Supreme People's Court, Annual Report on Intellectual Property Cases (2009) (Abstract)

In the Zhang Jianhua vs. Zhilian et.al. patent infringement case ((2008) Min Ti Zi No.83), the Supreme People's Court held that, when a people's court determines whether an alleged infringing technical solution falls within the scope of protection of a patent, it should compare the technical features of the alleged infringing technical solution with all of the technical features recorded in the patent claims. If the alleged infringing technical solution lacks one of the technical features of the patent, thus giving an inferior technical result, it should hold that the alleged infringing technical solution does not fall within the scope of protection of the patent.

2. Application of the doctrine of estoppel

In the Shen Qiheng vs. Shengmao patent infringement case ((2009) Min Shen Zi No. 239), the Supreme People's Court, following its review, held that, when a People's Court is determining whether infringement under the doctrine of equivalents is constituted, it may, even if the alleged infringer has not asserted the applicability of the doctrine of estoppel, and based on the facts that it has already ascertained, place necessary limits on the extent of equivalents by applying the doctrine of estoppel, and reasonably determine the scope of protection of the patent.

3. Interpretation of the sequence of steps in the claims for a process patent

In the OBE vs. Kanghua patent infringement case ((2008) Min Shen Zi No. 980), the Supreme People's Court held that, when determining infringement in a process patent infringement case by applying the doctrine of equivalents, the determination of whether each step needs to be executed in a fixed sequence may be made by combining (i) consideration of the entire technical solution as recorded in the patent description, drawings, review dossier and claims with (ii) the logical relationship between each step. Both the steps themselves and the sequence of execution of the steps should have the effect of defining the scope of protection of the process patent.

4. The way of thinking in the trial of a patent infringement case and the technology comparison and analysis method

In the Xue Shengguo vs. Zhao Xiangmin et. al. patent infringement case ((2009) Min Shen Zi No.1562), the Supreme People's Court conducted a relatively extensive analysis on how to specifically judge the “triple fundamental identities” and “obviousness” when applying the doctrine of equivalents. The Supreme People's Court also stated that if the explanation of a patentee's technical features made by the patentee in an infringement action does not exceed the scope recorded in the claims and the same is consistent with the patent description and drawings, such technical features may be defined based on its explanation.

5. Understanding of “a patent that has been declared invalid” as used in the first paragraph of Article 47 of the Patent Law

In the Wanhong vs. Pingzhi et. al. patent infringement case ((2009) Min Shen Zi No.1573), the Supreme People's Court held that the term “patent that has been declared invalid” as used in the first paragraph of Article 47 of the Patent Law means a patent declared invalid in a final decision rendered by the Patent Re-examination Board on the validity of a patent in an invalidation petition review. Until the effectiveness of such invalidation decision has been finally determined, it should not be indiscriminately used in civil infringement cases as the basis to directly render judgments or rulings rejecting the rights holder's claims.

6. Retroactive effect of a decision declaring a patent invalid

In the Xueqiang vs. Xu Zanyou other infringement case ((2008) Min Shen Zi No.762), the Supreme People's Court, following its review, held that, for the purposes of the second paragraph of Article 47 of the Patent Law (as revised for the second time in 2000), the term “ruling” means a patent infringement-related ruling, namely, where a people's court has rendered, following a trial, an effective judgment holding that patent infringement has been committed, the term means a ruling that has been rendered in respect of such case and been enforced, and excludes rulings relating to a judgment holding that patent infringement was not constituted.

II. Trial of copyright cases

7. Deduced vesting of copyright in an occupational work

In the Chen Junfeng vs. Jindun Publishing House copyright infringement case ((2009) Min Jian Zi No.361), the Supreme People's Court deduced, based on the acts of the two concerned parties, that there was an intent on the part of the parties that copyright in the work involved in the case belong to Jindun Publishing House, thereby affirming that the vesting of copyright in occupational works may be determined through deduction.

