Typical cases of IP courts of Beijing, Shanghai and Guangzhou

The Supreme People’s Court introduced the IP courts of Beijing, Shanghai and Guangzhou at a press conference in Beijing, where the chief judges of those courts outlined the courts’ operations and plans.

At the conference, the SPC also released reports of a group of 14 typical cases decided by the three IP courts.

The cases are as follows:

Case No 1: Dispute on medical equipment invention patent right between enterprise and individual

1. Background

Xiangyu Medical Equipment Co Ltd, an Anyang-based medical equipment manufacturer in Henan province, applied for invalidation of Cui Xuewei's patent of a moxibustion instrument, patent number 94119284.9. The Patent Reexamination Board sustained the administrative board’s decision to support the patent’s validity. The company refused to accept that decision and brought administrative appeal proceedings to the Beijing Intellectual Property Court.

2. Ruling

The Beijing IP Court determined that the scope for protection of patent rights in this case was clear. The invention’s instruction manual indicated that the patent was creative and complied with the Patent Law of the People’s Republic of China and its implementing regulations. Furthermore, an amendment to the patent application document made by the patent holder was within the scopes of the original manual and the patent claim document. Consequently, the court upheld the administrative decision.

Neither of the parties filed an appeal and the decision has come into effect.

3. Significance

Moxibustion treatment, a therapy in traditional Chinese medicine, was combined with electromagnetic technology in the patent, with functions of automatic warming and temperature control. Since the patent applies to many practical applications in the treatment field, it has been of wide concern to users of traditional Chinese medical equipment.

This case illustrates many factors in an application for invalidation of a patent: whether the scope of patent protection is clear, whether the claim can be supported by the description, whether the amendment of patent application documents is or is not beyond the scope of the original specification and the claim, and whether the patent rights are creative. In this case, the judgment was in favor of the inventor.

Case No. 2: Dispute on energy-saving invention patent right between a Beijing company and a Zhengzhou enterprise

1. Background

Beijing Hailin Energy Technology Company applied for invalidation of Zhengzhou-based Chunquan Energy-saving Co Ltd’s patent, an invention patent of an identification method and device for multi-gear speed motors based on the technology of voltage mutual inductance, patent number 200810231195.5.

The Patent Reexamination Board declared that all the patent rights involved in the case were invalid. Chunquan Company refused to accept the decision and brought administrative proceedings to the Beijing Intellectual Property Court.

2. Ruling

The Beijing IP Court heard the case and ruled that all the claimed patent rights were creative and the Patent Reexamination Board’s judgment was in error, so the court overturned the previous decision and ordered the board to correct it.

Neither of the parties has filed an appeal and the decision has come into effect.

3. Significance

This case involves an invention patent concerning complicated technical issues in electronics. The court reviewed the relevant technologies carefully and, following the Three-Step method for identifying patent creativity, overturned the Patent Reexamination Board‘s decision.

The decision in this case protects an inventor’s legitimate legal interests.

Case No. 3: Trademark dispute between a famous coal-mining company and a private person

1. Background

The Kailuan Group, a major energy enterprise in Hebei province, applied for invalidation of Zhang Hongbin’s “Kailuan” trademark (registration No 5667073), because of Zhang’s alleged malicious infringement on the company’s trade name “Kailuan. Zhang had not actually used the name in business.

The Patent Reexamination Board determined that the evidence provided by the Kailuan Group did not show any operation of beauty salons, public baths, or similar businesses which were Zhang’s activities. They were unable to prove that they had gained a reputation in these services before applying to use the name as a trademark. So the Board supported Zhang’s trademark registration. The Kailuan Group refused to accept the decision and brought administrative proceedings to the Beijing IP Court.

2. Ruling

The Beijing IP Court ruled that Zhang’s registration of the “Kailuan” trademark did in fact infringe upon the Kailuan Group’s prior right of trade. As the Reexamination Board was in error, the court overturned its decision ([2014] No 71444, sub-number 5667073), and ordered the board to correct it.

Neither of the parties filed an appeal after this judgment, which has come into effect.

