In the hot summer, the June General Membership Meeting of Quality Brands Protection Committee of China Association of Enterprises with Foreign Investment (hereinafter referred to as “QBPC”) was held successfully on June 24. Due to the impact of COVID-19, in order to ensure the health and safety of distinguished guests and representatives of member companies, this meeting was held online, with active participation of more than 110 representatives of member companies of QBPC. It’s reported that, procurator Li Weiwei from Supreme People’s Procuratorate the 4th Office, judge Qi Lei from Beijing High Court, and procurator Liu Lina from Beijing Municipal People’s Procuratorate were invited to share their opinions on the focus issues concerned by the members. Steven Wang, Vice Chair of QBPC, presided over this meeting and gave a summary speech at the end, and he pointed out that the three topics discussed at the meeting were quite in line with the strategy for intellectual property rights implemented by the state, made a brief summary of the three topics, specified what the participating representatives of the member companies will harvest from this meeting, and expressed his thanks to the guests and participants for their active involvement. Michael Ding, Chair of QBPC, delivered an opening speech, and expressed his thanks to the members for their active participation in this online meeting, and to these three guests for their topics sharing. With the arrival of the Dragon Boat Festival, he hoped that the contents of this meeting could offer a feast of intellectual property rights protection to the participants. Jack Chang, Vice Chair of QBPC, Michael Yu, Chair of Legal Committee of QBPC, and Michael Ding introduced the three guests respectively before the exchange and sharing session. It’s learned that, this meeting focused on the discussions on Update on The Pilot Program of IPR Holders Exercising Rights in The Proceeding against IP Crimes, sharing on Beijing High Court Determining Damages in IPR Cases, and Protection on the Procedural Rights of the Intellectual Property Right Holder in the Criminal Proceedings, three aspects, and the participating representatives of member companies and the guests had a lively discussion, and expressed that they would benefit a lot from the shared contents in the practical work in the future in succession.
Update on The Pilot Program of IPR Holders Exercising Rights in The Proceedings against IP Crimes
“Maintain a good social and economic order and market competition environment together with the IPR holders” – Li Weiwei
Li Weiwei, senior prosecutor of the third rank from the Forth Office of the Supreme People’s Procuratorate, has a doctorate degree in law and rich experience in law enforcement on intellectual property criminal cases. She has maintained communication and exchange with QBPC for many years as an old friend of QBPC. At the Membership Meeting, Li introduced about updates on the pilot program of IPR holders exercising rights in the proceeding against IP crimes (hereinafter referred to as “pilot program”) to the member representatives.
“Before the pilot program, Shanghai Procuratorial Departments explored and developed the related work earliest. In May 2018, all the procuratorate branches and primary procuratorates regarding intellectual property rights fully implemented the work of notification at litigation rights and obligations for IPR holders. In 2019, Beijing Municipal People's Procuratorate formulated the Guidelines of Beijing Procuratorates to Lawfully Guarantee the IPR Holders’ Right of Criminal Procedure to require delivering the Notification of Rights and Obligations to IPR holders in the stage of review and prosecution, and hearing their opinions in accordance with law, so as to guarantee their rights to know and participate in litigation.” According to Li, “With the support of QBPC Chair Michael Ding, and suggestions and promotion of QBPC Vice Chair Jack Chang, on the basis of successful practice praised a lot by the IPR right holders in Beijing and Shanghai, and considering the proportion, representativeness and coverage of cases at different places, the Supreme People’s Procuratorate (hereinafter referred to as “SPP”) selected Beijing, Shanghai, Jiangsu, Zhejiang, Fujian, and Guangdong provinces (municipalities) as pilot regions, to start the one-year pilot program from December 2019. SPP attaches high attention to this pilot program and has written it in the work report of Supreme People’s Procuratorate at NPC and CPPCC 2020, receiving the wide recognition and attention from all sectors of society.”
