Annual Review of Intellectual Property Legislation and Judicial Practices in 2024

• The draft amendment to the 2019 Anti-Unfair Competition Law addresses emerging issues arising from societal developments
• A number of guidelines were also issued to progress the implementation of the fourth amendment to the Patent Law of 2020
• The Supreme People’s Court's Interpretation on Several Issues Concerning the Application of Law in the Trial of Civil Cases Involving Disputes over Monopolistic Acts had a profound impact on competition law and should bring more clarity in monopoly-related litigation
• Key cases included Geely trade secret misappropriation and three generative AI and copyright cases

The year 2024 marked a year of incremental refinement rather than sweeping reforms in China’s intellectual property (IP) legal framework. While the large-scale amendments that marked previous years gave way to a more focused approach, policymakers and judicial authorities prioritized clarifying existing laws, issuing judicial interpretations, and addressing emerging challenges through landmark rulings. These developments reflect a continued effort to adapt IP protections to evolving technological and market realities.


Key Legislative Moments


A pivotal development in 2024 was the release of the draft amendment to the 2019 Anti-Unfair Competition Law (反不正当竞争法) (the “2024 Draft Anti-Unfair Competition Law Amendment”), which the Standing Committee of the National People’s Congress published for public consultation on December 25, 2024. Besides stricter fines for commercial bribery and new provisions aimed at regulating modern unfair competition tactics, such as the use of competitors’ social media accounts, app names, logos, and even the practice of setting competitors’ tradenames as search keywords, the 2024 Draft Anti-Unfair Competition Law Amendment increases the regulatory burden on service providers upon unfair competition activities. The draft amendment requires service providers to explicitly outline fair competition rules in user agreements and to adopt measures to curb unfair practices. A notable addition prohibits platforms from forcing sellers to price below cost, a direct response to algorithmic price-dumping strategies. Furthermore, service providers holding dominant positions in the market will be prohibited from imposing “one-out-of-two” exclusivity agreements, a practice deemed anti-competitive. This draft amendment reflects a slight shift towards strengthening the accountability of online platforms and ensuring that they act in line with fair competition principles.

“As AI continues to develop, further revisions and refinements to these guidelines will likely be necessary to ensure that the legal system adequately addresses the complexities of AI-driven innovation”

Another very significant development in 2024 was the continued implementation of the fourth amendment to the Patent Law (专利法), which had been enacted in 2020. The China National Intellectual Property Administration (“CNIPA”) issued several new guidelines designed to streamline patent processes, including detailed provisions on patent application, protection, and industrialization. Among the most notable of these is the Measures for Administrative Adjudication and Mediation of Patent Disputes (专利纠纷行政裁决和调解办法), which came into effect on February 1, 2025. These measures clarify the specific procedures for patent administrative disputes, infringement determinations, the patent linkage system, and guidelines concerning significant patent infringement disputes. This provides a clear pathway for right owners regarding where and how to resolve their disputes in virtue of administrative forces, ensuring more efficient and transparent dispute resolution. Additionally, the Guidance on AI-Related Invention Patent Applications (Trial Implementation) (人工智能相关发明专利申请指引(试行) ) issued in 2024 provides critical direction on patenting inventions generated with the assistance of AI. It clarifies key issues including the exclusion of AI from being named as a legal inventor, requirements for disclosing AI-assisted inventions, and the criteria for evaluating the inventiveness of AI-generated innovations. While still provisional, this guidance demonstrates China’s acknowledgment of the need and actions to adapt its patent framework to the emerging realities of AI technology. The guidelines also offer examples of AI-related inventions that illustrate how the rules may apply in specific contexts. As AI continues to develop, further revisions and refinements to these guidelines will likely be necessary to ensure that the legal system adequately addresses the complexities of AI-driven innovation.

Another important piece of legislation issued in 2024 was the Interpretation on Several Issues Concerning Application of the Law in the Trial of Civil Monopoly Dispute Cases (最高人民法院关于审理垄断民事纠纷案件适用法律若干问题的解释), issued by the Supreme People’s Court (“SPC”) and effective from July 1, 2024. This interpretation has had a profound impact on competition law. It is designed to provide greater clarity in monopoly-related litigation following the Anti-Monopoly Law (2022 Amendment) (反垄断法( 2022年修訂 ) ). Procedurally, the interpretation illuminates jurisdiction rules, mandates the consolidation of cases involving uniform monopolistic conduct, and clarifies evidentiary burdens. Substantively, it introduces concepts such as “one economic entity” and “agency”, outlining standards for identifying monopoly behaviors, such as horizontal concerted actions and reverse payment agreements. The interpretation also addresses the two-sided nature of vertical monopoly agreements, as well as the criteria for determining dominant market position and for presuming joint dominant market position. Additionally, the interpretation outlines the conditions under which abuse of a dominant position can be identified, including practices such as unfairly high price, refusal to deal, and restriction of transactions. By providing clear guidance on these issues, the interpretation plays a critical role in shaping the future of monopoly litigation in China and will undoubtedly influence how courts adjudicate and how practitioners defend such cases moving forward.


