth of Concluded Cases
93.01% 97.18%
2014
27.59% 19.18%
-10.36% -4.37%
32.91% 19.47%
2015
2016
2017
0.00% 2018
348 444 398 529 1021
365 435 416 497 980
2014
2015
2016
2017
2018
13,771
15,122
20,800 21,833 27,645
13,718
15,032
20,345 20,538 26,309
Chart 8: Breakdown of IP-Related Civil Lawsuits at Trial Courts
2014
Total
95522
Patent
9648
Trademark
21362
Copyright
59493
Technology Contract
1071
Competition/Monnopoly 1422
Others
2526
2015 109386 11607 24168 66690 1480 2181 3093
2016
2017
2018
136534 201039 283414
12357
16010
21699
27185
37946
51998
86989
137267 195408
2401
2098
2680
2286
2543
4146
5316
5175
7483
Above four chart data sourcesThe Annual White Paper on IP Protection in China Released by the PRC People's Supreme Court
08
Part III
Chart 9: Foreign countries involved in IP-related Infringement Lawsuits at Trial Courts (2015-2016)
28 countries were involved in IP infringement cases during 2015-2016. United State, France, and Germany topped the list in respect of quantity.
Chart 10: Claims Supported by the Courts in IP-related Infringement Lawsuits (2015-2016)
Rejected in 7.13% cases
Not supported in 0.05% cases
Wholly supported in 7.92% cases
Partially supported in 84.9% cases
Above two chart data sourcesPRC People's Supreme Court: http://www.court.gov.cn/fabu-xiangqing-63192.html 09
Selected Guiding Cases
Part IV
Guiding Cases
Guiding Cases
China is traditionally aligned with civil law system, but in recent years the Supreme People's Courts (SPC) have complied and published over a hundred guiding cases aimed at standardizing legal practice and forming a uniform criterion in adjudication. Of all 112 guiding cases issued by SPC, 20 are IP cases.
Definition of Guiding Case
Guiding Cases in China refer to the cases compiled and published as Guiding Cases by SPC and the rulings or judgments in these cases have already come into legal effect. The Guiding cases have tackled complicated legal issues and can be cited in similar cases.
Legal effect of Guiding Cases
According to Implementing Rules of the "Provisions on Guiding Cases issued by the SPC,
Where a case being adjudicated is, in terms of the basic facts and application of law, similar to a Guiding Case released by the Supreme People's Court, the People's Courts at any level should refer to the relevant Guiding Case to render its rulings or judgments.
Where the People's Courts at
any level cite a Guiding Case when adjudicating a similar case, it should explain the reason for citing the Guiding Case in its adjudication.
Typical Cases and Reference Cases
Other than Guiding Cases, the SPC and the Courts at all levels regularly issues Typical Cases or Reference Cases. Unlike the Guiding Cases, the rulings and judgments in the Typical Cases or Reference Cases are not binding and they are supposed to provide reference.
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Part IV
Interpretation of "well-known commodity" in PRC Anti-Unfair Competition Law
Guiding Case No. 47
Ferrero International S.A., Italy ( ) v. Montresor (Zhangjiagang) Food Co., Ltd. ( ) and Zhengyuan Marketing Co., Ltd., Tianjin Economic-Technological Development Area ( ), An Unfair Competition Dispute
FERRERO ROCHER
TRESOR DORE
1. The term "well-known commodity/ service" as used in the AntiUnfair Competition Law refers to a commodity/service that has a certain degree of reputation in the market within the territory of China and is known to the relevant public. China protects the distinctive product name, packaging or decoration of the wellknown commodity according to the Anti-Unfair Competition Law, provided that the commodity is well-known to the relevant public within the territory of China. Therefore, in order to determine whether an internationally known commodity is a well-known commodity and can be protected in the Anti-Unfair Competition Law, the court should take various factors into consideration, such as the sales period, sales regions, sales volume, and sales targets of that commodity within the territory of China, as well as the duration, extent and geographical
11
scope of advertisement and promotion that has been carried out for the commodity/services in dispute and the Court should also give appropriate consideration to the reputation of the commodity outside China.
