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China’s Supreme People’s Court Selects Top 10 Significant IP Cases of 2014

CNLantBEChina’s Supreme People’s Court (“SPC“) has published its list of the “top 10 significant IP cases” for 2014, which it has done since 2007. The list includes 1 patent case, 2 trademark cases, 2 copyright cases, 2 unfair competition cases, 1 antitrust case, 1 franchise case, and 1 integrated circuit design case. Although not strictly binding precedent under China’s civil law system, these cases act as judicial guidance for People’s Courts at all levels.

In this post, we briefly summarize the SPC’s top 10 significant IP cases.

1. Tencent Technology (Shenzhen) Co., Ltd. et al. v.  Beijing Qihoo Technology Ltd. et al. (Unfair Competition, the SPC)

Tencent claimed Qihoo committed unfair competition by developing a software product specifically targeting Tencent’s “QQ” software, one of the most popular instant messaging applications in China. Qihoo’s software allegedly enhanced computer security by searching for QQ and cleaning QQ of advertisements. The SPC affirmed the lower court’s judgment in favor of Tencent, holding that Qihoo’s software undermined the safety and integrity of Tencent’s QQ application in violation of the general principle of good faith and well-recognized business ethics in the internet industry under Article 2 of China’s Anti-Unfair Competition Law.

2. Beijing Qihoo Technology Ltd. et al. v. Tencent Technology (Shenzhen) Co., Ltd. et al. (Antitrust, the SPC)

Qihoo claimed Tencent abused its dominant position in the instant messaging market through restrictive dealing and tying in violation of China’s Antimonopoly Law. The SPC affirmed the lower court’s judgment in favor of Tencent, holding that Tencent’s acts did not constitute abuse of dominant market position. The SPC defined the “relevant market” as instant messaging services in mainland China, including those for PC and mobile devices as well as integrated and non-integrated services, and found that Tencent did not have a dominant market position in that market and had not engaged in conduct constituting abuse of dominant market position.

3. Nanjing Baoqing Yinlou Chain Development Co., Ltd., et al. v. Nanjing Baoqing Yinlou Jewelry Co., Ltd., et al. (Franchise Agreement, Jiangsu Higher People’s Court)

The plaintiff franchisee sought a court declaration that certain franchise agreements concerning the brand “Baoqing (宝庆)” could not be repudiated by the defendant franchisor. The Jiangsu Higher People’s Court affirmed the lower court’s judgment in favor of the franchisee, holding that the franchisor did not have sufficient reasons to repudiate the franchise agreements. Although the franchisee opened several chain stores without defendant’s authorization in breach of the franchise agreement, such breach did not severely harm the reputation of the brand or frustrate the main purpose of the franchisor, which was to promote the name of the brand.

4. Beijing Quna Information Technology Co., Ltd. v. Guangzhou Quna  Information Technology Co., Ltd. (Unfair Competition, Guangdong Higher People’s Court)

Beijing Quna (“趣拿”) claimed Guangzhou Quna (“去哪”) used the names of Beijing Quna’s well-known services in violation of China’s Anti-Unfair Competition Law. The Guangdong Higher People’s Court partially affirmed the lower court’s ruling, holding that “Qunar(去哪儿),””Qunar website (去哪儿网)” and “Qunar.com” are names of well-known services offered by Beijing Quna and that Guangzhou Quna’s use of “Quna” in its company name constituted unfair competition. However, the Guangdong Higher People’s Court also held that Guangzhou Quna could continue using the domain names “quna.com,” “123quna.com” and “mquna.com” since they had registered those domain names two years earlier than Beijing Quna’s website “qunar.com” and have legitimate reasons for registering and using the domain names.  Guangzhou Quna was required to add distinctive marks on their websites to distinguish themselves from Beijing Quna.

5. HiTrend Technology (Shanghai) Co., Ltd. v. Shenzhen Rui Neng Wei Technology Co., Ltd. et al. (Integrated Circuit Design, Shanghai Higher People’s Court)

HiTrend is the owner of a layout design for an integrated circuit named ATT7021AU. Rui Neng Wei was found to manufacture and sell integrated circuits incorporating parts of the ATT7021AU design, and HiTrend sued for infringement of its proprietary right to the design. The Shanghai Higher People’s Court found that certain design features in the accused product were substantially similar with corresponding parts of the ATT7021AU design and affirmed the lower court’s judgment of infringement. Notably, the court held that any original part of a layout design is protected regardless of the relative portion of the part to the entire design or the role it played.