When the pilot program developed to May, in the six provinces (municipalities) involved, a total of 1,614 criminal cases of intellectual property infringement were accepted, and 2,409 IPR holders were informed, with the informing rate up to more than 90%. The pilot program has obviously improved internal vitality of participation, significantly increased participation in litigation and initiative to safeguard rights for right holders. The program has provided them more sufficient procedural protection, and effectively saved the costs of rights safeguarding. Through the pilot program, the IPR holders could take part in some litigious activities like public hearings and court trials regarding with confession and punishment, review and arrest, and review and prosecution to express their opinions and claim their lawful rights more adequately. Moreover, some IPR holders helped to ascertain the criminal facts to improve the quality of case handling. In some cases, the IPR right holders supplemented the evidence proving rights authorization and economic loss in a timely manner. Some right holders explained the involved specialized problems and expressed their comments on the advice from technical experts and the judicial expertise. In other cases, owing of the participation of IPR holders, the results of investigation were further expanded, which effectively avoided the criminal suspects’ escaping from criminal prosecution.
In the half a year, the procuratorates in all the pilot provinces made a careful deployment and promoted the related work solidly and orderly and have already achieved great effects. Since the beginning of work, the procuratorates in the pilot provinces have established a specific leading group respectively, with the department head serving as the group leader and the post procurators as the group members, and a personal especially responsible for this work. They configure the corresponding instruments and strengthen the technical guarantee. During the pilot work, the procuratorates have acted and adapted to local circumstances to make continuous innovations in combination with the practical experience. For example, Shanghai expands the scope of notification cases to include cases involving competition between crimes of trademark infringement and illegal operation; the informing period was advanced to the stage of review and arrest in Shanghai, Zhejiang and other areas ; during the epidemic, many local procuratorates have innovated informing ways, and the IPR holders are informed through Online meeting when face-to-face informing was hard to realize.
Afterwards, Li also shared some problems existing during the implementation of pilot program in different places, mainly including low feedback rate of IPR holders, obstructed communication channel of IPR holders and the system itself to be improved. “Aiming to solve these problems, the SPP has conducted analysis and provided professional guidance and encourage to establish IPR holders’ information database, expand the range of informed cases , broaden the informing objects, add the receipt page in the notification form, and inform the standard requirements of providing evidence to the IRP holders while sending notification of rights and obligations. The measures above mentioned help the IRP holders to know, feedback and participate more effectively.” Li said, “at the beginning of next month, the SPP will organize the training of this pilot program for national excellent prosecutors good at cases of intellectual property rights to lay a better foundation for the development of this work.”
Meanwhile, Li hoped that QBPC members continue to strongly support this pilot program. When receiving the written or oral notification from procuratorates, please feedback actively and promptly. And it is suggested to actively follow and inquire the notification information announced via the official websites of provincial procuratorates, and then take the initiative to contact with the procuratorates. While exercising their own right of action fully, the right holders also are encouraged to assist actively the procuratorates to allege the intellectual property crimes. The law enforcement departments and the IPR holders should work together to maintain a good social and economic order and market competition environment.
QBPC Vice Chair Jack Chang hosted this part. He thanked Li‘s best sharings, and also expressed that we would have deeper communication and cooperation with the procuratorate of pilot provinces and other provinces on this pilot work with the assistance of the SPP. Li also said that the feedbacks and suggestions collected at the meeting had been recorded for the followup communication and promotion.
Beijing High Court Determining Damages in IPR Cases
Qi Lei, a judge from Beijing High Court (hereinafter referred to as “BHC”), is the second guest to deliver a speech. As more and more IPR holders take the means of civil action to safeguard their lawful rights and interests, problems like burden of proof, determination of damages, and criteria for statutory damages in judicial adjudications have become more prominent. With a practical attitude to solve concrete problems, BHC issued the Guidelines of the Beijing High Court on Determination of Damages in Cases Involving Intellectual Property Infringement and Unfair Competition as well as the Criteria for Statutory Damages (hereinafter referred to as “Guidelines”) in April this year. In the process of researching and finalizing the Guidelines, QBPC members actively cooperated with BHC, and put forward many carefully thought out, valuable opinions and suggestions. Some suggestions were incorporated into the Guidelines. For this, Judge Qi expressed her great appreciation to QBPC members.
