Supreme People's Court issues opinion on adjudication of IP cases

On April 21 2009 the Supreme People's Court issued an Opinion on Certain Issues Concerning the Adjudication of IP Cases in the Current Economic Environment.
In June 2008 the government promulgated the National IP Strategy, a blueprint for the development of IP rights in China. One of the goals was to provide a relatively high level of IP creation, utilization, protection and administration by 2020 (for further details please see "Compendium of China National Intellectual Property Strategy released"). To this end, the government pledged to focus on:
  • improving IP laws;
  • promoting the creation and utilization of IP rights;
  • strengthening the protection of IP rights;
  • preventing the abuse of IP rights; and
  • fostering a culture of IP rights.
While the strategy was welcomed, many considered that it was academic only and hoped that more pragmatic measures would be adopted. During the National Committee of the Chinese People's Political Consultation Conference and the National People's Congress held in March 2009, the government emphasized again that it recognizes the importance of the creation and protection of IP rights.
The opinion of the Supreme People's Court was issued for reference purposes. The opinion aims to implement the National IP Strategy so as to "ensure economic growth, individual and corporate well-being, and stability". The opinion recognizes that intellectual property is a strategic asset and the key to enhance China's competitiveness at the international level.
The opinion covers certain aspects of enforcement of patent and trademark rights. While the section on patents is quite theoretical, the section on trademarks (entitled "Enhance trademark protection, promote brand development, regulate market conditions and maintain fair competition") gives relatively precise guidelines on how the courts should approach various issues. 
The key aspects of this section are as follows:
  • In infringement actions, if the infringing mark is identical to a registered trademark and is used for similar goods, there is no need to consider whether there is a likelihood of confusion.
  • If the infringing mark is similar to a registered trademark and is used for similar goods, the court should consider the distinctiveness and reputation of the registered mark - the more distinctive and well-known the mark, the stronger the protection. This rule aims to discourage traders from imitating the marks of third parties and free-riding on their reputation.
  • If a registered trademark is not in use, the courts may issue an injunction against the unauthorized use of the mark, but may not award compensation if the trademark owner cannot prove that it has suffered damages. If it is demonstrated that the trademark owner has no intention of using the mark and relies on the registration only to obtain compensation for infringement, no damages may be awarded. Further, if a registered mark has not been used for a period of three years, the courts may not award damages.
  • The recognition and protection of well-known marks is crucial. However, if the issue of whether a mark is well known is not decisive in an infringement action, no determination should be made. Likewise, if the infringing mark is used for goods similar to those covered by the registered trademark, it will not be necessary to determine whether the mark is well known. The courts must prevent the dilution of well-known marks.
  • With regard to the revocation of registered trademarks, the courts must take into account private and public interests. If the mark has been in use for a long period of time, has a strong reputation on the market and is recognized by the public as a source indicator, the courts should consider carefully whether to revoke the mark.
  • If a registered trademark conflicts with copyright or other prior rights, but the revocation period has expired, the owner of the prior rights may still initiate a civil suit within the limitation period. However, the courts will not adjudicate on the civil liability which may arise from the use of the registered mark.
  • The courts must discourage attempts to free-ride on the reputation of a registered trademark by using a similar or identical company name.
  • The courts should accept complaints relating to a sign that reproduces or translates a well-known trademark, even if that sign is already registered.
  • A company name that is registered overseas may still infringe a registered trademark in China.
  • Where a trade or corporate name - or its acronym or abbreviation - has attained a certain reputation and public recognition, it should be protected against unfair competition.
  • If use of a company name constitutes trademark infringement, the courts may grant an injunction or restrict the manner in which the name can be used. If the trademark is well known and use of the company name is likely to cause confusion, the courts may order that the company change its name. If the infringer fails to comply, the courts may issue compulsory enforcement measures and increase the amount of damages.
Kenny Wong, JSM, Hong Kong 

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