CHINA: An Introduction to Intellectual Property: Litigation (PRC Firms)

The year 2024 marks the fifth anniversary of the Supreme People’s Court Intellectual Property Tribunal and the tenth anniversary of the Beijing Intellectual Property Court. The establishment of both judiciary institutions was widely believed to be instrumental in developing a robust IP system in China. Now, when we look back at the top ten cases and other precedents by these courts, what kind of policy trends are being unfolded? What can the international community expect? Below we highlight the key findings.

Procedural Reforms

Effective 7 November 2023, the Apostille Convention enters into force in China. By joining this convention, China has simplified the authentication procedures for foreign-originated documents to use in domestic courts. The traditional “notarisation and legalisation” process – requiring both foreign affairs department certification and embassy or consulate authentication – is replaced with a streamlined apostille certification. This significantly simplifies the process for using foreign public documents in China, alleviating the burden on foreign parties to litigate in China. Notably, our GEN Law team conducted at least two research projects on the reforms of legalisation requirements through EU-China IPR2 projects. Now it finally becomes a reality.

A less noticeable change concerns rehearing or retrial (or certiorari for petition in US terms) for IP cases. The Supreme People’s Court (SPC) issued a new rule that takes away the power of provincial higher courts to review retrial applications for the appellate cases that the provincial higher courts concluded themselves. This change minimises chances of any potential bias for the appellate courts at the provincial levels.

Escalating Compensatory Damages

In the trade mark arena, following our team’s success in receiving CNY100 million (about USD13.8 million) in damages – a landmark amount – awarded by the Jiangsu High People’s Court, which was affirmed by the Supreme People’s Court in the Xin Panpan case in 2023, we have seen a series of cases where the courts imposed increasingly higher amounts of damages. In September 2024, the SPC affirmed the Zhejiang High People’s Court’s award of CNY106 million in the Schneider case. In November 2024, the Luzhou Intermediate People’s Court in Sichuan rendered a first-instance judgment awarding CNY196 million in a trade mark infringement and unfair competition case between two liquor brands.

In copyright matters, the Shenzhen Intermediate People’s Court, in September 2024, awarded CNY107 million in a first-instance judgment protecting Pokémon’s copyrights.

Regarding patents and trade secrets, courts awarded CNY218 million in the melamine patent and trade secret disputes, with the rights-holder ultimately receiving CNY658 million. In June 2024, in the Geely v WM Motor trade secret case, the SPC revised the first-instance judgment, increasing the final compensation to CNY630 million in economic losses plus CNY5 million in legal expenses.

Punitive Damages

Punitive damages have emerged as arguably one of the best means to demonstrate the government’s pro-innovation and pro-IP attitude in recent years. Although China does not have a US-style discovery system, judges appear increasingly comfortable in determining wilful infringement by evaluating all available circumstantial evidence or economic expert testimony. For example, in an October 2023 judgment concerning plant variety infringement, the Intellectual Property Court of the SPC recognised that the base amount for punitive damages can be determined at the court’s discretion. This approach has begun to be widely applied in civil cases and is expected to lead to more high-damages IP judgments in the coming years.

In a patent infringement case represented by our GEN Law team, in which a US agrochemical company sued a local enterprise, the Chengdu Intermediate People’s Court awarded more than CNY32 million in the first-instance judgment, possibly the highest compensation obtained by a foreign enterprise in a patent lawsuit in China in recent years, including the first-ever maximum five-fold punitive damages. In another case where the NBA went after the liability of a local online pirate, the court imposed two-fold punitive damages. All these developments could bolster the confidence of IP owners to seek punitive damages in the coming years.

AI-Related Cases – Data Scraping and AIGC

Before AI-related cases gained prominence in Chinese courts, the closest comparable litigation involved data scraping. Internet companies have been known to scrape data from competitors for profit. As data is not subject to statutory type IP protection, litigators have had to resort to unfair competition laws in China. As shown in the No. 6 precedent listed by the SPC’s “Top Ten Intellectual Property Cases of 2023” released in April 2024, one of the reputable social media firms – Weibo – successfully convinced the high court to hold a company liable for maliciously using technical means to illegally scrape and sell large volumes of Weibo data. The Shenzhen Intermediate People’s Court, as the court of first instance, and the Guangdong High People’s Court, as the second instance, found this to constitute unfair competition and awarded damages exceeding CNY20 million.