3. Significance

This case is based on the Trademark Law’s provision that “an application for the registration of a trademark shall not create any prejudice to the prior right of another person”; the prior right in this case was the right of trade name. The court’s judgment was made by analyzing when the plaintiff began trading under the name “Kailuan” (1912), the reputation of the Kailuan Group (it’s among the world’s top 500 enterprises and its trade name is famous in China and abroad), differences between the plaintiff’s business scope and the litigated trademark’s approved usage service, possible public confusion, and the litigated trademark registrant’s awareness and actual use of the plaintiff’s trade name to determine whether any prejudice to the Kailuan Group’s prior right had occurred. Based on those factors, the court found that the disputed trademark registration damaged the Kailuan Group’s prior rights and that the registration should be made null and void. This decision protected the rights of a famous brand, prevented malicious and preemptive trademark registration, and safeguarded the integrity of competition among market players.

Case No 4: Guizhou pharmaceutical company wins appeal on overturning administrative decision on its trademark application

1. Background

Tongjitang Pharmaceutical Co Ltd in Guizhou province applied for registration of a composed mark which included a trademark saying “Tongjitang was founded in 1888”, and its logo at the Trademark Office of the State Administration for Industry and Commerce. The Office and Trademark Review and Adjudication Board rejected the application on the grounds that the litigated trademark was similar to the trademark “Tongji” and its logo (a quoted trademark having registration No 3178271) and “Tongji” (another quoted trademark having registration No 3574839). Although the two quoted trademarks in the case look the same in pinyin, they are written in traditional Chinese characters and simplified Chinese characters respectively. They look different in the Chinese versions.

The company refused to accept the decision and brought appeal proceedings to the Beijing IP Court.

2. Ruling

The Beijing IP Court decided that the public will not muddle the litigated trademark and the two quoted trademarks. The former is not in the same or a similar commodity category with the latter two as based on the reputation of the company’s previous trademark “Tongjitang” (Registration No 1093180), the actual use of the litigated trademark, the similarity between the litigated trademark and the company’s previous trademark, as well as the difference between the company’s previous and composed trademarks, and the two quoted trademarks. The court canceled the previous decision and ordered the Trademark Review and Adjudication Board to correct it.

3. Significance

This case clarifies that evolution of the same subject’s previous trademark and the litigated trademark should be taken into account in judging their proximity, and discusses the factors that should be considered making that judgment. The court fully considered the reputation of the company’s previous trademark “Tongjitang” (Registration No 1093180), the actual use of the litigated trademark, the similarity between the litigated trademark and the company’s previous trademark, as well as the difference between the company’s previous and composed trademarks, and the two quoted trademarks. It held that the previous trademark’s reputation was inherited by the litigated trademark, which can be differentiated from the two quoted ones.

The decision of this case is of great significance in safeguarding interests of famous trademark holders.

Case No 5: Dispute on the exclusive right of registered trademark between Beijing Concert Hall and its former general manager

1. Background

Beijing Concert Hall has hosted a group of shows under the name “Da Kai Yin Yue Zhi Men” (“Open the Door of Music”) over the years. Qian Cheng, then general manager of the Beijing Concert Hall, registered the expression as a trademark and brought the hall to court for its use of the trademark in operations without his permission and infringement of his exclusive right of the registered trademark after he left that employment. He requested the hall to stop infringement, make an apology and provide compensation for economic losses and other cost totaling 40,000 yuan ($6,250).

2. Ruling

The Beijing Xicheng District People’s Court found that the Beijing Concert Hall had used a trademark which had gained a reputation and been similar to the registered trademark on the same kind of commodity prior to the trademark registrant and before the registration. The court also held that Qian Cheng, who enjoys the exclusive right to use the registered trademark, did not have the right to forbid the hall’s uses of the trademark within its previous scope of activities. It did not support Qian’s argument that the Hall had no factual and legal basis to plead against him in court. In the result, it dismissed Qian’s claims.

Qian refused to accept the decision and instituted an appeal to the Beijing IP Court. The appeal court ruled that the trademark “Da Kai Yin Yue Zhi Men” had been used in shows and promotions and was part of all the activities at the concert hall; a fixed relationship had been established between the trademark and Beijing Concert Hall, which granted the right of pleading to the hall for its prior use of the trademark and established that the hall’s use could not be considered an infringement of Qian’s registration. The Beijing IP Court thus rejected the appeal and upheld the original decision.