8. Statutory permission to use a musical work that a third party has lawfully recorded as a phonogram to produce a phonogram and duplicate and distribute the same

In the Dasheng vs. Wang Haicheng et. al. copyright infringement case ((2008) Min Ti Zi No.57), the Supreme People's Court elucidated the relationship between the legal application of the third paragraph of Article 39 and the second paragraph of Article 41 of the Copyright Law, clarifying that once the phonogram of a musical work produced with the permission of the copyright holder has been published, the statutory permission specified in the third paragraph of Article 39 of the Copyright Law applies when other parties also use such musical work to produce separate phonograms thereof and duplicate and distribute the same, and the provision on obtaining the permission of the copyright holder in the second paragraph of Article 41 ceases to apply.

9. Direct liability for infringement of internet service providers that are involved in the provision of linking services

In the Ciwen vs. Hainan Unicom copyright infringement case ((2009) Min Ti Zi No.17), the Supreme People's Court clarified the conditions under which an internet service provider that is involved in the provision of internet linking services bears direct liability for infringement. From the appeal judgment in that case, it can be seen that if a web page or website does not provide any information, such as the corresponding domain name or website name, that can indicate that such web page belongs to a third party, determination that the internet service provider is providing linking services cannot be rendered and the internet service provider should bear direct liability for infringement in respect of the alleged infringement by such web page or website.

III. Trial of trademark cases

(1) Trial of administrative cases involving the granting and confirmation of trademarks

10. Criteria for the determination and application of the principle of “double jeopardy”

In the “采乐” (Caile) trademark administrative case ((2008) Xing Ti Zi No.2), the criteria for the determination and application of the principle of “double jeopardy” were clarified. The Supreme People's Court held that on the previous two occasions that Johnson & Johnson had submitted applications for review and adjudication, the relevant legal grounds and legal basis that could be asserted at the time had been exhausted, and the Trademark Review and Adjudication Board had conducted substantive hearings in respect of the relevant facts and grounds and twice rendered rulings upholding the registration of the disputed trademark. Johnson & Johnson, citing the revised Trademark Law, applied for cancellation of the disputed trademark, again mainly on the grounds that its trademark was well known and the Trademark Review and Adjudication Board again accepted the case, this time rendering a ruling cancelling the disputed trademark, thereby violating the principle of “double jeopardy”. If the Trademark Review and Adjudication Board wishes to accept a new review and adjudication application in a trademark dispute that has already been decided, the pre-condition must be new facts or grounds.

11. Retroactive effect of the trademark law (as revised in 2001) on trademark disputes in which final administrative rulings had been rendered before the implementation of said law

In the above mentioned “采乐” (Caile) trademark administrative case, the Supreme People's Court additionally clarified the issue of the retroactive effect of the Trademark Law (as revised in 2001) on trademark disputes in which final administrative rulings had been rendered before the implementation of said law. The Supreme People's Court, based on the principle of legitimate expectation, held that the Trademark Law as amended in 2001 was not retroactively applicable to trademark disputes that were subject to final rulings rendered before the amendment of that law.

12. Consideration of specific historical factors when determining the similarity of trademarks

In the “秋林” (Qiulin) trademark administrative case ((2009) Zhi Xing Zi No.15), the Supreme People's Court stated that, when determining the similarity of trademarks, factors such as specific historical relationships and existence in the same region may additionally be taken into account in order to consider whether the co-existence of the two trademarks would be likely to cause confusion among the relevant public as to the source of the goods or cause the relevant public to mistakenly believe that a certain connection existed between the two.

13. Determination of trademark similarity in cases involving the granting and confirmation of trademarks where the holder of a prior trademark simultaneously owns a registered well-known trademark for dissimilar goods and a prior registered trademark for similar goods

In the “苹果” (Apples) trademark administrative case ((2009) Xing Ti Zi No. 3), the Supreme People's Court stated that, when the holder of a prior trademark simultaneously holds a registered well-known trademark for dissimilar goods and a prior registered trademark for similar goods, not only should the disputed trademark be compared with the prior registered trademark for the similar goods, but the factor of protection of the well-known trademark should also be considered.