6. Shenzhen Tencent Computer Systems Co., Ltd. v. Guangzhou NetEase Computer System Co., Ltd. et al. (Copyright Infringement, Wuhan Intermediate People’s Court)

Tencent applied to the Wuhan Intermediate People’s Court for a preliminary injunction ordering NetEase to cease disseminating certain songs via its online platform “NetEase Cloud Music.” Tencent claimed ownership of the right of dissemination via information network and that NetEase infringed this copyright. The court ordered a preliminary injunction, holding that NetEase’s dissemination of the musical works likely infringed Tencent’s copyright. The court found that Tencent would suffer irreparable harm if NetEase’s dissemination was not immediately stopped because Tencent would lose market share to NetEase.

7. Suzhou Daoxiangcun Food Industry Co., Ltd. v. Trademark Review and Adjudication Board  of AIC (Third Party: Beijing Daoxiangcun Food Co., Ltd.) (Administrative Trademark Opposition, Beijing Higher People’s Court)

Third party, Beijing Daoxiangcun, filed an opposition against Suzhou Daoxiangcun’s trademark application for “CN7.1” (“Junior Mark“) based on its prior mark “CN7.2‘ (“Senior Mark“) registered on similar goods. The TRAB sided with Beijing Daoxiangcun and rejected registration of the Junior Mark. On appeal, Suzhou Daoxiangcun argued that the Junior Mark was an extension of its marks “CN7.3” (“Senior DXC Marks“), which were registered earlier than the Senior Mark. The Beijing Higher People’s Court held that the Junior Mark was similar to the Senior Mark and should not be approved for registration. The court noted the Junior Mark had obvious differences from the Senior DXC Marks and the fame of the Senior DXC Marks were not proved; thus, the Junior Mark cannot be deemed an extension of the Senior DXC Marks.

8. Shanghai Bifengtang Food Co., Ltd. v. Trademark Review & Adjudication Board of AIC (Third Party: Shanghai Panshi Yizhou Restaurant Management Co., Ltd.) (Administrative Trademark Cancellation, the SPC)

Shanghai Bifengtang filed a cancellation action against the third party’s registration of the mark “CN8” (“Disputed Mark”) for various dining services. Shanghai Bifengtang claimed “避风塘” (“Bi Feng Tang”) is a generic name for a type of cuisine and the Disputed Mark lacks distinctiveness when used for dining services. Shanghai Bifengtang also claimed the Disputed Mark infringed its prior right in the trade name “避风塘.” The TRAB sided with the registrant of the Disputed Mark, and Shanghai Bifengtang appealed. Ultimately, the SPC upheld registration of the Disputed Mark, holding that the owner of a trade name cannot prohibit others’ legitimate use of the trade name as its literal meaning if the use will not confuse or mislead the relevant public. The SPC found the Disputed Mark will not confuse the relevant public since the Chinese characters “竹家莊” (“Zhu Jia Zhuang”) and the bamboo device in the Disputed Mark are distinctive enough to identify the source of the services.

9. Beijing Yadong Biological Pharmacy Co., Ltd. v. Patent Re-examination Board of SIPO, (Third Party: Shandong Huayang Pharmaceutical Co., Ltd.) (Administrative Patent Invalidation, the SPC)

Beijing Yadong is the patentee of an invention patent entitled “A pharmaceutical composition and a preparation method thereof for the treatment of proliferative breast diseases” (“Disputed Patent”). Third party, Shandong Huayang, filed an invalidation action against the Disputed Patent, which resulted in the PRB invalidating the patent. On appeal, the SPC affirmed the Beijing Higher People’s Court’s finding that the Disputed Patent was invalid. The SPC found the patent lacked inventiveness since the improvement resulting from the distinguishing feature of omitting the step of “drying under reduced pressure” was foreseeable and did not surpass the reasonable expectation of a skilled person in the art.

10. In re: ZHOU Zhiquan, KOU Yujie et al. (Criminal Copyright Infringement, Beijing No.1 Intermediate People’s Court)

Defendant ZHOU Zhiquan operated an online platform called “HDstar forum,” which hosted a large number of copyrighted movies, TV shows and musical works for download by more than 26,000 registered members. He profited from collecting registration fees and VIP membership fees. Defendant KOU Yujie copied copyrighted movies to more than 4,000 hard drives for sale on his Taobao.com e-commerce store. The Beijing No.1 Intermediate People’s Court affirmed the lower court’s ruling and held that the defendants committed the crime of copyright infringement due to the serious nature of their infringement.

In addition to the “Top 10 Significant IP Cases”, the Supreme People’s Court has published its lists of “Top 10 Innovative IP Cases” and “Top 50 Typical IP Case” for 2014. Stay tuned for our upcoming post on the top 10 innovative IP cases.