On April 20, 2023, China’s Supreme People’s Court (SPC) released the Top 10 Intellectual Property Cases in Chinese Courts in 2022 (2022年中国法院10大知识产权案件). The cases include the first patent linkage case, trademark infringement, unfair competition in search engine optimization, criminal counterfeiting of registered trademarks, non-fungible tokens (NFTs) and others. The list of cases along with an explanation of each as provided by the SPC follow.
1. The case involving copyright infringement disputes involving “Big Head Son”
[Case Summary] In 1994, entrusted by the director of cartoons for the 95th edition of “Big Head Son and Little Head Daddy” Liu Zedai created images of “Big Head Son,” “Little Head Daddy,” and “Apron Mom,” but the two parties did not sign any written agreement on the copyright ownership of the work. The cast and crew list of the 95th version of the cartoon stated: “Character design: Liu Zedai.” In 2012, Mr. Liu transferred all copyrights to three works, including “Big Head Son”, to Mr. Hong. In 2013, Liu Zedai and CCTV Animation Group Co., Ltd. (hereinafter referred to as “CCTV Animation Company”) entered into a commission creation agreement and a supplementary agreement, agreeing that CCTV Animation Company owned all intellectual property rights except the right of authorship for the three models including “Big Head Son.” Later, Liu Zedai signed a statement confirming the above facts, and said that signing the transfer contract with Hong Liang was misleading. CCTV Animation also submitted to the court a written statement signed by Liu Zedai in 1995, which confirmed the ownership of the three images to CCTV. Hangzhou Datouzi Culture Development Co., Ltd. sued, claiming that CCTV Animation Company had infringed upon its copyright. The court of the first instance held that, because both parties had not concluded a contract to stipulate the ownership of the copyright, Liu Zedai enjoyed the copyright of the three works of fine art. Datouzi obtained the copyright of the aforesaid works according to the assignment contract, and CCTV-Animation Company shall bear the tort liability if its unauthorized use constituted an infringement. CCTV Animation Company’s appeal and petition for retrial were rejected and then appealed to the Supreme People’s Court. The Supreme People’s Court amended the judgment after bringing the case up for trial, and determined that the works involved in this case were commissioned, and the copyright and other intellectual property rights other than the right of authorship were owned by CCTV Animation Co., Ltd. In the judgment, the Supreme People’s Court dismissed all the claims of Datouzi.
[Typical Significance] This case clarifies the standards for judging commissioned works, legal-person works and works of special service, as well as the methods for analyzing and ascertaining ownership evidence, provides a reference for the protection of rights and interests of copyright owners of works under special historical backgrounds, and is of positive significance in stimulating cultural innovation and creation, supporting the wide dissemination of excellent cultural works, and promoting the high quality development of the cultural industry.
2. Drug Patent Linkage Case
[Case Summary] Chugai Pharmaceutical Co., Ltd. is the right holder of the invention patent entitled “ED-71 preparation,” and is also the holder of the marketing authorization of the marketed original drug “Idecalcitol Soft Capsule.” Chugai Pharmaceutical Co., Ltd. registered the above-mentioned drugs and patents on the Chinese market drug patent information registration platform, and claimed that its original drug was related to claims 1-7 of the patent involved. Wenzhou Haihe Pharmaceutical Co., Ltd. applied for the registration of the generic drug “Idecalcitol Soft Capsules”, and made a 4.2 statement that the generic drug does not fall within the scope of protection of the relevant patent rights. Chugai Pharmaceutical Co., Ltd. filed a lawsuit with the Beijing Intellectual Property Court in accordance with Article 76 of the “Patent Law of the People’s Republic of China” requesting to confirm that the generic drug technical solution applied for registration by Haihe Company fell within the scope of protection of the patent right involved. The court of first instance held that the technical solution of the generic drug involved in the case did not fall within the protection scope of the patent right involved in the case, so it rejected Chugai Pharmaceutical Co., Ltd.’s claim. Chugai Pharmaceutical Co., Ltd. appealed. The Supreme People’s Court held in the second instance that when judging whether the technical solution of a generic drug falls within the scope of patent protection, it should in principle be compared and judged on the basis of the application materials of the generic drug applicant. After comparison, the technical solution of the generic drug involved was determined to not fall into the scope of patent protection and Court dismissed the appeal and upheld the original judgment.
