Bringing you regular news of key developments in the area of Intellectual Property in China.

General

SPC issued the Outline of the Juridical Protection of Intellectual Property in China (2016-2020), 20 April 2017

The Supreme People's Court (the “SPC”) issued the Outline of the Juridical Protection of Intellectual Property in China (2016-2020) (the “Outline”) on 20 April 2017, which summarised the developments and achievements of the judicial protection of intellectual property in China over the past 30 years.

The Intellectual Property Courts (the “IP Courts”) of Beijing, Guangzhou and Shanghai were established in succession since November 2014. In early 2017, four additional IP Courts were established in Nanjing, Suzhou, Chengdu and Wuhan. Since July 2016, the “co-trial” regime of intellectual property civil cases, administrative cases and criminal cases has been promoted across China. Meanwhile, the diversified technical fact ascertainment mechanism for technical investigators, forensic expertise, expert assistants and consulting experts took shape.

The following effective measures will be taken by the SPC to establish improved protection regimes for intellectual property including 1) judging various IP cases in an impartial and efficient manner; 2) establishing effective mechanisms to ensure proper law enforcement; 3) comprehensively promoting the co-trial regime; 4) optimising the jurisdiction regime of IP cases; 5) formulating evidence rules for IP litigation; 6) optimising the technical fact ascertainment mechanism; 7) establishing an infringement compensation system with the intention of fully realising intellectual property value; 8) carrying out research on special procedures of IP litigation; 9) encouraging the development of special IP judicial organs; 10) researching and establishing the appeal mechanism for IP cases; 11) actively implementing the IP judgements guidance system; 12) encouraging the establishment of the diversified IP dispute resolution mechanism; 13) encouraging judicial transparency in intellectual property; 14) continuing to strengthen international communications and cooperation; and 15) building high-quality IP trial teams.

For the full text of the Outline, please click here (Chinese only).

The General Office of the State Council specified the Major Tasks for Cracking Down on the Infringement of Intellectual Property Rights, 16 May 2017

The General Office of the State Council issued the Circular on Issuing the Major Tasks in Nationwide Crackdown on the Infringement of Intellectual Property Rights and Production and Sale of Counterfeit and Goods of Inferior Quality (the “Circular”) on 16 May 2017. The Circular sets out the following provisions intended to crack down on IP infringements: 1) further focus on fields relating to people's livelihood and high technologies, such as food, drugs, medical devices and environmental protection; 2) strengthening the protection of well-known trademarks, geographical indications, foreign-related trademarks and time-honored trademarks; 3) seriously investigating and punishing copyright infringements, focusing on literature, education materials etc.; 4) accelerating the adoption of copyrighted software by local state-owned enterprises, small and medium-sized financial institutions and private enterprises; 5) continuing to crack down on the infringement of new varieties of plants in agriculture and forestry industries; and (6) promoting the formulation and revision of relevant laws and regulations, including the Anti-unfair Competition law, the Copyright Law, the Patent law etc.

For the full text of the Circular, please click here (Chinese only).

SAIC and Other Ministries and Commissions Specified the Special Action Programs for Regulating the Networking Market in 2017, 23 May 2017

The State Administration for Industry and Commerce (the “SAIC”) and some other authorities jointly issued the Circular on Issuing the Special Action Programs for Regulating the Networking Market in 2017 (the “Circular”) on 23 May 2017,which aims to promote the healthy and rapid development of network economy.

The Circular clarifies key objects and measures aimed at cracking down on online distribution of fake products and inappropriate promotional activities, including but not limited to:

  • carrying out joint law enforcement against illegal behaviours, with a focus on consumer goods and production materials which are of public concern to society and health and safety, such as food and drugs, cosmetics, medical equipment, clothing and shoes, supplies for children and the elderly, household appliances, consumer electronic products, automotive parts, decoration and renovation materials and agricultural materials;
  • establishing and optimising the administrative mechanism of the whole chain of manufacturing, circulation and marketing of infringing and counterfeit products;
  • toughening penalties for activities that are misusing, fraudulently using and forging well-known trademarks, foreign trademarks and geographical indications online;
  • cracking down on illicit acts such as infringement of the rights of time-honoured brands and manufacturing and marketing counterfeit and inferior quality time-honored products;
  • guiding and requesting online trading platform operators to make more efforts to prevent counterfeit and shoddy products in the whole process (pre-event, in-event and post-event);
  • cracking down on false promotion and illegal advertising activities online;
  • toughening the regulation and law enforcement of advertising in the key sectors of medical care, drugs, food, etc.