Key Judicial Precedents


The Geely Trade Secret Case

The Geely case was a landmark SPC decision in the trade secret case between Geely Automobile Holdings Co. Ltd. (Geely Automobile) and WM Motor Technology Group Co. Ltd. (WM Motor) (Case No: (2023) Zui Gao Fa Zhi Min Zhong No. 1590 ). The decision attracted widespread attention as soon as it was made public. The SPC handed down a record damages award of RMB 640 million (RMB 230 million in compensatory damages along with RMB 410 million in punitive damages), making this China’s largest trade secret award to date, breaking the previous high by more than three times.

The case arose when Geely accused WM Motor of misappropriating its trade secrets related to electric vehicle chassis designs. Geely alleged that several former employees who had joined WM Motor had used proprietary information from Geely to file patent applications for electric vehicle chassis designs. WM Motor, which had been established shortly after these employees (more than 40) left Geely, was able to introduce its own electric vehicles to the market in a remarkably short time (two years). Geely Automobile sought RMB 2.1 billion in damages, and the Shanghai High Court, in the first instance, awarded only RMB 5 million in damages, despite finding that Geely’s trade secrets had been infringed.

Using past Chinese court decisions as a guide, the first instance court’s damage award is not surprising, as some of Geely Automobile’s asserted trade secrets can be observed/measured from the Geely vehicles and the drawings submitted by WM Motors showed some differences compared with those from Geely Automobile. But the SPC brushed aside these factors that would typically support lowering the damage award. Instead, the SPC held that infringement should be assessed based on a “holistic analysis and comprehensive judgment” approach and pointed to the egregiousness of WM motor’s behaviors, especially how WM Motor could produce its vehicles in such an unreasonable short of time lacking legitimate technical source.

In handing down the ground-breaking damages award, the SPC derived WM’s profits using benchmark margins from competitors (Li Auto and Xpeng: 10.6%-17.9%) and applied a 10% “technical contribution rate” to the chassis design. In addition, punitive damages (set at twice the amount of compensatory damages) were justified by WM’s blatant misconduct taking the fact that WM Motor’s infringement significantly saved its R&D expenses and expedited the process for WM to place its vehicles on the market in damage determination.

The Geely case has been widely viewed as a milestone in the development of trade secret law in China, particularly in relation to the determination of damages. The ruling signals heightened judicial willingness to protect trade secrets and impose deterrent-level damages, particularly in high-tech industries.

“The intersection of AI and copyright law raises fundamental questions about authorship, originality, and responsibility, questions that courts around the world are still grappling with”

The Generative AI and Copyright Cases

The issue of copyright protection for works created by generative AI tools has become one of the most contentious topics in intellectual property law in recent years, particularly since the launch of ChatGPT at the end of 2022. The intersection of AI and copyright law raises fundamental questions about authorship, originality, and responsibility, questions that courts around the world are still grappling with.

One of the landmark cases in China was Li v. Liu (Case No.: (2023) Jing 0491 Min Chu No. 11279), in which the Beijing Internet Court , at the end of 2023, ruled in favor of the plaintiff, Li, who had used the AI tool “Stable Diffusion” to generate an image. The court recognized that the image, though generated by the AI tool, could be recognized as a copyrightable work based on the fact that the plaintiff, an individual, had made significant intellectual contributions in terms of using the prompts to design the figure and how the figure present in the image, choosing the prompt, arranging the sequence of prompts, setting parameters, and constantly adding the prompts and adjusting the parameters. The court held that the image reflects the plaintiff’s choice and arrangement as well as the aesthetic choice and personality judgment and could be protected as copyrightable work.