[Typical Significance] This case is the first drug patent linkage litigation case in the country. The “Patent Law of the People’s Republic of China” was amended in 2020 to formally establish China’s drug patent linkage system. In this judgment, the legislative spirit was implemented, and relevant issues concerning the drug patent linkage system that emerged in practice were explored in a beneficial manner.
3. Antitrust case involving market dominance
4. Case involving trademark infringement dispute of “green pepper”
[Case Summary] Shanghai Wancuitang Catering Management Co., Ltd. is the right holder of No. 12046607 registered trademark , No. 17320763 registered trademark and No. 23986528 registered trademark , and the approved service items include class No. 43 hotels, restaurants, etc., and all within the validity period. On May 21, 2021, Wancuitang discovered that Wenjiang WuApo Qinghuajiaoyu Hot Pot Restaurant used the words “Qinghuajiaoyu Hotpot” [meaning green pepper fish hot pot] on the shop sign in combination with WuApo Hotpot Restaurant to infringe its registered trademarks and sued, requesting an injunction and damages for economic losses and reasonable expenses totaling 50,000 RMB. The court of first instance held that WuApo’s alleged actions constituted trademark infringement, and ordered WuApo to stop the infringement and compensate a total of 30,000 RMB for economic losses and reasonable expenses. WuApo appealed. The second instance of the Sichuan Provincial Higher People’s Court held that green peppercorns are widely known as a seasoning for Sichuan cuisine. Due to the natural relationship between the restaurant, restaurant service and the food seasonings, the trademark involved in this case and the name of the food containing the words “Green Pepper” were mixed in identification, which greatly reduced the distinctiveness of the trademark involved in this case. The weak distinctiveness of the trademark involved in this case determines that the scope of protection shall not be too wide, otherwise it will impede the legitimate use of other market players and affect the market order of fair competition. In this case, the Chinese characters for “Green Pepper” in the shop prospectus of WuApo were an objective description of the feature of “Green Pepper” in the seasoning of the caipin fish hotpot it provided, which was not used prominently and had no intention of freeriding on the trademark involved in this case of Wancuitang, and would not easily cause confusion or misidentification among the relevant public. WuApo Hotpot Store’s alleged acts were due to legitimate use and did not constitute trademark infringement. Therefore, the Court rendered a judgment to revoke the judgment of the first instance and dismiss all of Wancuitang’s claims.
[Typical Significance] The second-instance judgment of this case clarified the criteria for determining the proper use of trademarks, and stated the principle of “good faith” that “the rights have boundaries and the exercise must be based on good faith.” The second-instance judgment fully respects common sense and protects the lawful rights and interests of honest and properly operated small and tiny enterprises and the market order of fair competition according to the law.
5. Dispute over interference with search engine unfair competition
[Case Summary] Beijing Baidu Netcom Technology Co., Ltd. is the operator of Baidu Search Engine. Suzhou Splash Push Network Technology Co., Ltd. generates a large number of advertising pages related to the search keywords commonly used by the client industry by leasing a secondary directory of high-weight websites and using technical means, and links these pages to the secondary catalog of high-weight websites. When users search for these keywords on search engines such as Baidu, the advertising pages of the promoted company will occupy one or more of the first pages of search results. Baidu Company filed a lawsuit with the Intermediate People’s Court of Suzhou City, Jiangsu Province against Flash Push on the ground that the aforesaid acts committed by Flash Push constituted unfair competition. The court of first instance held that: Flash Push carried out the business of “Wancebabing” [search engine optimization] by attaching itself to Baidu search engine, intentionally used technical means to disrupt the normal order of Baidu search engine’s inclusion and ranking according to keywords, increased the cost of obtaining user information, disrupted the market competition order and the Internet information service management order, violated the principle of good faith and recognized business ethics, and constituted unfair competition. Flash Push Company was ordered to cease the unfair competition act involved in this case, and compensate for economic losses and reasonable expenditures totaling 2,753,000 RMB. After the judgment of first instance was rendered, none of the parties appealed.