In the realm of AIGC, China’s judicial practice appears increasingly willing to recognise the originality of authors in using AIGC as a tool to create works. First, back in November 2023, the Beijing Internet Court affirmed the copyright of an author who used original prompts to generate AI-created images. In October 2024, a Changshu Court in Jiangsu also affirmed that users hold copyright over AI-generated images and protected the author’s information network dissemination rights. Additionally, cases have begun to surface where artists are suing platforms for using their works in AI model training, and individual artists are seeking protection for algorithm-generated content under unfair competition laws. As these legal issues have garnered extensive research and public debate, it is anticipated that Chinese courts will issue more judicial opinions in this area, and a clearer consensus on these matters may eventually be established.

Ever-Increasing Patent Litigations

In 2023, courts nationwide accepted 44,711 first-instance patent cases, marking a year-on-year increase of 15%. Additionally, there were 1,990 patent administrative cases for validity, up by about 6% compared to the previous year. Notably, cases involving foreign companies are also on the rise. From 2019 to 2024, new cases involving foreign parties accepted by the SPC accounted for about 10% of the entire dockets of SPC, with an average annual growth rate of 29%.

SPC’s IP Court

Established in 2019, the IP Court of the SPC, modelled on the IP high courts or federal circuit courts in major jurisdictions, is expected to centrally handle all the appeals of patent and trade secret cases for enhancing consistency and transparency. The Court is observed to have issued a large number of guiding cases, becoming quasi-case law to provide supervision and guidance over lower courts. Over 700 technical investigation experts have been incorporated into the “National Court Technical Investigator Talent Pool”, effectively alleviating difficulties in fact-finding for technical cases. Chinese IP courts will certainly have increased confidence in handling complex technical issues. One thing to watch in the future is whether the SPC IP Court will eventually evolve into the National IP Court.

Boldness in Administrative and Criminal Enforcement

China’s Intellectual Property Office (CNIPA and its local offices) has been engaged in patent enforcement in a more proactive way. Over the past two years, the China National IP Administration has adjudicated several major nationwide administrative decisions on patent infringement disputes, including multiple cases involving telecom standard essential patents between Huawei and Xiaomi.

On the trade secret side, since 2018, the State Administration for Market Regulation (SAMR) has carried out special enforcement campaigns for six consecutive years, focusing on investigating and penalising acts such as infringement of trade secrets. In 2024, the Ministry of Public Security also launched a special campaign for criminal prosecution against trade secret thefts called “Anxin”. Police reportedly look for leads for opening investigations.

Standard Essential Patents/FRAND

At the end of 2023, two SEP/FRAND cases were decided by the courts in China, arguably having the most impact on future cases of a similar kind: (i) the global FRAND rate judgment rendered in Chongqing Intermediate Court between Nokia and Oppo, and (ii) the SPC’s final FRAND rate decision in Advanced Codec Technologies (ACT) v Oppo. In both cases, while being contested vigorously by the litigants, the courts seemed to have possessed a high level of fluency in using top-down and comparable license approaches. Reportedly, the courts in China even accepted FRAND rate-setting cases involving patent pools, although no final decisions have yet been reached. Further, Chinese parties continue to fight in foreign courts, such as the Lenovo v ZTE case in London; however, after years of contentious global litigation, a number of these disputes have resulted in settlements.

While it might be incidental to all those licensing deals, the Chinese antitrust authority SAMR issued antitrust guidelines related to SEP. As demonstrated in the earlier drafts, the final version of the guidelines seems to call for more scrutiny over patent owners and patent pools’ licensing behaviours, with less emphasis on the implementers’ obligations in fulfilling FRAND obligations. It will be interesting to see how these guidelines play out at a time when Chinese home-grown licensors are gaining ground in the telecom and IoT technology SEP space.

Conclusion

The confidence in China’s IP system is undoubtedly growing, as evidenced by increasingly fierce IP disputes fought between local companies in the courts all over the country. One of our hopes is that the growing caseloads will be managed in such a way that judges will have more time to listen to counsel. We do expect that more complex cases such as FRAND rate-setting matters will come to the Chinese courts. Issues such as supplemental data filing in pharmaceutical patent validity cases will continue to pose significant difficulties for the courts, the patent offices and litigants.