For the full text of the Circular, please click here (Chinese only).

SIPO issued the Key Tasks to Develop the IP Regime in 2017, 31 May 2017

The State Intellectual Office (“SIPO”) issued the Circular on Issuing the Key Responsibilities of the State Intellectual Property Office in 2017 and Allocation of these Responsibilities (the “Circular”) on 31 May 2017.

The Circular clarifies SIPO's key tasks, the measures to be implemented and the corresponding deadline. Such measures include but are not limit to encouraging the revision of the Patent Law, the Regulations on Patent Agency and the Regulations on Service Inventions; perfecting the quality assurance system of the patent examination and establishing a guiding regime of examination practice; fully utilising the guidance of typical cases in examination practice; ensuring the stability of the examination standards and the consistency of the implementation criteria; improving the risk compensation mechanism for financing activities by pledging IP rights; developing additional kinds of insurance for IP financial activities etc.

For the full text of the Circular, please click here (Chinese only).

The Office of Inter-Ministerial Joint Meeting issued the Plan for Promoting the In-depth Implementation of National Strategies in IPRs and Accelerated Building of IPR Power in 2017, 23 June 2017

The Office of Inter-Ministerial Joint Meeting for the Implementation of Intellectual Property Strategies under the State Council (the “Office”) issued the Plan for Promoting the In-depth Implementation of National Strategies in Intellectual Property Rights and Accelerated Building of an Intellectual Property Right Power in 2017 (the “Plan”) on 23 June 2017. The Plan aims to coordinate the works of different authorities to implement the national IP development strategy, including the SPC, the Supreme People's Procuratorate, the State Administration for Industry and Commerce, the Ministry of Public Security, the National Copyright Administration etc.

The Plan proposes 103 measures from the following five perspectives: further reforms in the IP field; strengthening protection of IP rights; facilitating the creation and application of IP rights, deepening the international cooperation of IP, and other measures to promote and support the implementation of the strategy. Some of the detailed measures referred to in the Plan include: promoting the fourth revision of the Patent Law and the third revision to the Copyright Law; issuing anti-trust guidance on IP rights; promoting the co-trial regime; strengthening the protection of well-known trademarks, geographical indication trademarks and foreign-related trademarks; expanding the registration channels; promoting the support for IP financial activities etc.

For the full text of the Opinions, please click here (Chinese only).

Patents

SIPO issued the Administrative Measures for Prioritised Patent Examination, 27 June 2017

The State Intellectual Office (“SIPO”) issued the Administrative Measures for Prioritised Patent Examination (the “Measures”) on 27 June 2017, which aims to improve the procedures for patent examination.

The Measures broaden the application scope for prioritised examination in respect of the following cases: 1) application for invention patent at the substantive examination stage; 2) application for utility model patent and design patent; 3) re-examination of the application for invention patent, utility model patent and design patent; and 4) declaration of invalidation of an invention patent, utility model patent or design patent.

The Measures also expand the applicable conditions for using accelerated examination. An applicant may apply for prioritised examination for a patent application or reexamination process if the patent falls into the six listed kinds of applicable conditions of patent application or reexamination, such as the condition that the industries of the patents that are mainly encouraged by the provincial and district-level municipal people's government. Prioritised examination may also apply for declarations of invalidation if the patent declared is of great significance to the national or public interest, or related infringement judicial actions have been taken.

In addition, the Measures require the SIPO to conclude the case within the specified timeframe from the date of granting consent to conducting the prioritised examination. For example, for a utility model patent or design patent applications, the SIPO shall conclude the case within two months.

For the full text of the Measures, please click here (Chinese only).

