Supreme Court sets the tone for IP cases

China

On April 20 2012 the Supreme Court’s IP Tribunal issued its 2011 Case Report. The court continued its tradition by publishing 34 guiding precedents, covering almost all fields of IP litigation.

Importantly, the Supreme Court used the precedents to establish rules for 44 key legal issues that have often caused disputes in IP cases, including:  

  • Trademarks - review of new evidence: under the precedents mentioned in the case report, the courts are now allowed to review new evidence submitted by the parties. In the past, the courts were reluctant to review new evidence that had not been examined by the Trademark Office or the Trademark Review and Adjudication Board (TRAB). There was a misconception that the courts’ review had to be restricted to the facts on which the Trademark Office or TRAB’s decisions were based. This is thus a welcome development for brand owners. 
  • Trademarks - determination of distinctiveness: in a case dealing with the registrability of the mark BEST BUY, the Supreme Court held that the presence of a descriptive element does not necessarily negate the distinctiveness of the mark. The mark may still be registrable, as long as the relevant public can recognise the source of the goods. In the same case, the Supreme Court also held that the courts should take into account new evidence of use of the mark. This is again beneficial for brand owners.
  • Trademarks - cancellation on the grounds of non-use: the Supreme Court stated that any actual use of the mark can be used as a defence in a non-use cancellation action, even if such use resulted in a violation of the regulations (eg, illegal importation of goods). 
  • Trade secrets: under Chinese law, a plaintiff must prove that it has imposed certain measures to protect its 'confidential information' in order to qualify for trade secret protection. The Supreme Court stated that such 'measures' should show the plaintiff's intention to protect the confidentiality of the information and should be reasonable. A non-compete agreement containing no duty of confidentiality clause will not qualify.
  • Procedures: the location of shipment under 'free on board' (FOB) or 'cost, insurance and freight' (CIF) terms may be chosen as the venue of litigation in IP cases. China allows a plaintiff to sue in the jurisdiction where the products were sold. The case report confirmed that FOB and CIF terms can be the basis for the choice of venue.

These examples clearly demonstrate that the Supreme Court has made substantial moves toward establishing uniform standards in IP cases. IP rights holders and practitioners should thus pay close attention to this latest case report.

He Jing, ZY Partners, Beijing

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