Despite an extensive body of Chinese laws which recognizes that copyrightable works can only be created by humans and the primary criterion for copyright eligibility is that the work must reflect the creator’s “personal intellectual effort,” this case was notable because it extended the concept of authorship to the user of the AI tool, recognizing that while the AI itself lacks legal personality and free will, the user’s creative input in selecting prompts and shaping the generated content could amount to a form of intellectual creation. Thus, the court concluded that the user, Li, could be considered the author of the work and was entitled to assert copyright over the image.

The Guangzhou Intellectual Property Court dealt with another crucial aspect of AI-generated content: the responsibility of AI platform operators for copyright infringement, in Shanghai Character License Administrative Co., Ltd. v. Guangzhou Nianguang Internet Technology Co., Ltd. (Case No.: (2024) Yue 0192 Min Chu No.113) (the Guangzhou Ultraman Case). The case involved Nianguang, the operator of the AI platform Tab (alias), which allowed users to generate images based on input prompts. The plaintiff, Shanghai Character License, argued that Tab had generated images that were substantially similar to its copyrighted Ultraman character, a famous Japanese television and film series. The images created by users of Tab using prompts such as “generate an Ultraman” closely resembled the original character designs, leading to claims of copyright infringement.

“The court’s decision was based on the operator’s failure to implement adequate keyword filtering mechanisms to prevent the generation of infringing content”

The Guangzhou Intellectual Property Court ruled that the operator of the platform, Nianguang, was liable for copyright infringement. The court’s decision was based on the operator’s failure to implement adequate keyword filtering mechanisms to prevent the generation of infringing content. The court found that Nianguang, as the platform operator, had the ability and responsibility to prevent users from generating such infringing images, and therefore could not escape liability by simply arguing that the infringement was the result of user input. This decision suggests that platforms offering generative AI tools may be held liable for the output produced through their services, especially if they fail to take reasonable steps to prevent the creation of infringing works.

In contrast, another similar case involving the Ultraman character, Shanghai Character License Administrative Co., Ltd. v. Hangzhou Small Design Internet Co, Ltd. (Case No: Second Instance: (2024) Zhe 01 Min Zhong No. 10332, First Instance: (2024) Zhe 0192 Min Chu No. 1587) (the Hangzhou Ultraman Case), drew a different outcome. In this case, the Hangzhou Internet Court ruled that the Tentacle AI’s operator was not directly liable for the copyright infringement. Instead, the court found that the platform provider had only a contributory liability due to its failure to take sufficient action to prevent infringement.

“The Hangzhou Internet Court emphasized the importance of differentiating between a platform that directly generates content and one that merely hosts content created by users”

The difference as compared with the Guangzhou Ultraman Case is that, in this case, the images on Tentacle AI are generated based on user-uploaded models: the Ultraman images were generated after users uploaded their own images, chose a basic model and adjusted the parameters. In other words, the Tentacle AI platform generated images after other users had typed a prompt and applied the Ultraman model. The Hangzhou Internet Court emphasized the importance of differentiating between a platform that directly generates content and one that merely hosts content created by users. The court also reinforced the principle that platform operators have a duty to take proactive steps to avoid facilitating infringement, even if they are not directly responsible for the content itself.

In addition, the Hangzhou Internet Court refuted the plaintiff’s unfair competition claim (violation of the principle of good faith and business ethics) holding that the purpose of the defendant’s business model is to improve efficiency and to serve the users’ creations as well as the neutrality of the technique itself. The Hangzhou Intermediate Court sustained the Hangzhou Internet Court’s decision and further clarified that an AI service provider is different from an internet service provider, and that the determination of an AI service provider’s responsibilities should be based on whether the provider violates commonly accepted standards.

The contrasting decisions in the Guangzhou Ultraman and Hangzhou Ultraman cases underscore the ongoing debate over the responsibilities of AI platform operators and the scope of liability for copyright infringement. In particular, the Guangzhou court’s decision reflects a more expansive interpretation of platform responsibility, suggesting that operators may be directly liable if the infringing content is output by the AI tool. On the other hand, the Hangzhou court’s ruling highlights a more nuanced approach, suggesting that platform liability may depend on the nature of the platform’s involvement in the creation and dissemination of infringing content. The two Ultraman cases reflect ongoing debates over balancing innovation with IP enforcement, and delivery of the SPC’s opinion on this issue will be eagerly anticipated.


Inevitable Further Advancement

The legislative and judicial developments in 2024 demonstrate China’s continued efforts to refine its intellectual property framework in response to technological advancements. It is certainly possible that some unresolved or overlooked issues may have profound implications on the development of IP law, and balancing innovation with robust protections will remain a priority.