China: IP Injunction To Pave The Way For Digital Industry Development

--- Based on Preliminary Analysis of Several Typical Judicial Cases Released by Pudong New Area People's Court of Shanghai

Xiangxiang Ma (Partner) Anjie Broad Law Firm

On November 10, 2023, Pudong New Area People's Court of Shanghai ("Pudong Court") released 50 typical cases regarding the judicial protection of intellectual property ("IP") at a press conference ("Pudong IP Cases"). The typical cases encompass a variety of IP matters, ranging from traditional issues in the fields of copyright law, trademark law and anti-unfair competition to practical matters like IP-related contractual disputes. This preliminary analysis will briefly address issues relating to interim measures particularly injection relief taken by Pudong Court in Pudong IP Cases.

1. Injunction system under the current PRC law

In general, injunctive relief serves as a remedy that prohibits a party from doing an act or restrains from doing a threatened act, or mandatorily requires a party to do an act. Injunctive relief has existed in China for many years, particularly in the realm of IP rights ("IPR"), although the Civil Procedure Law of the People's Republic of China (the "Civil Procedure Law") did not formally endorse it until 2012.¹

The Civil Procedure Law stipulates the interim measures which includes both the preservation of evidence and property and the injunctive relief. Such interim measures are available both before and after a litigation is initiated. Where an injunctive relief is sought before a litigation is initiated, the court shall make a decision within 48 hours and the decision should be executed immediately after the decision is made.² According to the Civil Procedure Law, the application of injunction relief shall be filed under the urgent situation.³

According to the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in Reviewing the Injunction Cases involving Intellectual Property Disputes, taking effect on January 1, 2019 (the "IP Injunction Provisions"), several cases are listed as urgent situations like the disputed IP is about to be at an illegal disposal or the IP of a relatively time-sensitive and hot show or program is or about to be infringed.⁴ Furthermore, the IP Injunction Provisions provide that the People's Court shall consider the following factors when reviewing an application for injunction such as (i) whether the failure to enforce an injunction will cause the applicant's legitimate rights and interests to suffer irreparable injuries or will lead to the difficulty in executing a judicial ruling and (ii) whether the applicant's injury due to the failure of issuing an injunction will exceed the respondent's injury as a result of the enforcement of an injunction.⁵

It is commonly known that the subject matters of IPR are intangible assets, which can be easily reproduced regardless of time and space. In terms of infringement, IPRs are even more vulnerable than tangible property rights, which are more likely to result in extremely severe situations and cause irreversible damages. Injunctive reliefs offer several advantages for protecting IPR in the judicial process. Specifically, IP litigation normally involves a rich variety of complex legal, commercial or even technical issues, inevitably requiring the engagement of expert determination and demonstration of evidence. As such, the judicial process would usually last longer, and in the meantime, existing and potential damages would easily get increased if no remedial measures like injunctive relief are taken before a trial.

2. Injunctive Relief in Pudong IP Cases

According to the Judicial Protection of Intellectual Property Rights in Chinese Courts (2022) published by the IP Court of the Supreme People's Court, courts in Beijing, Tianjin, and Shanghai, issued injunctions against acts such as the piracy of the Beijing Winter Olympics and the Qatar World Cup, which in turn improves the market environment for digital culture.

Pudong Court further released three representative cases in which the injunctive relief was applied so as to timely protect the IPR before the trial. Below is the basic information of each case:

It is noted from the foregoing typical cases that Pudong Court adhered to the IP Injunction Provisions, thoroughly considered various situations of each case, and eventually issued the injunction in a relatively prudent manner.

What's more, considering that all of the foregoing cases are related to the emerging industrial sector such as livestream, online game and video aggregation, when determining whether irreparable damages may exist in a certain case, Pudong Court has given much attention to factors like comparative advantages and market shares may be affecting the industrial landscape as a whole. After all, to tackle IP issues in the digital era, a rich and complex understanding in terms of law and regulations, public policy, economy and commerce, technology and even culture is highly required.

Last but not least, one of the hot topics in IP is about balancing the interests of rightsholders and the public, which is continuously discussed both in the academic circle and the legal practice. Based on the analysis of those typical cases, Pudong Court has also proactively taken into account such balance when deciding to issue an injunction.

3. Looking ahead: increasing application of injunctive reliefs to boost the digital culture

It has been widely recognized that IP is of significant importance. Countries need an effective IP system to bolster innovation and creativity, helping to ensure economic prosperity and a vibrant cultural life. Moreover, the rapid development of the digital economy in China has sparked greater efforts to protect IPR through judicial procedure.

On September 22, 2021, China issued a long-term plan for the development of IPR power, stating that the country's IPR competitiveness will rank among the top in the world by 2035, with a complete IPR system, prosperous growth in IPR-driven innovation and a better social environment for IPR culture. The injunctive relief, like the IP laws and regulations, is actually brought in from the Western legal regime. We have witnessed that Chinese courts focused more on solving IP disputes concerning new technologies and digital industries in recent years as they sought to adhere to the nation's development strategy and promote innovation. The improved judicial efficiency is a boon for new businesses like the digital industry. The quick resolution of disputes allows market entities to invest in a fresh round of research and development as soon as possible, thus facilitating the creation of more new technologies.

The injunctive relief is designed to offer IP rightsholders effective measures to beef up IPR protection in disputes, specifically under urgent situations. As more and more injunctive reliefs are issued upon parties' application in the IP litigation, this may further invite more rightsholders to proceed with such measures prior to an IP trial. With injunctive relief functions as a better safeguard in real cases, IP rightsholders could be protected even under extreme and urgent situations. Similar to other IP protection measures, it is believed that the application of injunctive relief would ultimately stimulate the creation and the economy driven by innovation.

Currently, China is advancing the revision of laws in the fields of resolving disputes evidenced by the newly amended Civil Procedure Law to take effect on January 1, 2024 and the Arbitration Law in the amending and consultation process. As such, it can better solve disputes efficiently, optimize the arrangement of judicial resources, enhance the usage of technical methods in resolving disputes and effectively meet the public's diverging expectations on resolving judicial cases in a variety of contexts such as fairness, high-efficiency and expediency. With the release of typical cases concerning the issuance of injunction, we may expect more injunctive reliefs would be taken in the future IP litigation. With respect to the arbitration process, however, injunctive reliefs are still in discussion and rarely filed in real cases, which has become an impediment for parties to choose arbitration for purposes of resolving IP disputes. For purposes of better allocating judicial resources, we would anticipate the usage of injunctions in the arbitration so as to resolve IP disputes more effectively and efficiently.

Footnotes

1. Wenyan Ding, Application and Review of Civil Preservation of Act, People's Judicature (Application) Issue 34 (2017), available at: http://yyfx.court.gov.cn/news/xq-622.html, (Accessed 26 November 2023)

2. See article 103 of the Civil Procedure Law of the People's Republic of China (Amended in 2023).

3. See article 103 of the Civil Procedure Law of the People's Republic of China (Amended in 2023).

4. See article 6 of the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in Reviewing the Injunction Cases involving Intellectual Property Disputes.

5. See article 7 of the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in Reviewing the Injunction Cases involving Intellectual Property Disputes.

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