As 2009 begins and the economic crisis has hit most major markets globally, the Supreme People’s Court of the People’s Republic of China (“Supreme Court”) is studying how to adjust judicial policy on intellectual property rights (“IPRs”). The new policies will outline developing trends in the legal protection of IPR in China that may occur this year:
1. Increasing Compensation for Infringement on Intellectual Property Rights
Recently, the Supreme Court has stressed on various occasions that the court shall adopt flexible and practical methods to calculate the damages awarded in cases concerning infringement on IPRs in order to adequately compensate rights owners, negate illegal profits collected by the infringement, and truly raise the costs for infringement; the reasonable expenses of the right owners incurred while enforcing their lawful rights shall be reimbursed. When statutory compensation is applied, the compensation for the expenses incurred by the rights owners while enforcing their lawful rights shall be calculated separately, rather than be included in the statutory compensation. The current applicable maximum amount for statutory compensation in China is RMB 500,000（though the maximum amount has already been raised to RMB 1million in the third revised PRC Patent Law promulgated on December 27, 2008 which will come into effect on October 1, 2009）, which includes the allowance for expenses incurred. Due to the difficulty in producing evidence when seeking compensation and that the statutory compensation is non-substantial, the absence of sufficient and adequate compensation is a common problem faced by right owners. This issue could addressed in 2009.
2. Simplifying and Improving Flexibility of Litigation Procedures
For example, on December 17th of 2008, the Supreme Court promulgated the Circular on Application of the Provisions on Time Limit for Evidence Production under Several Provisions on the Evidence for Civil Actions. Such an interpretation allows for more flexibility on the time limits in evidence production and requires the court to adjudicate cases in a more just and efficient manner. This development is also applicable to all types of IPR litigations.
At the recent National Symposium on the Court Trial of Intellectual Property Rights held at the end of November 2008, the Supreme Court specially held a discussion on how to make it more convenient for plaintiffs (especially foreign plaintiffs) during legal proceedings, and clearly indicated that all the cases which meet the acceptance requirements shall be heard in a timely manner in accordance with the law. Currently, foreign rights owners usually delegate a representative within China to initiate the legal proceedings, and the court has a more complex set of procedures for such an arrangement. Some courts even require the rights owners to sign on the bills of complaints personally, and prohibit the local representative to sign on their behalf. The Supreme Court now, however, has standardized the process, allowing authorized delegates to initiate legal proceedings on behalf of foreign rights owners. Thus, the inconvenience currently faced by foreign rights owners may be minimized in 2009.
3. Taking into Account the Interests of All Parties and Carefully Sustaining Claims for Injunction
It is foreseeable that in 2009, the courts will place a stronger emphasis on the balance between the interest of the rights owners and the interest of the public, and prevent IP right owners from abusing their power. This means that the standards applicable to patent infringement determination, especially to equivalence infringement, may be tightened; in cases where the rights owners have allowed their rights to be infringed and take no action over a lengthy period of time, should they finally do take action and seek an injunction and if the order of injunction could potentially tip the balance between the interest of the parties, or impact economic activity so as to go against the public interest, the court may consider not granting the injunction. For some infringing acts, if public interest may be affected, the court may rule for compensation to be paid rather than grant the injunction. At present, the application for injunction can usually be granted by the court if the claim of infringement may be established by the rights owners.
In summary, it is foreseeable that due to the publication of the Outline of the National Intellectual Property Strategy in China, judicial protection will play a leading role in safeguarding IPRs. Furthermore, China’s intellectual property rights protection policy is undergoing change and adjustment in order to integrate further with the development trends of global IPRs protection.