[Typical Significance] The judgment of this case effectively curbed the acts of interfering with and manipulating the ranking of natural search results of search engines by technical means, was conducive to protecting the lawful rights and interests of network users, maintained a healthy and orderly search ecology and an internet order of fair competition, and highlighted the strength and determination of the people’s courts in creating a clean cyberspace.
6. Infringement case of NFT digital works of “Fat Tiger Vaccine”
[Case Summary] Shenzhen Qice Cultural Creative Co., Ltd. was authorized by Ma Qianli, a cartoonist, to enjoy the exclusive property right to the copyright of the series of works of “I Am Not a Fat Tiger.” Qice found that users of a platform operated by Hangzhou Yuanzhou Technology Co., Ltd. had created and released a “Fat Tiger Vaccine” NFT digital work, which was identical to Ma Qianli’s illustrations on Weibo, and even carried the corresponding watermark. Qice then filed a lawsuit with the Hangzhou Internet Court on the ground that Yuanzhou had infringed upon its right to network dissemination of information. The court of first instance held that the trading of NFT digital works was consistent with the characteristics of dissemination on information network, and in consideration of trading modes, technical features, platform control capability, and profit-making modes, among others, the platform involved in this case should establish an effective intellectual property review mechanism, and ruled that Yuanzhou Company was infringing. Yuanzhou appealed. The Intermediate People’s Court of Hangzhou City, Zhejiang Province, held in a second instance that the release of NFT digital works involved information network dissemination. Based on factors such as the generation and transfer of corresponding property rights and possible infringement consequences associated with NFT digital work transaction network services, such service providers should review the legitimacy of the source of NFT digital works and confirm that the creators of NFT digital works have the appropriate rights. In this case, Yuanzhou failed to fulfill the corresponding duty of care, so the appeal was rejected and the original judgment was upheld.
[Typical Significance] This case is a typical case involving the liability of an NFT digital works trading platform. The judgment actively explores the legal attributes of NFT digital works with blockchain as the underlying core technology, the definition of behavior under the transaction mode, the attributes of the trading platform, and the identification of responsibilities. The new ecology of digital works and the promotion of the development of the digital industry are of enlightening significance.
7. Administrative Punishment and Administrative Reconsideration Involving “Longjing Tea” Trademark
【Case Summary】 Zhejiang Provincial Agricultural Technology Promotion Center is the trademark owner of the “tea” trademark, and the approved in class 30. Tewei Tea Catering Management (Shanghai) Co., Ltd. imports tea from Xumu Company, which is not involved in the case, and sells tea with the logos of “Longjing Tea” and “Shengxi Longjing Tea,” and affixed a Chinese label with the words Longjing Tea on the product during the customs entry process. Shanghai Pudong New Area Intellectual Property Office determined that the above-mentioned behavior of Tewei constituted trademark infringement, decided to confiscate 1,422 boxes of tea marked with the logos of “Shengxi Longjing Tea” and “Longjing Tea” and imposed a fine of more than 540,000 RMB. Tewei applied for administrative reconsideration to the People’s Government of Pudong New Area, Shanghai. The People’s Government of Pudong New Area, Shanghai believes that the reason for the reconsideration proposed by Tewei is groundless in law, and upholds the above-mentioned administrative punishment decision. Tewei appealed to the People’s Court of Pudong New District, Shanghai. The court of first instance held that the administrative penalty decision was legal, the penalty result was not inappropriate, and the administrative reconsideration decision was legal, so it ruled to reject the lawsuit of Tewei. Tewei filed an appeal. The second instance of the Shanghai Intellectual Property Court held that the trademark involved, as a geographical indication certification trademark, has the function of marking the origin of the product to indicate that the product has a specific quality determined by factors such as the natural conditions, craftsmanship, and production methods of the origin. Tewei did not provide sufficient evidence to prove that its products originated from the planting area required by the certification trademark involved in the case, and its use of the alleged infringing logo easily misled the public on the specific quality of the product such as the origin of the product, which constituted a trademark infringement. Tewei not only sold infringing goods, but also used other people’s registered trademarks without permission, and the amount of sold infringing products was relatively large. The fine amount imposed by the administrative agency was reasonable according to the specific circumstances of the case, so the judgment was rejected. On appeal, the original judgment was upheld.
