Frontier legislation of behaviour preservation regarding IP rights

By You Minjian and Li Yuan, Co-effort Law Firm

Fuzhou Intermediate People’s Court issued an injunction during the litigation to prohibit a number of Apple affiliates to import, sell or offer to sell a number of Apple mobile phones involved with the patent at issue on 10 December 2018. Afterwards, the Supreme People’s Court promulgated the Provisions on Several Issues Concerning the Application of Laws in Adjudication of Behaviour Preservation Cases Involving Intellectual Property Disputes on 12 December 2018 in order to improve and standardize behaviour preservation in intellectual property (IP) disputes.

Two such successive incidents made injunctions on IP rights a hot topic in China’s judicial practice on intellectual property. Referring to the previous relevant legislation and representative cases, the authors believe that the above-mentioned provisions show obvious improvements and progress in the following aspects.

You Minjian
Founding Partner
Co-effort Law Firm

The provisions specify the scope of causes of action of IP cases in which the injunctions are applied. Articles 100 and 101 of the Civil Procedure Law provide for behaviour preservation and preliminary injunctions. In addition, the Patent Law, the Copyright Law and the Trademark Law respectively provide the injunctions on infringements of patents, copyrights and trademarks. The current Anti-Unfair Competition Law does not provide for injunctions. Article 1 of the provisions clarifies that these provisions shall apply to “disputes related to intellectual property rights and competition”, which clarifies the issue of behaviour preservation in unfair competition disputes.

The provisions specify the reference factors for applicable requirements of preliminary injunctions. The applicable requirements of preliminary injunctions provided for in the Civil Procedure Law include “emergency” and “irreparable damage”. However, the recognition criteria are not clear in practice, which also leads to the ambiguity of relevant judicial standards. The provisions specify guiding standards from the following perspectives:

With respect to “emergency”, article 6 of the provisions specifies the following circumstances: The applicant’s trade secret is about to be illegally disclosed; the applicant’s right of publication, right of privacy and other personal rights will be violated; the rights at issue will be illegally disposed of; the rights at issue are being, or will be, infringed on time-sensitive occasions such as trade fairs; time-sensitive programmes are being, or will be, infringed.

With respect to “irreparable damage”, article 10 of the provisions specifies the following circumstances: The behaviour of the respondent will infringe upon the applicant’s right to goodwill or personal rights such as the right of publication and the right of privacy, and cause unrecoverable loss; the behaviour of the respondent will lead to uncontrollable infringements and significantly increase the damage to the applicant; infringements will result in a significant reduction in the relevant market share of the applicant.

The provisions add the applicable requirements and recognition criteria for “stabilization of rights”. Article 7(1) of the provisions requires stable effectiveness of the IP rights requested by the applicant for protection, which was not mentioned in the previous relevant legal provisions. At the same time, articles 8 and 9 also clarify the reference criteria for “stabilization of rights”: The type or nature of the right at issue; whether it has undergone substantive examination; whether it is in the invalidation or cancellation procedure, or has the possibility of being declared invalid or cancelled; and whether there is a dispute over title. Where the right at issue is related to a utility model or design, a search report made by the patent administration department under the State Council, a patent right evaluation report, or a decision of the Patent Re-examination Board to maintain the patent right, should also be submitted.

Li Yuan
Co-effort Law Firm

The provisions specify that the preservation measures are not released due to counter-security provided by the respondents. The Civil Procedure Law only provides that if the respondent provides a security in case of a property dispute, the people’s court shall decide to lift the preservation, but the law does not provide for the counter-security of behaviour preservation. With respect to the preliminary injunction case of the “Voice of China” before the promulgation of the provisions, the Beijing Intellectual Property Court issued the following opinion on the respondent’s counter-security.

First, the application of counter-security may be contrary to the purpose of the application for pre-trial behaviour preservation by the interested party. The pre-trial behaviour preservation measures are based on the fact that the legitimate rights and interests of the interested party will be subject to irreparable damage. Unless the interested party agrees, the application of the counter-security will cause the interested party to fail to achieve the purpose of the application for pre-trial behaviour preservation.

Second, the application of counter-security in behaviour preservation does not comply with relevant legal principles. In practice, it is generaly unacceptable to lift the behaviour preservation measures becauses of counter-security. Therefore, as a procedural supporting measure, it is not appropriate to lift preservation for any counter-security put forward by the applicant during any review procedure.

Article 8 of the Interpretation of the Supreme People’s Court on Applicable Legal Issues regarding Pre-Trial Cessation of Infringement of Exclusive Rights to Use Registered Trademarks and Pre-Trial Evidence Preservation may serve as a similar example of the judicial interpretation on IP law, which provides that “the measures in an order for stopping the infringement of the exclusive rights to use a registered trademark shall not be released due to any security provided by the respondent, unless the applicant agrees”.

The newly promulgated provisions adopt the above-mentioned judicial interpretation and adjudication ideas, and clearly provide that “the behaviour preservation measures taken by the people’s courts are generally not lifted due to any security provided by the respondent, unless the applicant agrees”, making up for the gap in the previous legislation on counter-security issues.

In addition, the provisions also detail procedures and supporting measures applicable for behaviour preservation. The authors expect behaviour preservation can be better applied in IP cases in China.

You Minjian is the founding partner, and Li Yuan is an associate, at Co-effort Law Firm


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