Adjudicating concurrent IP protection and unfair competition claims

The Anti-Unfair Competition Law assumes full liabilities, supplementing IP laws such as the Copyright Law, Trademark Law and Patent Law, meaning rights and interests may simultaneously be protected by IP and the Anti-Unfair Competition Law.

For example, a mark can be both a trademark and an enterprise’s trade name, or a work can be both copyrighted and an identifier with certain influence. Accordingly, for a single infringement, a party may claim the right based both on IP and the Anti-Unfair Competition Law.

To secure full protection, a plaintiff usually opts to claim different rights infringed together, like claiming the act infringes IP rights and simultaneously constitutes unfair competition. It is the case with various claims that exist concurrently, and Chinese courts have long commonly accepted cases that combine IP infringement and unfair competition.

Among 10 major IP cases and 50 typical cases published by the Supreme People’s Court (SPC) on a yearly basis, many involve claims such as “trademark infringement and unfair competition dispute” or “copyright infringement and unfair competition dispute”.

In recognition, the Civil Procedure Law, relevant judicial interpretations of the SPC and judicial opinions of municipal high people’s courts, such as Beijing’s, provide rules for adjudicating cases with concurrent claims.

The Interpretations of the Supreme People’s Court of Several Issues Concerning the Application of the Law Against Unfair Competition, implemented on 20 March 2022, further clarify the rules for handling cases relating to concurrent IP infringement and unfair competition claims.

In this article, the author outlines the latest adjudication rules for courts dealing with these concurrent claims for IP infringement and anti-unfair competition.

Plaintiff’s choice

The plaintiff has the right to choose to assert IP rights or anti-unfair competition without compulsory priority of claims. For cases where claims exist concurrently, the court is required to determine causes of action based on the nature of legal relationships involved in claims the plaintiff opted to exercise.

Priority principle

Supposing the plaintiff sues on concurrent causes of action, the court’s trial shall prioritise the application of IP laws, with the Anti-Unfair Competition Law applying only to rights not protected by IP laws.

Avoiding duplication

A certain right or interest accorded protection under IP laws should not apply the Anti-Unfair Competition Law. In judicial practice, there have been different findings about what constitutes duplicated protection. For example, the court generally holds that a mark – both registered trademark and trade name of a well-known enterprise – owns different rights and interests, such as exclusive right to use the trademark and rights in an influential name, under the same look.

If an infringer uses the main part of such a mark to register an enterprise name in bad faith, this constitutes both infringement of the exclusive right to use a trademark, and an act of unfair competition, as found in Qing-Feng Steamed Dumpling v Shandong Qingfeng Catering Management (2016).

Article 24 of the interpretations provides that an infringement committed against an entity at a certain time and within a certain territorial scope – where a court has found infringement of copyright, patent or exclusive right to use a registered trademark, and ordered the infringer to bear civil liability – a plaintiff’s additional claim for civil liability for unfair competition shall not get court support.

The interpretations further revise no duplicated protection of “rights and interests” to no duplicated assessment of an “act”. That is to say, regardless of whether multiple legal rights and interests are infringed, ultimately, assessment and sanction of one act are done only once.

Correspondingly, since implementation of the interpretations, certain court judgments have determined that registration of an enterprise name in bad faith already constitutes infringement of the exclusive right to use a trademark. There is no need to conduct a further assessment and impose sanctions based on the Anti-Unfair Competition Law, as adjudicated in the case of Luoyang Hospitality Industrial v Yan Tianxia Catering Management (2022).

Second-instance assessment

If a case with concurrent causes is judged in the first instance to have infringed IP rights, with no need for assessment under the Anti-Unfair Competition Law, and the judgment is deemed to be untenable, the question of whether a court of second instance can assess if the act constitutes unfair competition has long vexed judicial practice.

In previous judicial practice, if the plaintiff, as prevailing party at first instance, does not appeal, then, based on the principle of no appeal, no second-instance trial in the Civil Procedure Law, the court of second instance will directly revoke the first-instance judgment that the defendant’s act in question constitutes unfair competition without conducting a trial again. However, in recent cases courts have adopted the more reasonable comprehensive assessment rule.

For example, in Yang LiPing Art and Culture v Yun Hai Yao (2022), the court at first instance held that a dance movement claimed by the plaintiff constituted a work protected by the Copyright Law and was infringed by the defendant. Hence there was no need to apply the Anti-Unfair Competition Law for protection.

However, after trying the issue not addressed at first instance concerning whether the act constituted unfair competition, the court of second instance held that a single movement of one individual could not be monopolised by anyone and protected by Copyright Law. The defendant’s action constituted “another act of confusion”, as specified in item (4) of article 6 of the Anti-Unfair Competition Law.

Li Chunyi is a senior partner at Zhongzi Law Office. He can be contacted at +86 10 6625 6419 or by email at lcy@zhongzi.com.cn