14. Time boundary when determining whether a disputed trademark infringes upon the prior rights of a third party

In the “散列通” (Sanlietong) trademark administrative case ((2009) Xing Ti Zi No. 1), the Supreme People's Court held that, when a People's Court is reviewing and determining whether the disputed trademark infringes upon the prior rights of a third party pursuant to Article 31 of the Trademark Law, in general, whether prior rights existed before the filing date for the disputed trademark should be taken as the time boundary.

15. Extent to which the use of a trademark during the time a pharmaceutical was listed in a state standard can be considered when determining whether the trademark is well known

In the “21金维他” (21 Super-Vita) trademark administrative case ((2009) Zhi Xing Zi No.12), the Supreme People's Court held that, under specific historical conditions, the names of certain pharmaceuticals were listed in state pharmaceutical standards then, and when such standards were revised, such names ceased to be used as the statutory generic names of the pharmaceuticals; if such a name had not yet in fact constituted a generic name, such name should still be held to have the function of identifying the source of the goods. On this basis, when considering the degree of notoriety of the registered trademark, reference may be made to factors such as the use of, and publicity for, such trademark by the registered trademark holder during the time it was listed in the state pharmaceutical standard.

16. Consideration of the use of a trademark before its registration when determining whether it is well known

In the “中铁” (Zhongtie) trademark administrative case ((2009) Zhi Xing Zi No. 1), the Supreme People's Court held that, when determining whether a trademark is well known, not only should the use of the trademark after its registration be considered, but the continuous use of the trademark before its registration should also be considered.

(2) Trial of civil trademark cases

17. Consideration of the factor that a registered trademark's not having actually been used when determining trademark similarity

In the “红河” (Honghe) trademark infringement case ((2008) Min Ti Zi No.52), the Supreme People's Court defined in greater detail the factors that need to be taken into consideration when determining trademark similarity. This is mainly manifested, when determining trademark similarity for infringement purposes, in not only the requirement to compare the similarity of the composing elements of the relevant trademarks, such as the form, reading and meaning of the word(s)/character(s), but also the requirement to consider whether they are sufficient to cause confusion in the market. Accordingly, a comprehensive determination should be made by considering factors such as the actual use of the relevant trademark, its distinctiveness, whether an illegitimate intent is involved, etc.

18. Consideration of the actual use of a trademark when determining trademark similarity

In the “诸葛酿” (Zhuge Niang) trademark infringement case ((2007) Min San Jian Zi No.37-1), the Supreme People's Court held that, when determining whether trademarks are similar, factors such as actual use of the trademark, particularly prior use, the specific method of use, etc. should be considered.

19. Meaning of trademark use for the purposes of trademark infringement

In the Pfizer 3-dimensional trademark infringement case ((2009) Min Shen Zi No.268), the Supreme People's Court held that uses that do not have the function of identifying the source and the producer may not be recognised as use for trademark purposes, and that such use by a third party does not constitute use of an identical or similar trademark and does not constitute infringement of the exclusive right to use the registered trademark. This judgment indicates that the necessary condition for trademark use for trademark infringement purposes is that it has the function of identifying the source and the producer.

20. Consideration of historical factors when determining legitimate use of a trademark

In the “狗不理” (Goubuli) trademark infringement case ((2008) Min San Jian Zi No. 10-1), the Supreme People's Court held that, when determining whether use of a third party's registered trademark constitutes legitimate use, relevant historical factors should be fully considered and respected. Additionally, necessary and appropriate limitations on the use should be imposed based on the principle of fairness.