2. The distinctive product name, packaging or decoration of the well-known commodity protected by the Anti-Unfair Competition Law are product name, packaging or decoration of the well-known commodity distinctive enough to distinguish the origin of the commodity.
While it is common practice that one can resort to unfair-competition law for legal protection against copycats when trademark registration was absent, it remains a legal obstacle for foreign IP right holder as to how to meet the criteria set out by the Chinese UnfairCompetition Law for such protection,
particularly when facing an adversary which has achieved certain market influence.
Such a problem was addressed and showcased in the Guiding Case No. 47, where the Ferrero chocolates were subject to a controversy between different courts as to how to define "well-known commodity" ( , revised to "commodity with certain influence"( ) in Chinese Anti-Unfair Competition Law, 2018).
In this case, the plaintiff Ferrero Company encountered the problem of imitation of its Ferrero Rocher chocolate (Chinese name JIN SHA ( ) in Hongkong and Taiwan).
The Plaintiff obtained the registration of the trademark "FERRERO ROCHER" in Latin in 1986, but it did not file the
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trademark "FERRERO ROCHER" in Chinese " " ( pronounced as JIN SHA in Chinese). In 1991, a dairy factory in Zhangjiagang City, Jiangsu Province, China registered the Chinese trademark " " on chocolate etc. and transferred the Chinese trademark " " to the defendant Montresor Company in 2002. The dairy factory and the Defendant had been producing and selling chocolates named as " " (JIN SHA) / " TRESOR DORE" with the trade dress similar to that of the Plaintiff.
In absence of trademark registration for the word " " (JIN SHA), the Plaintiff sued the defendants on the ground of unfair competition, claiming that the acts of the defendants had constituted "passing off" under Article 5 of Chinese Anti-Unfair Competition Law (1993). The court of first instance determined that Ferrero chocolates entered into China in 1984 through China National Cereals, Oils & Foodstuffs Import & Export Corporation who sold the chocolates by consignment, the Ferrero chocolates were sold primarily at duty-free stores, airport stores, and other locations permitted by the policies at that time. Such a practice continued until slightly before 1993. On the other hand, the Defendant had obtained relatively high degree of fame amongst Chinese consumers evidenced
by submitted by the Defendant to the court such as publicities, award records, market surveys etc. submitted by the Defendant to the court. Therefore, the court of first instance held that Ferrero chocolates was not "well-known commodity" back in 1990s when the allegedly passing off was started, even though it had met the criteria of "well-known commodity" by the time of hearings at the court of first instance. As a result, the court held that the acts of the Defendant could not cause confusion among consumers and thus, did not constitute unfair competition.
The court of second instance overruled the ruling of the first instance court, stating that comprehensive assessment should be carried out to decide whether or not the commodity in dispute was "well-known commodity" and the reputation of the commodity in dispute inside and outside China should be taken into consideration. And the term "well-known commodity" could not be understood as merely referring to a commodity being known within the territory of China. Based on such reasoning, among other things, the court of second instance revoked the first instance judgment.
However, in the retrial proceedings, the SPC pointed out that "well-known commodity" in the Chinese
Anti-Unfair Competition Law refers to commodities that have a certain degree of being known in the market within the territory of China and are known to the relevant public. For a commodity that is already known internationally, the protection of the trade dress of such a commodity should still be premised upon its being known to the relevant public within the territory of China. Nevertheless, the SPC held that the Ferrero chocolates acquired reputation amongst Chinese consumers after its entry into China in 1980s, prior to the existence of JIN SHA chocolates and rendered the retrial verdict in favor of the Plaintiff.
