Opinion: New landscape for IP prosecution

June 01, 2012 | BY

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The 2011 IP Case Report from the Supreme Court reinforces its commitment to standardising the country's IP practices

Among the 34 guiding precedents, 22 of these are dedicated to judiciary review of decisions made by the Trademark Reexamination and Appeal Board (TRAB) and Patent Review Board (PRB). Specifically, the precedents reshape how lower courts adjudicate IP cases. In particular, Beijing Higher People's Court and Beijing No 1 Intermediate Court have to follow new practices in reviewing patent validity and trademark examination decisions from the TRAB and PRB.

Patents

Claim amendments during patent prosecution have always been a difficult task. Any attempt to broaden the scope results in a rejection from the patent examiner at the State Intellectual Property Office (SIPO). Applicants had to incorporate additional elements in the claims by copying terms from the specification verbatim to avoid objections. The Supreme People's Court (SPC) disagreed with SIPO's practice and has reversed claim amendments citing the Seiko Epson v PRB case, holding that patent applicants are entitled to either narrow or broaden the scope for claims.

The Court further allows patentees greater flexibility with claim amendments during invalidation proceedings, if they do not broaden the scope of granted claims. In the past, patentees have deleted or incorporated dependent claims into independent claims.

Trademarks

The Report sets a precedent for judges, who can now review evidence previously unseen by the Trademark Office (TMO) or TRAB. Courts were reluctant to review new evidence that had not been examined by the offices. Judges strongly believed they were only allowed to review the facts on which the TMO or TRAB's decisions were based. This shows the SPC's understanding of long delays brand owners suffered during opposition or cancellation proceedings.

A case questioning whether the mark Best Buy can be registered saw the SPC hold that the presence of a descriptive element does not necessarily negate the distinctiveness of the mark. The mark may still be registered, if the relevant public can recognise the source of the goods. The Supreme Court is emphasising the possibility of confusion in reviewing trademark cases with this precedent.

The SPC also stressed through at least two cases that the TMO's Classification Chart could not be the sole basis for determining the similarity of goods. Rather the likelihood of confusion is the key principal judges should apply when determining similarity.

It is disappointing though that the Report fails to condemn bad faith filings. Chinese courts will thus continue in their reluctance to hold applicants accountable for obvious bad faith filings.

Trade secrets

As companies find themselves in greater competition with each other, the Report considers the increase in trade secrets cases. Courts and legal professionals found it troublesome to prove trade secrets existed and any infringement. By listing four cases as precedents, the SPC now guides lower courts on some of the critical issues.

Under Chinese law, a plaintiff must prove it took measures to protect its confidential information to qualify for trade secret protection. The SPC stated these measures must show the plaintiff's intention to protect confidential information. A non-compete agreement containing no obligation with a confidentiality clause does not qualify.

One of the most interesting parts of the Report is that the SPC has laid out a presumption for trade secret infringement. If the defendant has access to confidential information and later develops a product using it, and if the defendant fails to prove the product development results from independent research, the courts may find there is trade secret infringement based on common experience.

IP litigation procedures

The SPC officially endorses non-infringement declaratory actions for all kinds of IP claims. Declaratory judgments for patent and trademark cases have been accepted in judiciary practice, but this expands declaratory judgements to copyright and other types of IP cases. The Report also clarifies how to handle claims arising from infringement and how to handle jurisdiction issues for exportation.

The Report demonstrates an admirable move towards establishing uniform standards in IP cases. The IP Tribunal of the Supreme Court has a fast growing docket after it allowed more IP cases for review at the highest adjudication body. The IP Tribunal concluded review of about 420 cases in 2011, a 30% increase from 2010. The Report is no longer a summary of the SPC's achievements, but shows an understanding of its role to change the legal landscape. The precedential route offered will soon penetrate courts nationwide as judges catch up with the latest trends in IP practices.

By He Jing, ZY Partners, Beijing

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