21. Determination of the legitimate use of a descriptive trademark

In the “片仔癀” (Pianzihuang) trademark infringement case ((2009) Min Shen Zi No.1310), the Supreme People's Court held that, when a registered trademark is descriptive, if another producer, for the purpose of explaining or objectively describing the features of its goods, indicates the same in good faith within the necessary scope and such use would not cause the relevant public to treat it as a trademark and thereby cause confusion of the source, then such use constitutes legitimate use. In determining whether such use is made in good faith and is necessary, reference can be made to factors such as commercial practice.

22. Effect of a mark user's intent in using and act of using the mark on securing protection of an unregistered trademark

In the Pfizer vs. Dongfang unfair competition and “伟哥” (Weige) unregistered well-known trademark infringement case ((2009) Min Shen Zi No.313), the Supreme People's Court held that, where a plaintiff expressly acknowledges that it never used a certain mark in China, if third parties provide relevant publicity, etc. for that mark, such mark may not be recognised as constituting such plaintiff's unregistered trademark, and even more so its unregistered well-known trademark, as such publicity did not reflect a true intent on the part of the plaintiff to use such mark as a trademark.

IV. Trial of competition cases

23. Relationship between a business operator's illegal business acts and acts of unfair competition for which civil liability is bearable

In the Golden Holiday vs. Xiecheng case appealing a judgment of unfair competition ((2007) Min San Zhong Zi No.2), the Supreme People's Court clarified the relationship among illegal business acts, civil torts and acts of unfair competition. The Supreme People's Court held that, regardless of whether a business operator's engaging in illegal business acts violates relevant laws and regulations on administrative permissions, the issue of whether such business operator should be civilly liable for unfair competition arises only if its acts also violate the Anti-unfair Competition Law and cause harm to the lawful rights and interests of other business operators.

24. Issue of whether the abbreviated name of an enterprise is subject to protection under the anti-unfair competition law

In the “山起” (Shanqi) enterprise name case ((2008) Min Shen Zi No.758), the Supreme People's Court held that, where the abbreviated name of an enterprise or enterprise name has a certain degree of public recognition in the market, is familiar to the relevant public and already has de facto functions as a trade name, it can be deemed an enterprise name and be accorded protection pursuant to Item (3) of Article 5 of the Anti-unfair Competition Law.

25. Basic conditions under which civil liability is bearable for false publicity

In the above mentioned Golden Holiday vs. Xiecheng case appealing a judgment of unfair competition, the Supreme People's Court held that the three basic conditions that are required for a perpetrator of false publicity to be subject to civil liability are that (i) there be competition between the business operators; (ii) the contents of the publicity are sufficient to cause misunderstanding among the relevant public; and (iii) the publicity directly harms business operators. As to the issue of the consequences of causing misunderstanding and direct harm, the consequence of potentially misleading the relevant public that has no connection with the plaintiff cannot simply substitute for the plaintiff's burden of proving that it itself suffered harm.

26. Conditions under which commercial defamation is constituted

In the “Lanwang” egg commercial defamation case ((2009) Min Shen Zi No.508), the Supreme People's Court held that acts of commercial defamation as regulated by the Anti-unfair Competition Law do not require the actor to directly state the name of the specific target of the defamation, but the target at which the commercial defamation is aimed should be identifiable. The Anti-unfair Competition Law does not set limits on the language of commercial defamation, and the defamatory language need not necessarily be emotionally coloured.

V. Trial of intellectual property contract cases

27. Differentiation of technology transfer contracts from co-operative joint venture contracts under which technology is used to obtain an equity stake

In the Yan Chunmei vs. Zhu Guoqing technology transfer contract case ((2009) Min Shen Zi No. 159), the Supreme People's Court applied the first paragraph of Article 125 of the Contract Law and, based on the language used in the contract, relevant provisions of the contract, the objectives of the contract, trading practice and the principle of good faith, determined the true intent of the contract terms under dispute and thereby determined that the nature of the contract in the case was a technology transfer contract involving the advance payment of a preliminary technology transfer fee plus a share of the profits. The Supreme People's Court held that the provisions of the contract on financial monitoring, technical guidance, etc. that were on the surface reminiscent of co-operative joint venture provisions, were in fact subordinated obligations of the technology transferor under the technology transfer contract.