With the retrial verdict in the Ferrero case, the SPC had given the foreign IP right holders, who did not have trademark registration in China, a clear message that in order to get their trade dress protected in China according to the Chinese AntiUnfair Competition Law, they have to submit evidence to prove the reputation of the commodity in dispute within the territory of China. The reputation of the commodity in dispute outside China will not suffice to establish "well-known commodity" ( , revised to "commodity with certain influence"( ) in Chinese Anti-Unfair Competition Law, 2018).
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Part IV
SPC dismisses trademark Infringement Litigation Filed in Bad Faith
Guiding Case No. 82
WANG Suiyong ( ) v. Shenzhen Ellassay Fashion Co., Ltd. ( ) and Hangzhou Intime Century Department Store Co., Ltd. ( ), A Trademark Infringement Dispute
Trademark
Trademark No. Int'l Cl.
App. Date Registered Date
WANG Suiyong Shenzhen Gelisi
4157840
18 2004-7-7 2012-5-14
7925873
18 2009-12-18 2011-6-21
1348583 4225104
25
1998-9-15
1999-12-28
18 2004-8-17 2008-4-14
Where a plaintiff violates the principle of good faith, adversely affects the legal rights and interests of others, disrupts the fair competition order of the market, maliciously obtains and exercises trademark rights, and claims that others have infringed on his rights, the People's Court should not support such trademark infringement litigation on the grounds that the plaintiff has abused its rights and filed the trademark litigation in bad faith.
Trademark squatting has been a problem, haunting brand owners. Some trademark squatters have even sued the legitimate trademark owners, who have filed to register
13
their trademarks adequately or in time, for trademark infringement. The SPC issued the Guiding Case No. 82, giving the red light to such trademark squatters and stopping them from harassing legitimate trademark owners.
Shenzhen Gelisi Garments Industrial Co., Ltd. ( , later changed its English name to Shenzhen Ellassay Fashion Co., Ltd.), the legitimate brand owner in this case was established in 1999. Shenzhen Gelisi registered the trademark "ELLASSAY" on goods in Class 25 and Class 18. With respect to the trade name and trademark " " (GE LI SI), they only registered the trademark
" " (GE LI SI) in Class 25.
The plaintiff and trademark squatter, WANG Suiyong, registered the trademarks " " (GE LI SI),
" " (GE LI SI and graphic) in Class 18, and subsequently sued Shenzhen Gelisi, claiming that Shenzhen Gelisi had infringed upon his trademark rights for using the Chinese trademark " " (GE LI SI) on leather bags etc. in Class 18.
In 2013, the Intermediate People's Court in Hangzhou City, Zhejiang Province, rendered the first instance judgment, ruling that Shenzhen Gelisi
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had infringed on WANG Suiyong's trademark rights in Class 18 and ordering Shenzhen Gelisi to cease the trademark infringing acts pay WANG Suiyong RMB 100,000 as damages and reasonable expenses spent by him on the litigation.
Shenzhen Gelisi filed an appeal to the Zhenjiang High People's Court, arguing that WANG Suiyong obtained trademark registration in bad faith and filed trademark infringement lawsuit in bad faith. In October 2013, the Zhejaing High People's Court of Zhejiang Province rendered the second instance judgement, rejecting the appeal
and upholding the first instance judgment.
Both Shenzhen Gelisi and WANG Suiyong filed request to the SPC for a retrial of the second instance judgment. On August 14, 2014, The SPC rendered retrial verdict ( 2014 Min Ti Zi No. 24 Civil Judgment), revoking the first-instance and the second-instance judgments and rejecting all of the litigation requests raised by the Plaintiff.
In the retrial verdict, the SPC held that WANG Suiyong had engaged in act obtaining the trademark " " (GE LI SI) in Class 18 in bad faith and his acts of suing Shenzhen Gelisi for trademark infringement constituted abuse of rights.