3. Significance

This case involves the right of pleading based on prior use in the revised Trademark Law. The Beijing IP Court analyzed the law and discussed the use of trademark, reputation of the mark, and the subjective attitude of the user. The judgment safeguarded the brand of “Da Kai Yin Yue Zhi Men”, which had been used continuously by Beijing Concert Hall for nearly 12 years, and balanced the interests of both the prior user of the trademark and the registered trademark holder.

Case No 6: Unfair competition dispute between Beijing iQiYi Technology Co, Ltd and Beijing Jike Jike Technology Co Ltd

1. Background

Jike Jike is the manufacturer and seller of the “hiwifi” router, which can screen out advertisements on online video site iQiyi.com after the router users download a plug-in module from the “hiwifi” cloud computing platform. The iQiYi company thought that Jike Jike’ s module is unfair competition, and requested the court to order the company to stop its use, eliminate the negative effects and pay more than 2.10 million yuan ($312,500) as compensation.

2. Ruling

The court of first instance, the Beijing Haidian District People’s Court, found that Jike Jike’s plug-in module directly intervened in iQiYi’s operation for commercial profit which behavior was beyond the reasonable limits of competition, violated the principles of integrity and business ethics, and constituted unfair competition. Jike Jike refused to accept the judgment and appealed to the Beijing IP Court.

The IP Court held that every business operator should obey rules and not affect other competitors’ legitimate business models for its own interest. It ruled that Jike Jike’s plug-in module changed iQiYi’s business model forcibly in providing services to its “hiwifi” users, thus damaging the legitimate interests of iQiYi.

The court also found that Jike Jike’s behavior made iQiYi fail to sustain normal operations due to lack of advertising income to pay the high royalty fees of video programs. Consequently, the interests of Internet users will eventually be adversely affected.

After identifying the unfair competition behavior of Jike Jike, the Beijing IP Court dismissed the appeal and upheld the original judgment.

3. Significance

In the Internet era competition has become increasingly fierce and more and more forms of unfair competition have emerged. They are not always easy to identify. The courts made the judgment though analyzing Jike Jike’s subjective malice, the harm to another’s business model and the eventual influence on consumers. The case provides guidance in determining competition relationship and the legitimacy of competition against the background of the Internet environment.

Case No 7: Copyright and unfair competition disputes between Beijing Locojoy Technology Co Ltd and Beijing Koramgame Network Technology Co Ltd

1. Background

The Beijing Locojoy Technlogy Co Ltd (Locojoy) is the copyright owner of the mobile game “Wo Jiao MT on line” (My name is MT on line), and “Wo Jiao MT 2” (My name is MT 2), which were adopted from a serial 3D animation “Wo Jiao MT” (My name is MT).

Locojoy has the exclusive right to use the names of the games, the figures in the games, and the figures’ images.

Locojoy considered that when Beijing Koramgame Network Technology Co Ltd (Koramgame) released a game “Chao Ji MT” (Super MT) using the name of “Wo Jiao MT”, and names and images of figures similar to Locojoy’s game, it had infringed upon Locojoy’s copyright, and, in using slogans related to “Wo Jiao MT” in promotions, had committed unfair competition. Locojoy therefore instituted court proceedings.

2. Ruling

Beijing IP Court ruled that Locojoy’s games and figures of the games did not enjoy copyright law protection of written works, and that the figure images in the two litigated games were not actually similar, so that the Koramgame did not infringe upon Locojoy’s copyright.

However, the court also noted that Locojoy’s games came out earlier than Koramgame’s and had gained a reputation in the market. Koramgame, a player in the same field, not only failed to avoid similarity in names and figures, but conducted promotions that would lead to confusion. The court found that Koramgame’s actions constituted unfair competition by using another’s well-known name without permission and by making false advertisements. The court ordered Koramgame to stop the behavior and compensate Locojoy with 500,000 yuan ($78,100) for economic losses plus reasonable expenses of 35,000 yuan.