To solve hard problems like “difficulty of providing evidence”, “low reward” and “long adjudication cycle” encountered in the intellectual property rights protection, Judge Qi held that, we should take a combination of actions, and the solutions should be solid and multidimensional. We should make breakthroughs from the following three dimensions: detailing the rules of evidence, emphasizing the market value, and improving the way of judgment. The Guidelines focused on the solution to “low reward”, however, it didn’t just improve the compensation amount, instead, it promoted good interaction between the right holders and the judicial system by encouraging parties to come forward with evidence, distributing the burden of proof reasonably, and punishing the obstruction of providing evidence.
The Guidelines stipulated the criteria for statutory damages for cases involving copyright infringement, trademark infringement , and unfair completion. According to Judge Qi, these criteria were established on the basis of more than 20,000 copies of nationwide judgments collected manually by the BHC judges and their assistants, and were processed through big data analysis and horizontal comparison with the compensation criteria of higher people’s courts in other provinces and municipalities. The criteria established a baseline for compensation and based on circumstances unique to each case, add to or subtract from that baseline. The criteria also allowed room for punitive damages.
According to the Guidelines, the order of applying the methods of determining damages was from the IPR holders’ losses, infringers’ benefits, licensing fees, to the last one, the statutory damages. The parties also may reach an agreement on compensation on their own. In selecting methods for determining damages, Judge Qi explained that, “the IPR holders may select the methods independently and flexibly, and it could be single-choice or multiple choices; under each choice, the right holder may put forward multiple calculation formulas.”
In the Guidelines, the IPR holders are encouraged to try to offer evidence on the chosen method for determining damages and the claimed amount with best efforts. The IPR holders also have some flexibility in providing such evidence. For example, the compensation amount may be the accurate calculation given by the IPR holders, but may also be an estimate or within a reasonable range. According to Judge Qi, punishing behaviors that obstructing the flow of evidence applies to all types of intellectual property cases. When key evidence is in the hands of infringers, and the right holder has already provided the preliminary evidence, the right holder can reduce its burden of proof. Correspondingly, the Guidelines also put more requirements on the judges. The judges should set forth in the judgment of the reasoning behind how the method of determining damages was selected, how the specific amount was decided and how the relevant evidence provided by the parties were evaluated. Near the end, Judge Qi also explained the details of various methods for determining damages, issues related to punitive damages, and other problems.
At the end of the speech, Judge Qi answered questions raised by QBPC members on compensation determination method, sequence of selecting such methods and evidence required. This part of the meeting was hosted by Michael Yu (Unilever), Chair of QBPC Legal Committee.
Protection on the Procedural Rights of the Intellectual Property Right Holder in the Criminal Proceedings
Liu Lina, Prosecutor of the Fourth Procuratorial Department of Beijing Municipal People’s Procuratorate, made a speech on the “Protection on the Procedural Rights of the Intellectual Property Right Holder in the Criminal Proceedings”. She introduced that the procuratorates in Beijing attached great importance to protecting the litigation rights of intellectual property right holders according to laws. As early as 2017, procuratorates in Beijing issued the Notice on Protecting Criminal Procedure Rights of Intellectual Property Right Holders to stipulate the protection of the right to know, the right to participate in litigation and many other rights in twelve fields; after two years of accumulation, the Guidelines for Protecting Criminal Procedure Rights of Intellectual Property Right Holders was formulated in April 2019. With the progress of the relevant pilot work on informing the right holders of criminal procedure rights launched by the Supreme People's Procuratorate (hereinafter referred to as “SPP”), many regions have also adopted relevant advanced practices. Prosecutor Liu Lina organized some contents of the Reference to Criminal Trial and typical cases of intellectual property issued by the SPP, exchanged personal opinions on how the right holders can better exercise their litigation rights, and stated that all opinions are for research reference only and cannot be used as the basis for case handling. Her speech product, and fix such information in the form of legal evidence. She also supplemented with her private opinions: in practice, there are some professional issues that need to be identified, but due to the business secrets and other objective factors, it is really difficult for the expertise organization or people with professional knowledge to provide opinions, so the case handling organ can require the right holder to issue opinions and provide a relatively clear judgment basis according to the actual situation. For the intermediate market price of the infringed product, the right holder can actively provide the market sales contract, sales documents, market price of the infringed product within the infringing period, and the case handling institution can consider whether to accept such information according to other evidences of the case.