It is worth noting that shortly after being sued by WANG Suiyong, Shenzhen Gelisi filed a separate lawsuit against WANG Suiyong in Shenzhen on the ground of trademark infringement and unfair competition for selling goods in Class 18. In May, 2014, the Shenzhen Intermediate People's Court rendered its judgment, in which the court put aside the conflict between the two parties' registered trademarks and focused their analysis on use of trademark/ trade name " " (GE LI SI) by WANG Suiyong. The court pointed out that the legal formality of trademarks filed and registered by WANG Suiyong could not conceal the nature of the unfair competition acts on the part of WANG Suiyong, and could not be the "legal" basis for the unfair competition acts committed by WANG Suiyong. The court then came to the conclusion that WANG Suiong's acts constituted unfair competition, and ordered WANG Suiyong to stop selling goods in Class 18 bearing the trademark " " (GE LI SI) .
WANG Suiyong appealed but his appeal was rejected by the Guangdong High People's Court and his request filed to the SPC for retrial was also refuse by the SPC.
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Part IV
Time
March 2012 August 2012 November 2012 December 2012 June 2013 November 2013 May 2014
August 2014
November 2015 June 2016
Hangzhou Lawsuit
Complaint filed by WANG Suiyong against the Gelisi Company
Shenzhen Lawsuit
Complaint filed by the Gelisi Company against WANG Suiyong
The Gelisi Company withdrew their counter claim
First instance judgement rendered, supporting the claim of WANG Suiyong
Second instance judgement rendered, upholding the first instance judgement
The SPC decided to retry the case
First instance judgement rendered, supporting the claim of the Gelisi Company, forbidding WANG Suiyong to use the " " (GE LI SI) trademark
Final judgement rendered, revoking the first instance and the second instance judgments and rejecting all of the litigation requests made by WANG Suiyong
Second instance judgement rendered, upholding the first instance judgement
Appeal for retrial rejected by the SPC
15
Part V
The Revised PRC Anti-Unfair Competition Law Took Effect on April 23, 2019
16
Part V
On April 23, 2019, the Standing Committee of the National People's Congress (NPCSC) passed the amendments to the PRC Anti-Unfair Competition Law, the second amendments since the implementation of the PRC Anti-Unfair Competition Law in 1993 and the first amendments in 2017. The revised PRC Anti-Unfair Competition Law became effective on April 23, 2019.
The new PRC Anti-Unfair Competition Law featured trade secret protection and raised fines and damages for unfair competition acts. These new revisions address international concerns, enhance trade secret protection and show that China is giving priority to building an environment conducive to trade and investment.
The revisions are summarized in the underlined texts in the charts as follows:
Trade Secrets
Before the amendments
Article 9:
The operator shall not commit the following violations of trade secrets:
After the amendments
Article 9:
The operator shall not commit the following infringement of trade secrets:
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Before the amendments
(1) Obtaining the trade secrets of the right holder by theft, bribery, fraud, coercion or other improper means;
After the amendments
(1) Obtaining the trade secrets of the right holder by theft, bribery, fraud, coercion electronic intrusion or other improper means;
Before the amendments
(2) Disclosing, using or allowing others to use the trade secrets obtained by the previous means;
After the amendments
(2) Disclosing, using or allowing others to use the trade secrets obtained by the previous means;
Before the amendments (3) Disclosing, using or allowing others to use the trade secrets in violation
of the agreement or in violation of the rights holder's requirements for keeping the confidentiality of trade secrets
After the amendments
(3) Disclosing, using or allowing others to use the trade secrets in violation of the confidentiality obligations or in violation of the rights holder's requirements for keeping the confidentiality of trade secrets.
(4) Instigating, tempting, and helping others to violate confidentiality obligations or to violate the rights holder's requirements for conservative trade secrets, to acquire, disclose, use or allow others to use the rights holder's trade secrets.
Other natural persons, legal persons and unincorporated organizations other than the operator who commit the illegal acts listed in the preceding paragraph shall be
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deemed to have infringed on trade secrets.
Before the amendments
If a third person knows or knows that the employee, former employee or other unit or individual of the trade secret right holder has implemented the illegal acts listed in the preceding paragraph and still obtains, discloses, uses or allows others to use the trade secret, it shall be deemed to infringe the trade secret.