28. Nature and effect of performance contracts executed by performing arts brokerages and performers and the performance arrangement provisions thereof

In the Xiong Wei and Yang Yang vs. Union Culture intellectual property contract case ((2009) Min Shen Zi No.1203), the Supreme People's Court held that the performance contract involved in the case was a type of general contract and that the provisions on the performance arrangements therein were not of an agency or brokerage nature but rather a part of a general contract, and therefore it was not possible to apply, pursuant to the provisions of the Contract Law on agency contracts or brokerage contracts, the “unilateral termination” rules solely to the provisions on performance arrangements.

VI. Bearing of liability for infringement of intellectual property

29. Determination of the measure of damages for patent infringement

In the Hua Jiping vs. Sportin et. al. briefcase patent infringement case ((2007) Min San Zhong Zi No.3), the Supreme People's Court held that, where the sales quantity of the infringing product can be determined, the loss incurred by the infringed party or the benefits derived by the infringer can be calculated based on the profit rate of the patented product or the infringing product, and this can then be used to determine the measure of damages. Where the profit rate of the relevant product is impossible to calculate accurately, the People's Court may determine at its discretion a reasonable profit rate to make the calculation. When determining the measure of damages for intellectual property infringement, the corresponding damages may be determined by considering the extent of the subjective fault of the concerned party and, particularly when it is necessary for the People's Court to determine at its discretion the specific calculation criteria, the extent of the subjective fault of the concerned party should be considered.

30. Determination of the reasonable amount of expenditures incurred in investigating and halting infringement

In the foregoing briefcase patent infringement case, the Supreme People's Court held that all of the various expenditures incurred by the rights holder in investigating and halting infringement can be included in the damages so long as they are reasonable. It is not necessary to have the receipts to document each of these reasonable expenditures; the People's Court may, based on the specific circumstances of the case and the amount of the reasonable expenditures for which there is documentation, comprehensively determine, within the measure of damages for reasonable expenditures claimed by the plaintiff, the measure of damages for reasonable expenditures by taking into account other expenditures that genuinely could have been incurred.

31. Payment of remuneration for use of a musical work adapted from a folk song by a third party

In the above mentioned Dasheng vs. Wang Haicheng et. al. copyright infringement case, the Supreme People's Court held that, where a musical work adapted from a folk song by a third party is used to produce a phonogram and the same is reproduced and distributed, the entire amount of the remuneration may be paid to the person who created the adaptation.

32. Civil liability for infringement of a registered trademark that has not actually been put to commercial use

In the above mentioned “红河” (Honghe) trademark infringement case, the Supreme People's Court held that, where a registered trademark that has not actually been put to commercial use is infringed, the infringer should bear civil liability by halting the infringement and compensating for the reasonable expenditures incurred by the rights holder in halting the infringement, but a judgment may be rendered that does not require the infringer to bear civil liability by compensating for losses.

33. Liability to halt use when an enterprise name in a case is determined to constitute unfair competition

In the Guangdong Xingqun vs. Guangzhou Xingqun unfair competition case ((2008) Min Shen Zi No. 982), the Supreme People's Court held that, where the trade name that has a significant degree of public recognition in the market and is familiar to the relevant public is used in bad faith in an enterprise name of a third party, it is very likely to mislead the relevant public because both names are found in the same area and it is not possible to prevent confusion in the market without halting use of the infringing name, the people's court may directly render a judgment ordering the relevant business operator to bear civil liability by halting use of its enterprise name.

