Global IP Matrix - Issue 8

The Supreme People’s
Court of China issued opinions on
strengthening the punishment
of IPR infringement
On September 14, 2020, the China
Supreme People’s Court issued the
Opinions on Strengthening the
Punishment of IPRs Infringements
(hereinafter referred to as the
Opinions), stipulating and
improving judicial remedies for IPR
infringements to effectively deter
IPR infringements and create a
sound business environment under
the rule of law. The promulgation
of the Opinions is an important
measure for the People’s Courts to
thoroughly implement the Opinions
on Strengthening the Protection of
Intellectual Property Rights issued by
the General Office of the CPC Central
Committee and the State Office of
China.
Based on the trial practice of intellectual
property rights, the Opinions focus on the key
and difficult issues in trial practice and provide
measures such as behaviour preservation,
evidence preservation, obstruction of proof,
cessation of infringement, punitive damage,
statutory compensation, and heavier criminal
punishment, so as to effectively enhance the
actual effect of judicial protection.
In strict accordance with relevant laws and
regulations, the Opinions require courts at
all levels to pay attention to the coordination
and connection between different laws and
regulations, and comprehensively strengthen
the punishment of IPR infringement
ACTS. It includes the application of the
obstruction of the proof system in the factfinding
of the tort involved in the product
accused of infringement, from the high legal
compensation and the situation of the heavier
criminal punishment according to law.
According to the Opinions, if the holder of
an intellectual property right applies for both
a prior judgment to stop the infringement
and an application for act preservation in an
intellectual property infringement lawsuit,
the People’s Court shall examine the case in a
timely manner.
Written by Ray Zhao, Senior Partner at Unitalen Attorneys at Law,
China - www.unitalen.com
With respect to the product or other evidence
that has taken preservation measures,
or the accused infringer has damaged or
transferred the facts of the infringement
without authorisation so that the facts of
the infringement cannot be ascertained, the
People’s Court may presume that the right
owner’s claim on the evidential matters
involved in the evidence is established. Except
under special circumstances, at the right
holder’s request, counterfeit or pirated goods
and materials and tools mainly used for the
production or manufacture of counterfeit or
pirated goods shall be destroyed.
If the right owner requests in the procedure
of the second instance to include the
additional reasonable expenses paid for
stopping the infringing act into the amount of
compensation, the people’s court may examine
them together. In the case of counterfeiting
registered trademarks of commodities such as
emergency rescue, disaster relief, and epidemic
prevention materials during a specified period,
or violating intellectual property rights
again after being subjected to administrative
punishment for infringing intellectual property
rights, the offender shall be given a heavier
punishment according to law, and suspension
of sentence is generally not applicable.
The Opinion has centralised regulations so
that the right holder may make full use of the
relief measures in the people’s court to guide
the positive, comprehensive, accurate, and
honest proof at the same time. According
to law, the aspects of the profit and legal fees
for infringement provide proof guidance and
help the holder of the highly effective rights
and effectively inhibit infringing intellectual
property rights behaviour.
I. Strengthening
the application of
preservation measures
1. In case of infringement or imminent
infringement of intellectual property rights
involving core technologies, well-known
brands, popular programs, or infringement
of intellectual property rights in exhibitions
that will cause irreparable damage, the people’s
court shall, in accordance with the law, timely
examine and make a ruling.
2. If the holder of an intellectual property
right applies for both the prior judgment for
the cessation of the infringement and the act
preservation in the intellectual property right
infringement lawsuit, the people’s court shall
examine the application in time in accordance
with the law.
3. If the right owner has preliminary
evidence proving the existence of
ACTS of infringement of intellectual
property rights and the evidence
is likely to be destroyed or lost
or difficult to obtain later, and
the people’s court applies for the
preservation of evidence, the people’s
court shall examine the evidence and
make a ruling in a timely manner
according to law.
The technical investigation officer
may participate in the preservation
of evidence involving strong
professional technical issues.
4. With respect to the product or other
evidence that has taken preservation
measures, or the accused infringer has
damaged or transferred the facts of the
infringement without authorisation
so that the facts of the infringement
cannot be ascertained, the people’s court may
presume that the right owner’s claim on the
evidential matters involved in the evidence
is established. In cases of obstruction of
proceedings as prescribed by law, compulsory
measures shall be taken according to law.
