Highlights from the Annual Report on IP Cases by the Supreme People’s Court
On March 1, 2022, the Intellectual Property Court of the Supreme People's Court (“the IP Court” of the “SPC”) of China released its 2021 Annual Report. We now provide you with the following key data and main characteristics of the different types of cases in the Report.
In 2021, the IP Court continued to see significant increases in both newly received and concluded second-instance (appeal) civil and administrative cases involving technology-related intellectual property matters and anti-monopoly matters (the court’s designated subject matter jurisdiction).
During the year, the IP Court received 4,335 and concluded 3,460 such cases, representing increases of about 36% and 24%, respectively, over 2020. Also, the IP Court's received and concluded cases accounted for about 18% and 14%, respectively, of all cases handled by the Supreme People's Court during 2021, the highest of any court or tribunal of the SPC.
Among the newly received cases, over half were appealed from the IP Courts of Beijing, Shanghai or Guangzhou. At the same time, cases appealed from the IP Courts of central and western regions, such as Zhengzhou, Chengdu, and Wuhan, also saw significant increases.
The 3,460 concluded cases represent about 83 cases per judge, an increase of about 1.2% over 2020. The average case pending time, from docketing to conclusion, was 134 days, an increase of an unspecified amount over 2020.
Among the newly received second-instance civil cases, 2,569 were substantive in nature, including 806 utility model infringement cases, 593 copyright related computer software cases, 576 invention patent infringement cases, 213 cases related to patent ownership or right to apply for a patent, 153 cases involving contract disputes regarding technology-related IP matters, 79 trade secret cases, 68 new plant variety cases, 25 anti-monopoly cases, 2 cases involving integrated circuit layout designs, and 54 other types of cases.
Among the newly received second-instance administrative cases, 1,290 were substantive in nature, including 457 reexamination cases over the rejection of invention patent applications, 283 invalidation cases over invention patents, 234 invalidation cases over utility model patents, 102 invalidation cases over design patents, 36 reexamination cases over the rejection of utility model patent applications, 3 reexamination cases over the rejection of design patent applications, 2 anti-monopoly cases, 1 reexamination case over the rejection of an application for new plant varieties, and 172 cases involving administrative punishment, administrative adjudication and other administrative actions.
Among the 3,460 concluded second-instance civil and administrative cases, 2,272 cases, or about 66%, were affirmed; 509 cases, or about 15%, were withdrawn; 198 cases, or about 5.7%, were settled through court mediation; 468 cases, or about 13.5%, were amended (including remand, modification of judgment, and total or partial reversal); and 13 cases were concluded by other manners.
Among the 2,023 concluded second-instance civil cases that were substantive in nature, 1,004 cases, or about 50%, were affirmed; 440 cases, or about 22%, were withdrawn; 198 cases, or about 9.8%, were settled through court mediation; 381 cases, or about 19%, were amended (including remand, modification of judgment, and total or partial reversal).
Among the 971 concluded second-instance administrative cases, 862 cases, or about 89%, were affirmed; 43 cases, or about 4.4%, were withdrawn; 64 cases, or about 6.6%, were amended (including remand, modification of judgment, and total or partial reversal); and 2 cases were concluded by other manners.
Foreign Related Cases
The IP Court received 437 cases that involved a party from a foreign country (382 cases) or Hong Kong/Macau/Taiwan (55 cases), representing about 10% of the total received cases and an increase of about 16% over 2020. Among the 437 cases, 176 were second-instance civil cases, and 261 were second-instance administrative cases. The IP Court concluded 280 cases that involved a foreign or Hong Kong/Macau/Taiwan party, or about 8.1% of the total concluded cases.
Main Characteristics of the Cases
Civil Patent Cases
(1) Claim interpretation continued to be the main difficult points in such cases. The IP Court further clarified claim interpretation standards related to issues such as delineation of technical features, determination of equivalent features, and identification of functional and usage environment features, in an effort to ensure that patent protection scopes and strength are commensurate with the patentee's inventive contributions over the prior art.