After the amendments
If a third person knows or should know that the employee, former employee or other unit or individual of the trade secret right holder has implemented the illegal acts listed in the paragraph 1 of this Article and still obtains, discloses, uses or allows others to use the trade secret, it shall be deemed to infringe the trade secret.
Before the amendments
The term "trade secrets" as used in this Law refers to technical information and operation information that are not known to the public, have commercial value, and are subject to appropriate secrecy measures by the right holder.
After the amendments
The term "trade secrets" as used in this Law refers to business information such as technical information, operation information and commercial information that are not known to the public, have commercial value, and are subject to appropriate secrecy measures by the right holder.
Article 32:
In the civil trial procedure for infringement of trade secrets, if the trade secret right holder provides prima facie evidence showing that he has taken confidential measures against the claimed trade secrets
and reasonably indicates that the trade secrets have been infringed, the alleged infringer should prove that the trade secrets claimed by the right holder are not trade secrets under this law.
"If the trade secret right holder provides prima facie evidence showing that the trade secret is infringed and provides one of the following evidence: the alleged infringer shall prove that there is no infringement of trade secrets:
(1) There is evidence showing that that the alleged infringer has access with channel or chance to obtain the trade secrets and that the information used by the infringer is substantially the same as the trade secrets;
(2) There is evidence showing that the trade secret has been disclosed, used or suspected of being infringed by the infringer;
(3) There is other evidence showing that trade secrets have been infringed by the alleged infringer."
The revisions in Article 9 are all about trade secret protection, including the definition of trade secrets and acts of trade secret infringement. The newly added Article 32 allocates the burden of proof in trade secret civil lawsuits.
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Part V
Damages
Before the amendments
Article 17:
If the operator violates the provisions of this Law and causes damage to others, he shall bear civil liability according to law.
After the amendments
Article 17:
If the operator violates the provisions of this Law and causes damage to others, he shall bear civil liability according to law.
Before the amendments
If the legitimate rights and interests of the operator are damaged by unfair competition, he may file a lawsuit in the people's court.
After the amendments
If the legitimate rights and interests of the operator are damaged by unfair competition, he may file a lawsuit in the people's court.
Before the amendments
The amount of compensation for an operator who is harmed by unfair competition is determined according to the actual loss suffered by the infringement; if the actual loss is difficult to calculate, it shall be determined according to the benefit obtained by
19
the infringer due to the infringement. The amount of compensation should also include reasonable expenses paid by the operator to stop the infringement.
After the amendments
The amount of compensation for an operator who has been harmed by unfair competition is determined according to the actual loss suffered by the infringement; if the actual loss is difficult to calculate, it shall be determined according to the benefit obtained by the infringer for the infringement. Where an operator maliciously infringes the trade secrets and in case of serious acts, the amount of compensation may be determined within more than one time to five times the amount determined according to the above method. The amount of compensation shall also include the reasonable expenses paid by the operator to stop the infringement.
Before the amendments
If the operator violates the provisions of Articles 6 and 9 of this Law, if the actual loss suffered by the right holder due to the infringement and the benefit obtained by the infringer due to the infringement are difficult to determine, the people's court shall award the right holder compensation of less than three million yuan (around 444,985 USD) in light of the circumstances of the trade secret infringement.
After the amendments
If the operator violates the provisions of Articles 6 and 9 of this Law, if the actual loss suffered by the right holder due to the infringement and the benefit obtained by the infringer due to the infringement are difficult to determine, the people's court shall award the right holder compensation of less than five million yuan (around 741,641 USD) in light of the circumstances of the trade secret infringement.
The revisions in Article 17 introduce the one to five times punitive damages for malicious infringement of trade secrets and increases the maximum statutory damages from the previous 3 million yuan (around 444,985 USD) to 5 million yuan (around 741,641 USD).