‘Patent Linkage’ Regime may be established in China, 12 May 2017

The China Food and Drug Administration (the “CFDA”) issued the Relevant Policies on Encouraging the Innovation of Drugs, Medical Devices and Protecting the Rights of Innovators (Circular No. 55, 2017) (the “Draft”) on 12 May 2017. The Draft addresses the Chinese ‘Patent Linkage’ regime and states that a Marketed Drug Catalogue should be established in China.

According to the Draft, when submitting an application for drug registration, the applicant should submit a statement regarding relevant rights relating to the drug that the applicant knows or ought to know. If the applicant wants to challenge the relevant patent rights, the applicant should declare that the applicant does not infringe the relevant patents, and inform the relevant patentees of their current application within 20 days of submitting the application for registration.

If any of the relevant patentees consider that their patent rights have been infringed, they should instigate patent infringement litigation with the judicial authorities and inform the drug evaluation authority within 20 days of receiving the information from the applicant.

When the drug evaluation authority has received the documents that prove that a patent infringement case has been successfully filed, the drug evaluation authority may decide to instigate a waiting period in relation to approval of the drug registration. The maximum length of such waiting period is 24 months. During the waiting period, the technical evaluation of the filed drug registration application will not be suspended. If, during the waiting period, the parties reach a settlement or the judicial authority reaches a valid judgment of infringement or non-infringement, the drug evaluation authority shall approve or refuse the drug registration application according to the settlement or the valid judgment. If, during the waiting period, the judicial authority does not reach the conclusion that there has been an infringement, the drug evaluation authority may approve the drug registration.

If the party who is applying for drug registration does not declare the relevant patent rights and the relevant patentee subsequently files an infringement lawsuit, the drug evaluation authority may apply the waiting period for the application in accordance with whether the judicial authority has accepted the case or not. If intellectual property litigation is instigated by the sale of a drug, the decision of the judiciary will prevail.

The Marketed Drug Catalogue would be the Chinese equivalent to the ‘Orange Book’ in the US. Drugs that are approved for marketing in China would be included in the Catalogue, along with the category of the drug (for example innovative drugs, improved drugs or generic drugs). Further details such as the active ingredients, dosage forms, specifications, Market Approval Holders and exclusive rights (such as patents, monitoring periods and trial data protection) would also be included.

Trademarks

Beijing IP Court issued eighteen typical cases of malicious trademark registration, 24 April 2017

The Beijing Intellectual Property Court(the “Court”) announced eighteen typical cases of malicious trademark registration (the “Cases”) on 24 April 2017, including the following types of cases:

  1. Registration of a third party's well-known trademark, i.e. registering a third party's well-known trademark that has not been registered in China in respect of identical or similar goods or registering a third party's well-known trademark that has been registered in China in respect of different or other types of goods. Such Registration violates Article 13 of the Trademark Law of the People's Republic of China (the “Law”). Some example typical cases include “Tiffany”, “Esso”, “JOHN DEERE” trademark case, etc.
  2. Registration of a client's trademark, i.e. an agent or a distribution representative of the client, without the authorisation of the client, registers the trademarks which is identical or similar to client's trademark on identical or similar goods. Such registration violates Article 15 of the Law. A typical example case is “BRANE-CANTENAC” trademark case.
  3. Registration of a trademark which is identical or similar to another person’s registered and famous trademark on identical or similar goods, resulting in the public easily being confused. Such registration violates Article 30 of the Law. Example typical cases include “JILIyong” trademark case and "JINSIHOU" trademark case.
  4. Registration of a trademark by infringing another party's prior existing rights (legitimate civil rights other than trademark rights, such as trade names, names, copyrights, designs, or other legitimate rights and interests that should be protected) which are used by others before the date of filing the trademark application. Such registration violates Article 32 of the Law. A typical case is “SHENGDOUSHIXINGSHI” trademark case.
  5. Registration of large numbers of trademarks without the intention to use such trademarks i.e. the registered trademark is not for the purpose of production and business activities, but for a large number of hoarding, high-priced transfer or selling. In many cases, such marks also infringe another party's prior existing rights. Such acts fall into the "registration by other improper means" which is stipulated in Article 44 (1) of the Law. Example typical cases include the “UL” trademark case, “A-K-R-I-S-” trademark case, etc.
  6. Registration of a trademark by using a famous person's name, i.e. registering a person’s name who has significant influence in politics, the economy, culture or religion as a trademark, or registration of a dead person’s name who was famous in the entertainment industry, sports or other fields as a trademark. This would be a violation of the principle of good faith, and the judicial practice generally forbid that behaviour according to Article 10 (1) (8) of the Law.