34. Reasonable apportionment of case acceptance fees

In the above mentioned briefcase patent infringement case, the Supreme People's Court held that, in an infringement case, when determining the apportionment of the case acceptance fee, not only should the percentage of the amount claimed by the plaintiff that is upheld be considered, but, more importantly, consideration should be given to the question of whether the infringement asserted by the plaintiff was upheld. Additionally, other factors such as the extent to which the plaintiff's other claims were upheld and the specific exercise of the right of action by any of the parties such as whether or not it was clearly at fault may be considered. The apportionment of case acceptance fees may not be determined solely based on the ratio of the amount claimed by the plaintiff to the amount supported in the judgment.

VII. Evidence in intellectual property actions

35. Evidentiary weight of a copyright vesting certificate issued by a body without copyright certification qualifications, and review and judgement

In the “Prince Hours” copyright infringement case (case no. (2009) Min Shen Zi No.127), the Supreme People's Court held that the Beijing representative office of the Korean Copyright Deliberation and Conciliation Commission can only engage in liaison work related to copyright certification, and does not have the qualifications to substantiate copyright vesting. When confirming the vesting of copyright in foreign works, a comprehensive determination should be made by taking into account lawful publications and other such evidence.

36. Review and determination of the rights entity and facts of the act in cases involving the infringement of rights of phonogram producers

In the Jiahe vs. Tianzhong Wenhua et. al. neighbouring rights infringement case (case no. (2008) Min Shen Zi No.453), the Supreme People's Court held that, based on the two Co-operation Agreements executed with other parties, proof of the security provided for the performers and the lawful publications submitted by the respondent, it could be determined that the respondent enjoyed the rights of a phonogram producer. Whether the respondent has an Audio and Video Product Production Permit does not affect the exercise of its right to institute an action.

37. Review and determination of the genuineness of an exhibit after a concerned party abandons its application for evaluation thereof

In the Shuoxing vs. Longzhong patent licensing and technical service contract case (case no. (2009) Min Shen Zi No.1325), the Supreme People's Court held that, when an exhibit has not been subjected to forensic analysis, its authenticity should still be comprehensively determined based on the provenance, manner of formation, objective state, etc. of the exhibit while taking into account the other exhibits in the case. The authenticity of the exhibit cannot be denied directly based on the fact that the concerned party abandoned its application for evaluation.

VIII. Intellectual property litigation procedures

38. Determination of duplicated lawsuits

In the Golden Holiday vs. Xiecheng case appealing a judgment of unfair competition (case no. (2007) Min San Zhong Zi No.4), the Supreme People's Court held that, when determining whether a lawsuit was a duplicated lawsuit, the key was whether the same party was making the same claims based on the same legal relationship and the same legal facts. Where the lawfulness of an act has been confirmed in an effective judgment/ruling, the continued exploitation after the judgment/ruling has become effective shall still fall within the res judicata of the effective judgment/ruling and be subject to the protection of the law, and thus may not again be made the subject of a lawsuit.

39. Jurisdiction over illegal business acts

In the above mentioned Golden Holiday vs. Xiecheng case appealing a judgment of unfair competition, the Supreme People's Court held that the issue of whether Xiecheng Computer Company was guilty of illegally engaging in value-added telecommunications business was an issue of whether it had violated relevant administrative laws and regulations, and whether it should bear the relevant administrative liability; and, as such, should be investigated, handled and determined by the competent administrative department in accordance with the law, and did not fall within the scope of a civil procedure review by a people's court.

40. Jurisdiction in trade secret infringement cases instituted on the basis of a confidentiality or non-compete clause in an employment contract

In the Chen Jianxin vs. Chemical Engineering Department Nantong Composite Materials Factory et. al. case of opposition to jurisdiction in a trade secrets dispute (case no. (2008) Min San Zhong Zi No.9), the Supreme People's Court held that, when there is a coincidence of liability for breach of contract and liability for infringement, the plaintiff has the option to institute a contract suit or an infringement suit, and the people's court should, in accordance with the law and based on the plaintiff's cause of action, determine whether or not it can accept the case and determine jurisdiction. In a case arising in connection with non-compete provisions between the worker and the employer, if the concerned party asserts its rights on the grounds of breach of contract, the case is a labour dispute and should be resolved by way of a labour dispute resolution procedure in accordance with the law; if the concerned party asserts its rights on the grounds of infringement of trade secrets, the case is an unfair competition dispute and the people's court may accept it directly in accordance with the law.

