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What Influences Will General Provisions of the Civil Law of the People's Republic of China Have on the Protection of Intellectual Property Rights?

General Provisions of the Civil Law of the People's Republic of China (hereinafter referred to as General Provisions of the Civil Law) has been adopted at the 5th Session of the Twelfth National People's Congress on March 15, 2017, and effective as of October 1, 2017.

 

The implementation of the General Provisions of the Civil Law will have a significant impact on China's intellectual property rights (IPR). Beijing Sinda Law Office makes a brief introduction about the relevant stipulations of the General Provisions of the Civil Law, mainly about limitation of action and compensation for infringement of rights.

 

Limitation of Action

 

Article 188 of the General Provisions of the Civil Law stipulates that the limitation of action regarding applications to a People's Court for protection of civil rights shall be three years. And if the Law has other stipulations concerning limitation of action, those stipulations shall apply. This article extends the limitation of action regarding applications to a People's Court for protection of civil rights from two to three years.

 

The existing Patent Law of the People's Republic of China (hereinafter referred to as Patent Law), Interpretation of the Supreme People's Court Concerning the Application of Laws in the Trial of Civil Disputes over Copyright and Interpretation of the Supreme

 

People's Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks stipulate that the period of limitation for filing a suit concerning the infringement of a patent right , a trademark right or a copyright shall be two years, counted from the day on which the right holder or the interested parties become aware or should become aware of the act of infringement. When the period of limitation for filing a suit concerning the infringement of a patent right, a trademark right or a copyright is extended from two years to three years probably depends on the Supreme People's Court's judicial interpretation, since if the limitation of action regarding applications to a People's Court for protection of other civil rights is three years while the period of limitation for filing a suit concerning the infringement of an intellectual property right is two years, it seems to be unfair to the intellectual property owner.

 

Article 196 of the General Provisions of the Civil Law stipulates that the following rights of claim shall not apply the stipulations on the limitation of action: (1) request cessation of Infringements, removal of obstacles, elimination of dangers; (2) a right holder of the real right of a real estate and a registered movable property request return of property; (3) request to cover child support, support for elderly parents or support for other adult dependants; and (4) other rights of claim that do not apply the limitation of action. This article clearly stipulates that an IPR holder’s right of claim for cessation of infringement will not be limited by the limitation of action, that is, only the infringement is still continuing, the right holder may bring a lawsuit to the People's Court to stop the infringement.

 

Compensation for Infringement of Rights

 

Article 196 of the General Provisions of the Civil Law stipulates that the main methods of bearing civil liability mainly include (1) cessation of infringements; (2) removal of obstacles; (3) elimination of dangers; (4) return of property; (5) restoration of original condition; (6) repair, reworking or replacement; (7) continuation of fulfillment; (8) compensation for losses; (9) payment of Breach of Contract damages; (10) elimination of ill effects and rehabilitation of reputation; and (10) extension of apology. If the law has stipulations concerning punitive compensations, those stipulations shall apply. The methods of bearing civil liability stipulated by this law may be applied exclusively or concurrently. Wherein the stipulation concerning punitive compensations is new content of the General Provisions of the Civil Law.

 

In accordance with the existing Patent Law, Trademark Law of the People’s Republic of China (hereinafter referred to as Trademark Law) and Copyright Law of the People’s Republic of China (hereinafter referred to as Copyright Law), the amount of compensation for an infringement shall be determined on the basis of the actual losses incurred to the right holder as a result of the infringement. If it is difficult to determine the actual losses, the actual losses may be determined on the basis of the gains which the infringer has obtained from the infringement. If it is difficult to determine the losses incurred to the right holder or the gains obtained by the infringer, the amount shall be reasonably determined by reference to the multiple of the royalties. If it is difficult to determine the losses incurred to the right holder, the gains obtained by the infringer as well as the royalty obtained for the right, the People's Court may, by taking into account particulars of the infringement and the like, determine the amount of compensation. In addition, the compensation shall include the reasonable expenses that the right holder has paid for stopping the infringement. Besides, the Trademark Law stipulates that if the infringement is committed in bad faith with serious circumstances, the amount of damages shall be the amount, but not more than three times the amount, determined in the aforesaid method.

 

The stipulations concerning punitive compensations in the General Provisions of the Civil Law indicates that China will strengthen the protection of civil rights. Though the compensation for infringement of patent right, trademark right or copyright shall be handled in accordance with the existing Patent Law, Trademark Law and Copyright Law, when the Patent Law and Copyright Law would be amended, the stipulations concerning punitive compensations in the General Provisions of the Civil Law will provide a higher statutory basis for incorporating punitive indemnity clauses into the Patent Law and Copyright Law.