SAIC issued the Opinions on Further Implementing the Trademark and Brand Strategy and Promoting the Development of Chinese Brands, 17 May 2017

The State Administration for Industry and Commerce (the “SAIC”) issued the Opinions on Further Implementing the Trademark and Brand Strategy and Promoting the Development of Chinese Brands (the “Opinions”) on 17 May 2017, which aims to improve China's brand competitiveness. The circular contains seven points: 1) general opinion on the strategy of developing brands; 2) furthering reform of the trademark registration system; 3) practically strengthening the administrative protection for registered trademarks; 4) building a service regime for developing brands; 5) promoting developing brand in industrial regions; 6) supporting international brand development; 7) other measures to promote and support the implementation of the strategy.

The Opinion also clarifies the following detailed measures: expanding trademark registration channels; setting up more local trademark receiving facilities; promoting online channels for trademark registration; revising the Trademark Application Form Review Standards and the Trademark Review and Adjudication Standards; improving the confirmation mechanism within the principles of integrity and good faith; strengthening the protection of famous trademarks in the processes of examination, objection, review and other related processed etc.

For the full text of the Opinions, please click here (Chinese only).

Copyright

A Judgment Clarified the Boundary of the Potential Infringement of “Fan Fiction”, 18 May 2017

The facts of the case were as follows: Zhang Muye (the “Defendant”), the author of “Ghost Blows out the Light” (the “Ghost”), had transferred the intellectual property rights of the Ghost to Shanghai Xuanting Entertainment Information Technology Co., Ltd. (the “Plaintiff”) 10 years ago. However, the Defendant himself later created another work called “Mojin, The Lost Legend” (the “Mojin”) which use some similar elements of the Ghost. The Plaintiff then filed a lawsuit claiming that the Defendant had infringed the copyright of the Ghost or, if infringement of the copyright could not be proved, that the Defendant using Ghost’s elements constituted unfair competition in relation to the Ghost. According to the Plaintiff, the Defendant had used many elements from the Ghost in the Mojin, such as the characters’ names, characters’ images, characters’ relationships, tomb robbing methods and other original expressions elements. The Plaintiff claimed that such usage had violated the Plaintiff’s derivative rights over the Ghost, or if the original expression elements of the Ghost were not protected by the Copyright Law and therefore no infringement was established, the Defendant’s actions would fall within unfair competition. The Plaintiff’s argument was based on the fact that the Ghost is a very famous piece and the Defendant’s usage of elements of Ghost was misleading consumers and also taking advantage of the reputation of the Ghost.

However, the court rejected the Plaintiff’s claims and clarified the reasons as below:

  1. The characters and other elements involved in such work are only tools for describing a story. They cannot be deemed as expression and be protected as the object of copyright, unless such elements have been fully and especially demonstrated in the development of the story and have constituted a part of the story itself. In this case, the Court considered that the elements of the Ghost were not the objects protected by the Copyright Law and therefore compared the whole story of Ghost and the story of Mojin to see if the infringement could be established. The Court decided that although the Defendant has used elements of the Ghost, the Mojin was a new piece of work with an independent story and content. The Mojin was not similar to the Ghost and therefore on these grounds no infringement of the Ghost was established
  2. The elements of the Ghost are well-known because of the great commercial success of the work and therefore such elements may still be protected by the Anti-Unfair Competition Law. When judging whether using such elements constitutes unfair competition, the court is required to fully respect the legitimate rights of the original author and ensure the freedom of creation and commentary. In this case, the Defendant is the person who created such elements. Allowing the original author to use his elements to create a new story is in line with the purpose of encouraging the creation of literary and artistic works. Thus, the Defendant does not constitute unfair competition.

This case generally illustrates the court's view on the method of determine whether a “fan fiction”, works created by using the elements of other existing works, constitutes infringement.