In response to intellectual property rights (IPR) infringement, many rights holders look to the courts to request the granting of interim injunctions. Indeed, whether in China or in other countries, interim injunctions are usually able to quickly and effectively suspend infringing acts, therefore providing rights holders with a prompt and timely judicial procedural remedy. However, this often involves a balance between the interests of multiple parties, such as the legitimate claims of rights holders, the compliance requirements of platform operators, and the fairness and efficiency of the judiciary.
How to find a common denominator that protects IP rights and maintains the balance of the online ecosystem is an important proposition for the judiciary, rights holders, and platforms to explore and balance their interrelated needs and interests.
1. Legal framework and judicial practice of interim injunction (Act Preservation Order) in China IP
Legal framework
Within Chinese law, litigation injunctions include pre-litigation, in-litigation, and permanent injunctions. The corresponding legal terms for pre-litigation or in-litigation injunctions in China are "act preservation orders", with permanent injunctions signifying final court orders to cease infringement permanently.
A number of laws, including the Civil Procedure Law, the Patent Law, the Trademark Law and the Copyright Law, as well as relevant judicial interpretations, form the legal framework for act preservation orders.
The "Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in Cases Involving the Review of Act Preservation in Intellectual Property Disputes" (hereinafter referred to as the "Provisions") in 2019, set out in detail the factors that courts should consider when reviewing applications for act preservation order in IP dispute cases, thereby providing specific guidance for issuing the said order in IP cases. The introduction of the Provisions has provided rights holders with a clearer procedural path for safeguarding their IP rights.
Judicial practice
Given that act preservation orders are temporary relief measures that do not undergo rigorous and complete substantive examination procedures, therefore in the context of Chinese law, they only aim at infringing acts that must be ceased immediately.
Chinese courts generally approach act preservation requests positively but cautiously, and due to the unavoidable inherent tension between the two, the weight of the coordination between the two is dynamically changing.
Based on our observations, the courts that predominantly handle and grant such act preservation applications in IP and unfair competition cases are primarily located in economically prosperous regions of China, for example, Guangdong, Beijing, Shanghai, and Zhejiang. The majority of cases pertain to disputes related to unfair competition, while patent disputes are comparatively less prevalent. These disputes primarily arise within the internet industry, which places significant emphasis on timely resolutions.
Simultaneously, there has been a noticeable upward trend in recent years regarding both the frequency of rights holders filing applications for act preservations orders in IP cases and the success rate of such applications being granted by the courts.
2. Recent developments of interim injunctions (Act Preservation Order) in China IP
Judicial injunction
In December 2023, the Hangzhou Intermediate People's Court issued a ruling (2023 ZHE 01 MINCHU No.1411), which extensively discussed the significant functions of act preservation order in preventing and prohibiting infringement before substantive judgments take effect.
Notably, prior to the hearing on the application for the order, the defendant had temporarily removed the infringing content from the relevant application (app) and argued that the infringement had ceased. Consequently, the defendant argued that there was no necessity for granting the order. However, the court held that the significance of an act preservation order lies in both temporarily suspending the infringing act and preventing its continuation or reoccurrence before the substantive judgment takes effect.
Considering the possibility that the defendant could reinstate the infringing functionality by relaunching the app, which would not involve significant technical difficulties or time costs, the court determined that there was a realistic possibility of the defendant reengaging in the alleged infringing act. Thus, the court found it necessary to grant the act preservation order to prevent the potential expansion of damages resulting from the alleged infringement.
Administrative injunction
On June 24, 2021, a local Administration for Market Regulation (AMR) in Shenzhen issued the first administrative injunction in China.
In this administrative case, the patentee, a Canadian citizen, alleged that the respondent was selling "bathtub chairs" infringing his design patent on a famous e-platform. The patentee requested an immediate order to cease manufacturing, selling, and offering for sale of the infringing products.
The AMR, based on the existing evidence provided by the applicant, as well as the preliminary investigation carried out by itself, issued an administrative injunction ex officio, ordering the respondent to cease the infringing acts instantly. The AMR, in the subsequent substantive proceedings, determined in the administrative ruling that the respondent had infringed the applicant's design patent.
3. Implications for IP owners in China
(1) Expedite the cessation of infringing activities
The development of act preservation orders provides rights holders with the means to swiftly undertake measures to halt ongoing acts of IP infringement. Through the pursuit of act preservation orders or administrative interim injunctions, rights holders can effectively mitigate the perpetuation of harm to their interests resulting from IP infringement.
It is of importance for rights holders to promptly collaborate with proficient legal practitioners to comprehend the requisites and protocols governing the application process for act preservation orders, so as to be able to react quickly in the event of an IP infringement.
(2) Proper management of relevant evidence
Applications for act preservation orders commonly necessitate rights holders to furnish substantial evidence and information substantiating their claims. Consequently, it is imperative for rights holders to adeptly gather and preserve pertinent evidence, encompassing IP certificates such as patents, trademarks, or copyrights, alongside evidence attesting to the popularity of the brand, sales data pertaining to the purportedly infringing products, communication records with online platforms and/or alleged infringers, and other relevant documentation.
The meticulous preservation of evidence plays a pivotal role in fortifying the grounds for the application and enhancing the prospects of a favourable outcome.
(3) Strengthening IP management and monitoring
Rights holders should bolster their management and surveillance of IP rights. This entails conducting regular assessments and updates of their IPR portfolio to ensure the efficacy and breadth of protection.
Additionally, proactive market monitoring should be undertaken, coupled with fostering close relationships with pertinent industries and organisations to acquire timely intelligence on infringements and facilitate swift response measures to safeguard the IP rights.
Based on the foregoing, the development of interim injunction (in various forms) in China has bestowed upon IP owners a more formidable instrument for asserting their IP rights. Looking forward, it is foreseeable that the utilisation of interim injunction as a deterrent against online IP infringements will persistently progress in China. As a result, we shall remain diligently attentive to the forthcoming trends and fluctuations within the intricate framework of IP protection in China.
For more information, or to discuss any of the points raised in this article, contact Ivy Liang.
Footnotes
[] The Provisions set out below factors that should be satisfied for granting an act preservation order:
(a) whether the applicant's request has factual basis and legal basis (i.e. the factor of likelihood of success on the merits);
(b) whether the failure to grant such an order will cause the legitimate rights and interests of the applicant to suffer irreparable damage or will cause difficulty in enforcement of the court's substantive ruling (i.e. the factor or irrevocable damage);
(c) whether the damage suffered by the applicant as a result of the failure to enforce the order will exceed the damage suffered by the respondent as a result of enforcement of order (i.e. the factor of balance of interests);
(d) whether the enforcement of order will compromise public interest (i.e. the factor of public interest); and,
(e) any other factors to be considered.