[Typical Significance] The judgment of this case, which supervises and supports the administration by law of administrative organs, and promotes the unification of administrative law enforcement standards for the protection of geographical indications with the adjudicative standards, is of positive significance to strengthening the judicial protection of geographical indications, regulating business operators’ correct use of commercial signs containing the words “geographical indication”, and maintaining consumers’ interests.
8. A dispute over the license fee for the temporary protection period of the new plant variety “Dumi No. 5”
[Case Summary] “Dumi No. 5” is a new plant variety authorized by the Ministry of Agriculture and Rural Affairs. Jingyan Yinong (Shouguang) Seed Industry Technology Co., Ltd. believes that during the provisional protection period from the date of the announcement of passing the preliminary examination of the new plant variety right to the date of the grant of the variety right, Xinjiang Chang Feng Agricultural Science and Technology Development Co., Ltd. produced and sold “Dumi No. 5” seeds under the name of “Shijimi No. 25”. Jingyan Shouguang Company sued at the Intellectual Property Court of Hainan Free Trade Port, requesting that Changfeng Company stop production and sales and compensate economic losses of 3 million RMB. The court of first instance held that the appraisal unilaterally entrusted by the variety right owner before the lawsuit was not a judicially entrusted appraisal, but after strict examination of the sample source, appraisal qualification, applicable appraisal rules and testing methods, the probative force of the evidence was confirmed, “Shijimi No. 25” and “Du Mi No. 5” were identified as the same variety. Changfeng Company, without permission, produced, propagated, and sold “Shijimi No. 25” which is the same variety as “Dumi No. 5” during the provisional protection period of the new plant variety “Dumi No. 5”, and should pay to Beijing Yanshouguang Company a licensing fee for the provisional protection period. Comprehensively considering factors such as variety type, production and sales time, sales unit price, and quantity, it was judged that Changfeng Company should pay a total of 350,000 RMB in provisional protection period license fees and reasonable expenses. After the judgment of the first instance, neither party appealed.
[Typical Significance] This case is a dispute over royalties for a provisional protection period. After the judgment came into effect, the parties in the related case reached a royalty payment agreement and a variety rights license agreement, which achieved positive results. This case strengthens the protection of new plant variety rights holders and promotes independent innovation in the melon seed industry.