Fines
Before the amendments
Article 21:
If the operator violates the provisions of Article 9 of this Law and infringes on trade secrets, the supervision and inspection department shall order it to stop the illegal act, and impose a fine of not less than 100,000 yuan (around 14,832 USD) but not more than 500,000 yuan (around 74,164 USD); if the circumstances are serious, the fine shall be more than 500,000 yuan (around 74,164 USD) and less than three million yuan (around 444,985 USD).
05 / 2019 Newsletter
After the amendments
Article 21:
If the operator and other natural persons, legal persons and unincorporated organizations violates the provisions of Article 9 of this Law and infringes on trade secrets, the market supervision and administration authorities shall order it to stop the illegal act, confiscate illegal gains and impose a fine of not less than 100,000 yuan (around 14,832 USD) but not more than 1,000,000 yuan (around 148,328 USD); if the circumstances are serious, the fine shall be more than 500,000 yuan (around 74,164 USD) and less than five million yuan (around 741,641 USD).
The revisions in Article 21 have prescribed confiscation of illegal gains and higher fines for infringement upon trade secrets than before. In severe trade secret cases, the maximum fines have been increased to five million yuan (around 741,641 USD) from the previous fines at the amount of three million yuan (around 444,985 USD).
Trade secret is important asset and critical infrastructure of incredible value to IP right holders and in some cases, is vital to business survival and sustained success in the coldblooded cut-throat market competition. "That's why the formula for Coca-Cola was never patented. They kept it as a trade secret, and they've outlasted patent laws by 80 years or more." as it is explained by Mr. Craig Venter, American biotechnologist, biochemist, geneticist, and businessman. The
statistics in the annual White Paper on IP Protection released by the PRC People's Supreme Court shows the steady growth of unfair competition lawsuits in China and a drastic surge at 63.04% in 2018 compared to those in 2018. The revisions to the PRC AntiUnfair Competition Law focus primarily on trade secret protection with more heavy-handed penalties for the violators and increased damages for the IP right holders.
Unfair Competition Lawsuits at the Courts of First Instance Number of Unfair Competition Lawsuits Trialed by People's Court of China
53.38%
Annual Growth Rate
63.04%
9.22% 2014
2015
4.81% 2016
11.24% 2017
2018
1422
2181
2286
2543
4146
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Part VI
Amendments to China's Trademark Law will be implemented on November 1, 2019
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5 / 2019 Newsletter
On April 23, 2019, the Tenth Session of the Standing Committee of the 13th National People's Congress passed a decision to amend the Trademark Law of the People's Republic of China. The detailed content of the amendment to the "Trademark Law of the People's Republic of China" is listed below for reference. The words in red letter refer to the amended or added contents.
1. Article 4 paragraph 1:
"Where any natural person, legal entity or other organization, in the course of his or its production or business operations, intends to acquire the exclusive right to use a trademark for his or its goods or services, an application should be filed with the Trademark Office for registration of the goods trademark. Applications for trademark registrations in bad faith which are not intended for use shall be refused."
2. Article 19 paragraph 3:
"Trademark agency is forbidden to represent the client where it knows or should know the trademark to be filed for registration by such client falls under the circumstances prescribed in Article 4, Article 15 and Article 32 of this Law."
3. Article 33:
The prior right owner or any interested party may, within three months from the date of publication, files an opposition against an accepted and published application for registration of a trademark, if he finds that the application stands in violation of the provisions
of Article 13, paragraph two or three, Article 15, Article 16, paragraph one, Article 30, Article 31, Article 32 of this law, or any person finds that the application stands in violation with the provisions of Article 4, Article 10, Article 11, Article 12, Article 19 paragraph four of this law. If no opposition is filed within the specified period, the trademark shall be registered, a certificate of registration shall be issued, and the registration shall be published.
4. Article 44 paragraph 1:
Where a registered trademark stands in violation of the provisions of Article 4, Article 10, Article 11, Article 12, Article 19 paragraph four of this Law, or the registration of a trademark has been acquired by fraud or any other unfair means, the Trademark Office shall declare the registered trademark invalid; any other organization or individual may request the Trademark Review and Adjudication Board to declare such a registered trademark invalid.