3. Significance

As an emerging cultural industry, mobile gaming is a combination of culture and technology and enjoys great potential for growth and bright market prospects.

This case involves a dispute over copyright infringement of mobile games and unfair competition. The facts were complicated and impacted by many difficult issues in law. The court made a detailed analysis of various points, such as whether the names of games and figures can enjoy protection of Copyright Law as written works and adapted works; whether a mobile game’s name can be considered as a famous commodity’s unique name; and how to identify false advertisements for mobile games.

In identifying the civil liability, the court took the plaintiff’s market share in the mobile game market and the defendant’s subjective attitude into full consideration, and protected the copyright owner’s interests by punishing according to law the unjust behavior of infringing on another’s interests.

The case provides clear direction in solving disputes involving copyright protection for mobile games, and is a useful precedent for healthy development of the mobile game industry.

Case No 8: Burberry trademark right infringement dispute with Chen Kai and Lu Qiumin

1. Background

Burberry owned 25 registered clothing series trademarks. On March 20, 2012, a public security organ investigated sales of counterfeits of those trademarks by Chen Kai and Lu Qiumin and asked Burberry to help identify those fake products. The Shanghai Yangpu district people's court sentenced both defendants to imprisonment (probation) and a fine on August 24, 2012. On August 15, 2014, Burberry filed a lawsuit and asked the court to have both defendants pay one million yuan as financial compensation. Both defendants held that the litigation was beyond the prescribed period and thus invalid.

2. Rulings

In the first trial, the Yangpu court ruled that Burberry's appeal was still valid and both defendants had infringed on the company's exclusive right to use the trademarks. Therefore, they were ordered to pay 165,000 yuan for related financial loss and costs. Lu Qiumin refused to take the ruling and appealed to a higher court. The Shanghai intellectual property court dismissed the appeal and maintained the ruling.

3. Significance

The case involved discontinuance of an action because of exceeding of a limitation period. It clarified criminal prosecution procedure for people who knew their rights were violated and the consequence in civil law of assisting an investigation at the request of related departments. The case has two important conclusions: first, injured parties should appreciate the need to be aware of and calculate the prescribed period for litigation, arising from when they knew their rights were violated; second, there may be an effect on limitation periods when such people reasonably trust a criminal investigation to protect their civil rights. The court also discusses whether or not such an effect depends on an ultimate finding of criminal behavior with consequent conviction. The judgment delineates some factors arising in an application to discontinue an action based on exceeding a limitation period and safeguards the rights of the injured party.

Case No 9: KDF Distribution (Shanghai) Co Ltd sued Aquatherm Pipe System (Shanghai) for trademark right infringement and false publicity

1. Background

KDF Distribution held the rights to the “AQUA-SCIE” trademark, and enjoyed the exclusive right to sell Aquatherm’s pipe products in China before July 1, 2013. After that, KDF terminated cooperation with Aquatherm, and Aquatherm Pipe System (Shanghai) became the new agent. KDF’s registered trademark had only been used to promote Aquatherm’s pipe products. After July 1, KDF continued to hold the trademark and began to use it for pipe products from other companies. Aquatherm Pipe System (Shanghai) commissioned Oushu Co to sell Aquatherm’s products. The two companies used advertising slogans indicating that the AQUA-SCIE trademark has been replaced by Aquatherm and the original trademark had nothing to do with Aquatherm’s products. KDF believed that the two companies’ use of those slogans constituted trademark infringement and misleading advertisement and applied for an order that the two defendants should stop their actions and compensate its loss with five million yuan.

2. Ruling

The Shanghai Xuhui district people’s court dismissed KDF’s claims in the first trial. KDF then appealed to a higher court. The Shanghai intellectual property court held that the AQUA-SCIE trademark was once used to promote Aquatherm’s products, and it was necessary for the two defendants to inform consumers of the changes. Neither defendant, however, acted unreasonably or confused consumers about the origin of the products. It was the proper use of a trademark. The defendants’ use of words was indeed not very accurate, but it wasn’t misleading. Therefore, their actions didn’t constitute false advertising banned by the unfair competition law. The court dismissed the claim and upheld the first ruling.

