The White Paper on Intellectual Property Protection by Chinese Courts in 2009 Issued Initially

2010/10/25,By Zhang Bing, China IP,[Comprehensive Reports]

On April 20, the Supreme People’s Court issued the bilingual White Paper on Intellectual Property Protection by Chinese Courts in 2009 (hereinafter referred to as the “white paper”). It is said that this is the first time for the Supreme People’s Court to promulgate the IP judicial protection position to the public in the form of an annual protection white paper.
It is also reported that the white paper has comprehensively summarized the intellectual property judicial protection effort of 2009, and briefly introduced IP judicial protection work over the last three decades starting from the reform and opening of China. This illustrates the achievements made by the intellectual property division of China’s People’s Court, and has showcased the determination and confidence of China’s court on intellectual property judicial protection, which is a great measure of the further implementation of the National Intellectual Property Strategy and enhancement of intellectual property judicial protection.
The background of the white paper
 “The engine has been running nonstop since it was launched,” said Jiang Zhipei, former presiding judge of the intellectual property division of the Supreme People’s Court. “The number of intellectual property cases increases, new types of cases emerge, major or difficult cases appear, and this is what we are facing right now,” The “engine” he referred to is the intellectual property judicial protection mechanism in China. The subject of the white paper is one of the crowning achievements of the Supreme People’s Court concerning the full implementation of this mechanism.
 “We have decided to realize the institutionalization and normalization of the white paper issued from this year and beyond,” stated the spokesperson from the IP trial division of the Supreme People’s Court, and continued to say. ”This move has great significance to speed up judiciary democracy and open justice, enhance judicial credibility, and accept all aspects of supervision.”
“The undertaking of intellectual property commenced late in China. It started to develop from the reform and opening of China in the late 1970s and early 1980s. Since this is the first time for the Court in China to publish the official white paper on IP judicial protection, it is necessary to introduce China’s IP judicial protection work over the past three decades.” That is why we chose the last three decades as the reference point of this whitepaper, said the spokesperson.
In the short time span of thirty years, intellectual property judicial protection work of the People’s Court has developed from scratch, became strong, gradually established a relatively complete intellectual property judicial protection system with Chinese characteristics that meets the needs of national development, and performs its international treaty obligations. This has become the important component of China’s judicial mission, and significant guarantee for a healthy and rapid development of China’s intellectual property undertakings.
Intellectual property judicial protection is increasingly enhanced
As stated in the white paper in recent years, the people’s court orders infringers to take tort liabilities according to related law,and the People’s Court strives to lower the cost of rights protection and increase the cost of rights infringement, and guarantee that the proprietors can gain sufficient compensation for damages.
With regards to compensation for damages, the spokesperson from the Intellectual Property Division of the Supreme People’s Court stated that the people’s court persistently follows the principle of full compensation, determines the damage amount by judging the infringement on the oblige according to related law, the request from the litigant and detailed case circumstances. Reasonable expenses result from survey and the prevalent tort shall also be covered in the compensation in order to reduce the cost of rights protection, increase the cost of rights infringement, and make efforts to ensure that the oblige can receive adequate compensation for damages. However, due to the intangibility, uncertainty and causal relationship of the intellectual property infringement damages, the compensation amount is comparatively difficult and complicated to be determined in practice.
The Supreme People’s Court recently held a discussion on national intellectual property trial work;,and proposed the following criteria on IP compensation for damages: adherence to the principles of full compensation, full implementation of infringement rights cost, make efforts to reduce cost of rights protection, reasonably determine the compensation amount for infringement damages and the reasonable expenses for preventing the act of infringement, to guarantee the full realization of obligee’s interests. The calculation of compensation amount shall belong to finding of fact and also apply the standard of evidantiary rule of , “the preponderance” in accordance with the specific circumstances of the cases, distinct flexibly, and apply the discretionary compensation amount and statutory damage. The royalty rates, average industry profitability, nature of the infringement, duration, subjective fault and other factors can be taken as reference to calculate compensation on the condition that the obligee has provided the sale quantity and certain required data to calculate the obligee’s loss or infringer’s revenue while other required data is not certain. The amount of compensation should follow the principle of reasonableness, and not be restricted by the statutory limit on the maximum.
Additionally, the spokesperson offered another two examples to describe the increasing enhancement of IP judicial protection; we shall judge the protection level according to law and evidence rather than solely the amount of damages.
The first significant Supreme Court decision in the area of registered trademark patent infringement was COFCO Ltd v. Beijing Jiayu Dongfang Wine Co., Ltd in 2006. The defendant was ordered to compensate for accuser pecuniary loss amounting to 1.061 million Yuan in the final judgment.
Another major Supreme Court decision in the area of “flue gas desulfurization” patent infringement was China Environmental Project Tech Co., Ltd. v. Fujikasui Engineering Co., Ltd. and Huyang electric Co., Ltd. at the end of 2009. The two defendants were ordered to compensate for accuser pecuniary loss amounting to 50,612,400 Yuan (USD 7.42 million) in the final adjudication.
Concerning the number of IP criminal acts, as released in the whitepaper, the people’s court has fully implemented the functions of IP judicial protection with various penal sanctions according to law,and has severely punished criminal behavior against intellectual property rights. In 2009, district courts concluded 3660 criminal cases associated with intellectual property infringement, an increase of 10.04% from the previous year, and judgments relating to 5836 people took legal effect, an increase of 8.31% from the preceding year, of which 5832 people received guilty verdicts, which is an increase of 8.28% from the prior year. The fight against tort criminal offense is very striking from that of other countries worldwide.
The “Trinary System
The State Council issued the Outline of the National Intellectual Property Strategy on June 5, 2008. Article 45 of the Outline clearly states: “Improve the trial system for intellectual property, optimize the allocation of judicial resources and simplify remedy procedures,” this is the so-called “Trinary.”
When commenting on the “Trinary,” Jiang Zhipei told the reporter that the Shanghai Pudong court must be applauded as the earliest pilot unit to hold onto the “Trinary” against the backdrop of controversy in the legal arena at that time.
The staff of the intellectual property division of the Supreme People’s Court has doubled from eleven people at the inception, now we have made amazing achievements around the world in terms of IP judicial protection,” Jiang Zhipei said, “as you know, we have accomplished the journey in three decades while the western countries spent two or three hundred years.”
In 2009, led by the judicial system and working system reform office of the Supreme People’s Court, together with related divisions, they had jointly carried out the special subject survey of “Trinary.” They approved by consent that Jiangsu Higher People's Court, Inner Mongolia Autonomous Region court system, Henan Higher People's Court and its Zhengzhou and Luoyang two intermediate people’s courts, Tianjin Municipality Heping district People’s court as the trial unit of “Trinary.” As told by the spokesperson from the IP Division of the Supreme People’s Court, the guidance document is being drafted.

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