5. Article 63:
The amount of damage for infringement of the exclusive right to use a registered trademark shall be assessed on the basis of the actual losses suffered by the right holder because of the infringement; where it is difficult to determine the actual losses, the amount may be assessed on the basis of the profits the infringer has earned because of the infringement. Where it is difficult to determine the losses the right holder has suffered or the profits the infringer has earned, the amount may be assessed by reference to the appropriate multiple of the amount of using the registered trademark under a contractual license. Where the infringement of the exclusive right to use a registered
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Part VI
trademark is committed in bad faith and the circumstance is serious, the amount of damage shall be more than one time but less than five times of the amount assessed by referring to the above calculation. The amount of the damage shall also include the reasonable expenses of the right holder incurred for stopping the infringing act. When the right holder has tried his best to provide the evidence, but account books and materials relating to the infringement act are mainly under the control of the infringer, to determine the amount of damage, the People's court may order the infringer to provide the account books, materials relating to the infringement act. Where the infringer refuses to provide or provides false account books and materials, the People's court may determine the amount of damage by reference to the claim and evidences provided by the right holder. Where it is difficult to determine the losses suffered by the right holder, the profits the infringer has earned and the fees of licensing a registered trademark, the People's court shall grant a compensation not exceeding RMB5,000,000 yuan, according to the circumstances of the act of infringement. In examining trademark dispute cases, the people's court shall, at the request of the rights
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holder, order the destruction of commodities bearing counterfeit registered trademarks, except in special circumstances; order the destruction of materials and tools mainly used to manufacture commodities bearing counterfeit registered trademarks, without compensation; or, in special circumstances, order the prohibition of the aforementioned materials and tools from entering commercial channels, without compensation. Commodities bearing counterfeit registered trademarks shall not enter commercial channels after only removing counterfeit registered trademarks.
6. Article 68 paragraph one item three:
(3) To violate the provisions of Article 4, Article 19 paragraph
three or four.
(4) To file trademark application for registration in bad faith, which shall be imposed, according to circumstances, administrative penalties such as a warning or a fine; to file trademark lawsuit in bad faith, which shall be imposed punishment according to law by the people's court.
It can be seen that the Amendments to the Trademark Law involve six Articles in total, the purpose of which is to more effectively crack down on malicious applications that are not for use purpose, and to impose more powerful penalties on trademark infringements in order to create more optimized convenience, fair market atmosphere and business environment.
Part VII
References
Please visit the following website for information on IP-related litigation and enforcement in China http://zscq.court.gov.cn/ - IPR Adjudication of the SPC http://www.chinaiprlaw.cn/ - Judicial Protection for IPR http://www.sipo.gov.cn/ - National Intellectual Property Administration http://sbj.cnipa.gov.cn/ - Trademark Office of China http://www.cgi.gov.cn/Home/Default/ - China Protected Geographical Indication Products http://www.ncac.gov.cn/ - National Copyright Administration of China http://ipr.mofcom.gov.cn/, http://chinaipr.mofcom.gov.cn/ - Intellectual Property Protection in China http://dndrc.cietac.org/ - China International Economic and Trade Arbitration Commission Online Dispute Resolution Center https://www.adndrc.org/office/bj - Asian Domain Name Dispute Resolution Center Beijing Office https://www.ccpit-patent.com.cn/ - CCPIT Patent and Trademark Law Office
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CCPIT Patent and Trademark Law Office
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Guangzhou Office
Suite 1112-13, CITIC Plaza 233 Tianhe N. Road Guangzhou 510613, China TEL: +86-20-38770278/38770272/38770262 FAX: 86-20-38770297 E-mail: guangzhou@ccpit-patent.com.cn
This publication is designed to provide our friends and clients with up-to-date information regarding intellectual property in China. It is not intended to provide legal advice. We welcome your suggestions and comments.