9. Unfair Competition Dispute Case of Generating False Screenshots in Social Media Software
[Case Summary] Shenzhen Tencent Computer System Co., Ltd. developed and operated the software “WeChat” and “QQ”. Chenzhou Qixiao Network Technology Co., Ltd. and Zhien Commodity Information Consulting Service Department of Yuelu District, Changsha City (hereinafter referred to as the two defendants) jointly developed and operated two software named the “WeChat Business Screenshot King” (later renamed “WeChat Business Planet”) and “Mars Beautification. ” These software provide materials and templates that are completely consistent with the interfaces, icons, and emoticons of the “WeChat” and “QQ” software, enabling users to edit and generate interfaces with various usage scenarios of the “WeChat” and “QQ” software including false screenshots of the dialogs, red envelopes, money transfers, wallets, etc. The “Le Store” application platform operated by Beijing Magic Workshop Technology Co., Ltd. provides download services for the accused software. Tencent believed that the three defendants operations constituted unfair competition, and sued at the People’s Court of Haidian District, Beijing. The court of first instance held that the two defendants took advantage of the extensive user base of WeChat and QQ software and the real and honest social ecology they built, and took advantage of the psychology of some users intending to obtain improper benefits through fraud and cheating, so that the accused software gained a large number of users and made high profits accordingly. The two defendants provided their users with important tools for fraud and cheating, provided conditions for fraudulent deceit and deception, and violated the principle of good faith and business ethics. The accused behavior has directly impacted the operating foundation of WeChat and QQ based on real social interaction, and easily caused consumers to suffer damage due to false screenshots, disrupted the order of market competition, and constituted unfair competition. As a network service provider, Beijing Magic Works Technology Co., Ltd. has fulfilled its reasonable duty of care and should not bear relevant legal responsibilities. The court of first instance ordered the two defendants to compensate Tencent for economic losses and reasonable expenses totaling 5,284,520 RMB based on factors such as the number of users of the accused software and the transaction amount. The two defendants filed an appeal. The second-instance judgment of the Beijing Intellectual Property Court rejected the appeal and upheld the original judgment.
[Typical Significance] This case is a typical case of the people’s court in cracking down on the unfair competition of online “black and gray industry.” It plays a role in promoting the formation of a fair competitive market environment.
10. The crime of counterfeiting registered trademarks by Luo XX, Ma XX and eight others
[Summary of the Case] The owner of the trademark “AIRPODS” and “AIRPODS PRO” is Apple Inc., and the products approved for use include earphones, etc. Defendants Luo XX, Ma XX, etc. produced Bluetooth headsets that counterfeited Apple’s registered trademark and sold them for profit. Regardless of whether the Bluetooth earphones and packaging involved are printed with Apple’s registered trademark, after connecting to the Apple mobile phone via Bluetooth, a pop-up window will display “Airpods” or “Airpods Pro.” The People’s Court of Longgang District, Shenzhen City, Guangdong Province held in the first instance that the defendants had committed the crime of counterfeiting registered trademarks, and sentenced defendant Luo XX and others to two to six years in prison and a fine. After the judgment of the first instance was pronounced, some defendants appealed. The Shenzhen Intermediate People’s Court of Guangdong Province also found out in the second instance that the revenue of the infringing headphones sold in this case should be adjusted and determined to be 22,106,296.08 RMB. The court of second instance held that the “use” in the crime of counterfeiting a registered trademark is not limited to the use of a trademark in tangible carriers such as commodities, commodity packaging or containers, as long as it is used to identify the source of commodities in commercial activities, it is a trademark use. Consumers of Bluetooth headsets search for devices through Bluetooth pairing, and the identification of the source of Bluetooth headset products mainly realizes the function of Bluetooth headsets by finding the correct pairing item for the device. During the pairing and activation process of the infringing Bluetooth headset produced by the defendant connected to the mobile phone, the “Airpods” and “Airpods Pro” trademarks were displayed to consumers in the pop-up window of the Apple mobile phone, which led the consumers to wrongly believe that the products they used were manufactured by Apple, and caused confusion and misidentification on the source of such products, thus committing the crime of counterfeiting a registered trademark. The Court of Second Instance rendered a ruling to dismiss the appeal and affirm the original judgment.
[Typical Significance] This case is a typical case of using Internet of Things technology to implement new forms of trademark crimes in the digital economy environment. The judgment of this case grasped the essence of trademark crimes, correctly defined trademark use behaviors, and effectively cracked down on crimes of infringement of intellectual property rights using new technologies.
The original text is available here (Chinese only).