41. Can a ruling terminating execution of a judgment currently being executed be rendered on the grounds that a patent is declared invalid?

In the Tianjin Higher People's Court request for instructions case (case no. (2009) Min San Ta Zi No.13), the Supreme People's Court in its official reply held that, where a judgment/ruling document that has determined that patent infringement was committed has not been quashed but the patent that the document determines as having been infringed has been declared invalid in accordance with the law, an appropriate interpretation of termination of execution as specified in the Civil Procedure Law may be rendered so that the executing court, when directly rendering a ruling terminating execution pursuant to an application by the concerned party for termination of execution on the grounds that the patent has been completely invalidated, is not required to wait for the original basis for execution to be quashed. Additionally, the termination of execution does not affect the separate application by the defendant under the original judgment of infringement to quash the original judgment of infringement through a trial monitoring procedure.

42. Handling of a new act of exploitation after an infringer modifies his original infringing technical solution

In the Sichuan Higher People's Court case requesting instructions in the Longsheng vs. Jieming Research Institute dispute over confirmation of no patent infringement (case no. (2009) Min San Ta Zi No. 6), the Supreme People's Court in its official reply held that if, after an effective people's court judgment/ruling confirms that a specific product or process infringes another's patent, the actor substantially modifies the relevant infringing technology or design in the product or process, the act of exploiting the modified technology or design does not fall within the scope of the subject of execution of the original effective judgment/ruling. The issue of whether the act of exploitation of the modified technology or design by the actor still constitutes infringement of the patent should be determined through the institution of a separate legal action. If the actor refuses to perform its obligation of halting infringement as determined in an effective judgment/ruling of a people's court and continues its original infringement, the rights holder may, in addition to requesting in accordance with the law that the relevant authority pursue the legal liability of the infringer for refusing to perform the judgment or ruling, institute a separate legal action to pursue the infringer's civil liability for continued infringement.

43. Handling of a case where an application for a retrial is made when the original judgment/ruling was genuinely in error but the parties have reached a settlement agreement

In the Bifengtang vs. Dongyong Matou unfair competition case (case no. (2007) Min San Jian Zi No.21-1), the Supreme People's Court attempted to handle the examination of the application for a retrial in an innovative manner. By additionally rendering, in the ruling permitting the withdrawal of the application for a retrial, a clear review determination as to the errors in the original judgment/ruling in a situation where the original judgment/ruling was genuinely in error but the parties had reached a settlement agreement, it not only avoided the wastefulness inherent in a process of instituting a retrial to correct an erroneous determination in the original judgment/ruling, but also manifested the judicial policy direction of encouraging and facilitating the resolution of civil disputes by parties by way of a settlement.

44. Determination of the validity of agreed jurisdiction clauses in foreign-related contracts

In the MGame vs. Jufeng Net et. al. objection to jurisdiction case in an online game agency and licensing contract dispute (case no. (2009) Min San Zhong Zi No. 4), the Supreme People's Court held that, with respect to the validity of an agreed upon clause on selection of the court with jurisdiction, the judgement should be made based on lex fori. The provision in Article 242 of the Civil Procedure Law whereby the parties “may, by way of a written agreement, select the jurisdiction of the court of the place with a real connection with the dispute” should, based on the legislative background and relevant legislative spirit at the time in question, be understood as an enabling norm rather than a directive norm. When parties involved in a foreign-related contract or foreign-related property rights dispute case agree to select the court with jurisdiction, they should select the court of a place which has a real connection with the dispute, failing which such court selection agreement will be invalid.