3. Significance

The case involved standards identifying fair use of trademarks and false advertising. The court focused on the defendants’ subjective intention the way of use, and the possibility of confusion, and decided that it was a proper use of a trademark. It stressed using a broad interpretation of advertising slogans in detecting false advertising, and took into account public attention and cognitive experience. The case sets a precedent in this area.

Case No 10: Shanghai Pafuluo Stationery Co sued Shanghai Art Imagine Stationery Co for copyright infringement

1. Background

Shanghai Pafuluo Stationery’s website homepage featured a dark red background, dynamic white starlight, a copper bell ringing and background music. The company felt that Shanghai Art Imagine Stationery and Shanghai Europe Crocodile Stationery Co had plagiarized its website and infringed on its copyright, so it applied for a court order to have the two companies stop the infringement and compensate it with 223,000 yuan.

2. Ruling

The Shanghai Minhang district people’s court ruled that the two defendants infringed upon the plaintiff’s website copyright and ordered them to pay the plaintiff 30,000 yuan for its loss. The two defendants appealed to a higher court. The Shanghai intellectual property court dismissed the appeal and upheld the first ruling.

3. Significance

This case focused on whether website content arrangement is included among works protected by the Copyright Law. The court held that although the websites in question had many public elements, such as columns and structures, the color, content, display and overall arrangement reflected unique ideas and showed visual art effect. They were original and replicable, and therefore could be counted as works protected by the copyright law. The case ruling is a precedent for other similar webpage copyright protection cases.

Case No 11: Autodesk, Adobe apply for pretrial evidence preservation

1. Background

Autodesk and Adobe are two software companies based in the US. They believed that Shanghai-based Ablues Design Exhibition copied and installed their AutoCAD, Photoshop and Acrobat softwares for commercial purposes without authorization. They couldn't get relevant evidence because the software was all on computers in the Shanghai company. And, relevant evidence such as computer software and data is intangible and easy to hide or destroy. Once transferred, hidden or eliminated it is hard to recover. So the plaintiffs applied to the Shanghai Intellectual Property Court for pretrial evidence preservation.

2. Ruling

The intellectual property court held that the evidence the plaintiffs wanted to be protected was valid under legal regulations and, as they couldn't collect it on their own for objective reasons, they had met the requirements of pretrial evidence preservation. The court ruled that related software on computers and other equipment in question should be preserved as evidence. After the ruling, the Shanghai third intermediate people's court worked with the intellectual property court and smoothly finished the pretrial evidence preservation work.

3. Significance

The case was the first of its kind since the Shanghai Intellectual Property Court was established. It involved evidence on nearly 400 computers, which required professional and complex preservation work. The intellectual property court invited technical experts to assist in evidence preservation and come up with a thorough work plan. Experts, inventory and field control teams were established with clear responsibilities. They stuck to operation norms and finished the preservation work. The case is important for intellectual property case enforcement mechanisms, implementation and trial linkage enhancement, pretrial evidence preservation efficiency and accuracy, and protection of legal rights of all parties.

Case No 12: Chanel sues Wendaxiang and Ramada Pearl Hotel Guangzhou for trademark right infringement

1. Background

Chanel is a French company established on August 27, 1954. The Chanel brand is a luxury brand worldwide. The company owns its figurative marks for such products as clothes, shoes and scarves and the CHANEL logo mark. Wendaxiang signed a leasing contract with the Ramada Pearl Hotel Guangzhou to sell clothes and leather products and promised that no fake and shoddy goods would be sold. Chanel came to believe that Wendaxiang had used its registered logo and infringed upon its trademark right. It applied to the court to have the two defendants stop the infringement and compensate its loss with 300,000 yuan.

2. Ruling

In the first trial, the Guangzhou Yuexiu people's court held that Wendaxiang infringed on Chanel's registered trademark right and ordered it to stop the violation and compensate for loss, but that the Ramada Pearl Hotel Guangzhou shouldn't be held accountable. Chanel didn't accept the ruling and appealed. The Guangzhou Intellectual Property Court found that Chanel was a famous brand and the Guangzhou hotel was an upscale facility, so the hotel should be responsible for sales of shoddy products. In addition, Wendaxiang committed violations repeatedly, and the hotel should have noticed them if it was paying due attention. The court ruled that the hotel turned a blind eye to the trademark violation and should be held accountable for assistance in the infringement. Therefore, the two defendants were ordered to pay 50,000 yuan to compensate the plaintiff.