(2) Practicing prior art and (alleged infringing products were obtained from) legitimate sources appeared most as non-infringement defenses.
(3) Calculations of damages were more scientific and reasonable, by flexibly applying rules regarding evidence and clearly ascertaining facts regarding profit losses and/or illegal gains due to infringement. There were more and more cases with high damages, effectively increasing the strength of punishment against infringement acts.
(4) A big portion of disputes regarding ownership of patents/patent applications involved service-invention situations. The main disputed issues in such cases were whether the subject inventions were “related to” the employee's duty or designated work at his former employer and whether the subject inventions were made “mainly by using” the former employer's materials and/or technologies.
(5) Coordination between civil and administrative patent cases was further improved, by actively working together with the CNIPA to build communications and feedback mechanisms.
Administrative Patent Cases
(1) Invention patents/applications accounted for most, or about 66%, of all reexamination and invalidation cases.
(2) The fields of medicine (including Traditional Chinese Medicine) and telecommunication continued to be hotspots in litigations, while technologies related to the internet, big data, e-commerce, AI, blockchain were also involved in more and more cases.
(3) Inventiveness and novelty were the most disputed issues.
Trade Secret Cases
(1) Case numbers and involved technology areas continued to grow. The IP Court received 12 trade secret cases that were substantive in nature in 2019, 44 in 2020 and 79 in 2021.
(2) Technologies involved were complicated and varied. Procedural issues mainly involved jurisdiction disputes, including the place of infringing acts, jurisdiction determination when breach of contract and infringement were both involved. Substantive issues mainly included the nature and extent of the trade secret, damages determination and measures to protect the trade secret, material contribution when changing or improving the trade secret, and whether technologies involved in making customized products could be trade secret.
(3) High damages amount cases continued to increase. In 2020, the IP Court handed down a RMB 30 million (about US$4.7 million) punitive damages amount, based on 5 times of the determined amount, in the “carbomer” trade secret case. In 2021, a damages amount of RMB 159 million (about US$25 million) was issued by the IP Court in the “vanillin” trade secret case.
Computer Software Cases
(1) There were two main types: infringement of computer software copyright and disputes involving computer software development contracts.
(2) In software copyright infringement cases, many involved copyright registered in bulk.
(3) Determination of ownership to computer software faced many difficult issues. For example, determining the time when a computer software was completed required cyclic and many rounds of presentation of relevant evidences.
(1) In civil disputes regarding monopoly agreements, cases involving horizontal monopoly agreement accounted for a bigger share and involved industries such as telecommunication, driver's license training services, and fire safety inspection services. Some monopoly agreements involved industry associations. Monopoly behaviors were found in some cases.
(2) The court started to see administrative anti-monopoly cases. The two cases involved allegations against relevant local and central governmental agencies, respectively, for non-action in accordance with the Anti-Monopoly Law of China.
(3) Foreign related anti-monopoly civil cases increased, in which plaintiffs filed lawsuits against monopoly behaviors happened outside of China but had impact on domestic market and resulting in restrictions against competition.
(4) Monopoly and intellectual property issues were increasingly intertwined, involving abuses of market dominant positions related to patent rights. These cases also involved drug patent related horizontal monopoly agreements such as reverse-payment settlements, market division schemes, and sale restriction agreements.
The above is a summary of the highlights from the Annual Report without our comments. As you can see, the IP Court, as the nationwide second-instance (appeal) court for technology-related IP cases, has been increasingly active during the past several years, receiving and concluding a large number of cases involving a variety of issues and technologies.
Together with the Annual Report, the IP Court also published an abstract that contains summaries of key points of law in the judgments of certain typical cases of 2021. We are in the process of analyzing the cases and key legal points, and will report to you in our upcoming newsletters.
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