中国知识产权诉讼年度回顾

2024年是最高人民法院知识产权法庭设立五周年和北京、上海、广州知识产权法院设立十周年。这些专业法院和法庭在提高审判质量、统一裁判标准等方面取得了显著的成绩，为加强创新驱动发展战略和国家知识产权战略实施提供司法保障。以下是我们关于过去一年中国知识产权保护的亮点和发展的回顾。

诉讼案件持续增长

2023年，全国法院新收知识产权民事一审案件 462176件，审结460 306件，比2022年分别上升 5.4%和 0.55%。其中，新收专利案件44711件，同比上升14.73%；商标案件131429件，同比上升16.85%；技术合同和竞争类案件也有明显的同比上升。而在最高人民法院知识产权庭，2023年受理的技术知识产权和垄断案件7776件，受案量同比增长25.8%。我们预计在未来两年这一趋势仍然会保持。

赔偿金额不断攀升

2024年，不断出现高额判赔的案件。在商标领域，在维持了“新盼盼”案中判决的一亿元赔偿后，2024年9月，最高人民法院维持了浙江省高级人民法院在“施耐德”案中判决的1.06亿元赔偿。2024年11月，四川泸州中级人民法院在两大白酒品牌的商标侵权及不正当竞争案一审中判赔1.96亿元。在著作权方面，2024年9月，深圳市中级人民法院在宝可梦案中一审判赔1.07亿元。在专利和商业秘密方面，最高人民法院在“密胺”专利和技术秘密纠纷中判赔2.18亿元，通过执行和解权利人最终获得6.58亿元，刷新了国内知识产权案件记录。2024年6月，在吉利诉威马商业秘密案中，最高人民法院改判，将一审判决的赔偿额提高至6.3亿元，另加500万元的合理支出。

这些高判赔案件中一般均引入了惩罚性赔偿，有效震慑了侵权人。在己任团队代理一家美国农药公司诉四川一家本地企业的专利侵权案中，成都中级人民法院一审判赔超过3200万元，其中适用了最高5倍的惩罚性赔偿，可能是全国首例。

人工智能案件的进展

在AI相关案件进入中国法院视野之前，最接近的诉讼类型是互联网公司从竞争对手处抓取数据。在最高人民法院在2024年4月发布的“2023年十大知识产权案件”中，广东省高级人民法院判定某公司恶意利用技术手段非法抓取并出售大量微博数据构成不正当竞争，判赔金额超过2000万元。

在AIGC领域，在2023年11月，北京互联网法院认可了作者通过原创提示词创作的AI生成图像的著作权。2024年10月，江苏常熟法院也确认用户对AI生成的图像拥有著作权，并保护了作者的信息网络传播权。此外，还出现了艺术家起诉平台在AI模型训练中使用其作品的案例，以及个人艺术家寻求对算法生成内容进行不正当竞争保护的案例。这些法律问题已经引起了广泛的研究和公众讨论，相信不久之后更高级别的法院将在这一领域发表意见。

行政/刑事执法的大胆举措

中国各级行政部门在专利执法方面更加积极。过去两年，中国国家知识产权局已裁决了多起重大专利侵权纠纷行政裁决案件，包括多起涉及华为和小米之间的电信标准必要专利案件，同时受理众多药品专利侵权纠纷早期解决机制行政裁决案件。

在商标、版权、海关行政保护、商业秘密方面，各级市场监管部门和公安机关开展了诸多专项行动，如“铁拳”、“剑网”、“龙腾行动”、“昆仑2024”等，有效打击了知识产权侵权，改善营商环境。2024年，公安部也启动了名为“安芯”的针对商业秘密盗窃的刑事专项行动。

标准必要专利/FRAND的进展

2023年底，中国法院裁决了两起标准必要专利（SEP）/FRAND案件：（1）重庆市第一中级人民法院在诺基亚与OPPO之间作出的全球FRAND费率判决；（2）最高院就ACT诉OPPO案的费率判决。这些案件最终都达成了全球和解。2024年11月，国家市场监督管理总局发布了标准必要专利反垄断指引，对专利持有人和专利池的许可行为给予了更多的指导。

结论

中国知识产权保护的强度正在提升，这从越来越多的头部企业之间在国内法院的专利诉讼态势就可以间接证明。另外，国外企业在国内法院的诉讼参与更加活跃。根据统计，从2019年到2024年，最高人民法院受理的涉及外国主体的新案占了受案量的约10%，年平均增长29%。未来我们希望国内的案件受理量能达到一定的平衡，这样让法院有充分的时间进行审理。另外，我们也预期今后法院会审理更多的诸如标准必要专利费率这类复杂的案件。类似药品专利当中补充提交数据引起的这些难题仍然将会是法院、专利局和当事人关心的热点。