II. Make a judgment to
stop the infringement
according to law
5. If the infringement facts are clear, and
the infringement can be ascertained to be
established, the people’s court may make a
judgment to stop the infringement in advance
according to law.
6. With regard to counterfeit or pirated goods
and materials and tools mainly used for the
production or manufacture of counterfeit or
pirated goods, the people’s court shall support
the right holder who, in civil proceedings,
proves the existence of the said goods and
requests speedy destruction, except in special
circumstances.
Under special circumstances, the people’s
court may order that materials and tools,
which are mainly used for the production or
manufacture of counterfeit or pirated goods,
be disposed of outside commercial channels,
to minimise the risk of further infringement.
If the infringer requests compensation, the
people’s court shall not support it.
III. Increase
compensation in
accordance with the law
7. The people’s court shall make full use of such
systems and methods as proof obstruction,
investigation and evidence collection, evidence
preservation, professional assessment, and
economic analysis to guide the parties to
provide evidence actively, comprehensively,
correctly, and honestly, improve the scientific
and rational calculation of damages amount,
and fully make up for the loss of the right
holder.
8. The people’s court shall make active use
of the relevant data provided by the party
concerned from the industrial and commercial
tax authorities, third-party commercial
platforms, websites of the infringer, publicity
materials, or documents disclosed in
accordance with the law, as well as the average
profit rate of the industry, etc. to determine the
profits from the infringement in accordance
with the law.
9. If the right owner requests, according to
law, to determine the amount of compensation
based on the infringement profit and has
provided evidence, the people’s court may
order the infringer to provide evidence of the
infringement profit in his possession;
If the infringer refuses to provide the
compensation without justified reasons or fails
to do so as required, the people’s court may
determine the amount of compensation based
on the right owner’s claim and the evidence on
the record.
10. For those who intentionally infringe
intellectual property rights of others, if the
circumstances are serious, the right owner’s
claim for punitive damages shall be supported
in accordance with the law, and the deterrent
effect of punitive damages on intentional
infringement shall be fully exerted.
11. The people’s court shall reasonably
determine the amount of compensation
prescribed by law.
Where the infringing act causes heavy losses
to the right owner or considerable profits to
the infringer, in order to fully compensate
the right owner’s losses and effectively deter
the infringing act, the people’s court may, at
the request of the right owner, determine the
amount of legal compensation close to or up to
the maximum limit.
The people’s court should consider when
determining legal compensation from high
factors, including the infringer to deliberate
whether there is infringement, whether the
infringement is for the main business, whether
there is any repeat infringement tort, whether
the duration is long, whether the area is vast,
whether it may endanger personal safety or
damage to the environment resources or harm
the public interests, etc.
12. If the right owner requests
in the procedure of the second
instance to include in the amount
of compensation the additional
reasonable expenses paid for
stopping the infringing act, the
people’s court may examine the
matter together.
13. The people’s court shall,
taking into account such factors
as the complexity of the case,
the specialty and intensity
of the work, trade practices,
and the guided price of the
local government, reasonably
determine the lawyer’s fee for
the compensation claimed by
the right owner according to the
evidence provided by the right
owner.
IV. Intensify criminal
crackdown
14. The number of illegal business operations
and illegal income committed to the crime
of infringing intellectual property rights
through online sales shall be determined
with comprehensive consideration given to
electronic data of online sales, records of bank
account transactions, delivery notes, records
of computer systems of logistics companies,
the testimony of witnesses, statements of
defendants and other evidence.
15. In the case of counterfeiting registered
trademarks of commodities such as emergency
rescue, disaster relief, and epidemic prevention
materials during a specified period of time,
or violating intellectual property rights again
after receiving administrative punishment
for infringing intellectual property rights, the
offender shall be given a heavier punishment
according to law, and suspension of sentence is
generally not applicable.
16. The illegal gains shall be strictly recovered
in accordance with the law, the application of
fines shall be strengthened, and the ability and
conditions for criminals to infringe intellectual
property rights again shall be deprived.
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