3. Significance

In recent years, the clothing market and hotel's leased shops have often been found selling shoddy products. Trademark right holders often sued shop owners, lessors and management personnel together and asked them to shoulder related responsibilities. In cases such as these, it's important to determine the responsibilities of the shop lessors and management parties. In this case, the court considered the plaintiff’s trademark popularity, whether the shop's violations were evident, as well as the relations between the lessor and the shop operator. It clarified the responsibilities of the lessor based on the circumstances. The ruling explored assisted infringement identification and offered guidance for famous brands’ legitimate benefits protection.

Case No 13: Sun Lijuan sues Urban Revivo (Guangzhou) and Guangzhou Urban Renewal for copyright infringement

1. Background

Sun Lijuan published a piece of art work showing a giraffe on a website on January 12, 2011. Sun's work then won first prize at a T-shirt design competition in March, 2011. Sun believed that the two Guangzhou companies used her work in their products and thus infringed on her signature, reproduction and publishing rights. She applied to court for an order that the two defendants stop the infringement, pay compensation of 270,000 yuan, and make written apologies to affect public awareness.

2. Ruling

In the first trial, the Guangzhou Baiyun district people's court held that the two defendants used Sun's work without authorization and thus infringed on her copyright. But, they couldn't be held accountable for violating Sun's signature right since it was hard to legibly print the name of a work’s author on clothes. The court ruled the two defendants should stop the violation, destroy related products in stock or on sales, and pay Sun 30,000 yuan for her loss. Sun didn't accept the ruling and took the matter to a higher court. The Guangzhou Intellectual Property Court believed that showing the name of authors of art works used on clothes was common practice in the fashion design industry, and therefore the two defendants violated Sun's signature right. Considering the fame of the art works, Guangzhou Urban Renewal's obvious attention, and Urban Revivo (Guangzhou)'s significant business operations, the intellectual property court held that the compensation was too low in the first ruling and ordered the two defendants to compensate Sun with 80,000 yuan and offer her an apology.

3. Significance

The case involved identification of signature right infringement in costume design. The court considered industry practice in costume design and, and decided that there were no objective restrictions in naming the authors when using their art works on clothes. In addition, name labeling wouldn’t compromise the overall aesthetics of clothing. The final ruling protects an author's signature right and plays an important role in standardizing copyright use in the costume design industry.

Case No 14: Blizzard Entertainment and Shanghai EaseNet Network Technology apply for interim injunction

1. Background

Blizzard Entertainment was the copyright owner of the game World of Warcraft, and Shanghai EaseNet Network Technology was the exclusive operator of the game in the Chinese mainland. The two parties believed that the game Quanmin Warcraft, which was developed by Chengdu Qiyou Co and run exclusively by Rekoo and downloadable from http://game.open.uc.cn/, infringed on their copyright and was an unfair competition practice in that it used their name and decorations as well as generated misleading promotions. The two plaintiffs applied for an interim injunction when filing the litigation. They appealed to the court to have the three defendants immediately stop the infringement and offered 10 million yuan as a cash guarantee.

2. Ruling

The Guangzhou Intellectual Property Court granted the injunction, ruling that Chengdu Qiyou and Rekoo be forbidden to copy, distribute and promote the game in question, and http://game.open.uc.cn/ stop distributing the game. None of the three parties have appealed.

3. Significance

The case involved an interlocutory injunction for an immediate stop of an activity. It’s important to actively deal with such applications and effectively enforce judgments to preserve intellectual property and ensure timely, convenient and effective judicial remedies. In such an application, the court must balance benefits to applicant and respondent, and set conditions for a standardize review process. They should not only satisfy the justified demand of the applicant to have their rights immediately protected but also prevent abuse of the system to impair business rivals. In this case, the court listened to the opinions of both parties, considered the applicants’ security guarantee, properly determined the precise measures necessary to make the injunction effective, and balanced the benefits to both sides.