Secondly, how to protect rights in second-hand refurbishment cases. There are mainly four circumstances: 1: Old A is sold in the name of Old B; 2. Old A is sold in the name of new A after simple processing; 3. Old A is sold in the name of new A after careful processing; 4. Old A is still sold in the name of second-hand A after processing. Prosecutor Liu Lina introduced the relevant case judgments respectively, and believed that according to the right exhaustion principle of trademark rights, not all cases constitute a crime, the main judgment is based on whether it causes the consumers to confuse the source and whether it is a reproduction or remanufacturing behavior. In addition, she also introduced the standards for determining the crime of producing and selling fake and inferior products where competition and cooperation might exist. Based on the provisions of the Criminal Law and the relevant judicial interpretations, including adulteration, passing fake for genuine, selling seconds at best quality prices, and selling unqualified products as qualified products, she made a detailed introduction on the first article of the Interpretations of Specific Application Issues about Handling Criminal Cases of Producing and Selling Fake and Inferior Products enacted by the SPC and the SPP in 2001. Finally, from the perspective of protecting rights, Prosecutor Liu Lina suggested that the right holder should collect and provide the following explanations and corresponding evidence materials as far as possible: firstly, the specific difference between the infringing product and the infringed product, including but not limited to the appearance difference; secondly, the influence of the difference between the two products on the product quality, for example, the infringed product has a life cycle, while the infringing product has been used as an old product for a long time, and may cause hazard when used as a new product.
Thirdly, she introduced some professional case handling experience of procuratorates in Beijing. Through sharing three cases of typical intellectual property right protection cases handled by procuratorates across the country, she introduced the procuratorates performed their rights and obligations according to laws during the review and prosecution proceeding, actively listened to the opinions of right-holding companies, encouraged the right holders to apply for court hearings, explored public review of cases without prosecution, and fully protected the business secrets from being disclosed.
Finally, Prosecutor Liu Lina expressed her hope that “the intellectual property industry association should further play their roles and guarantee the right holders could exercise their criminal procedural rights according to laws through timely sharing the contact information of right holders and jointly holding legal publicity, exchanges and training activities similar to this event.”
In the Q&A session, Prosecutor Liu answered the questions from Michael Yu (Unilever), Chair of QBPC Legal Committee and Jack Chang( L Brands), Vice Chair of QBPC, and said that the procuratorates in Beijing would conduct more exchange activities online and offline in the future. The speech in this part of the General Meeting was hosted by Michael Ding (ABB), Chair of QBPC. The host introduced the theme of the guest speech at the beginning of this session, and pointed out: “The professional construction of procuratorates in Beijing is obvious to all, and QBPC and its members fully feel the professional level of the prosecutor”; after the speech, he also made a summary to proceed with the General Meeting smoothly.
“Update on The Pilot Program of IPR Holders Exercising Rights in The Proceeding against IP Crimes”, “Beijing High Court Determining Damages in IPR Cases” and “Protection on the Procedural Rights of the Intellectual Property Right Holder in the Criminal Proceedings” are three issues of great concern of the member companies of QBPC recently. The contents of this General Meeting are closely centered on the above three themes, and after the speaking guests shared the great contents, the representatives of member companies of QBPC further participated in the discussion in the Q&A interaction session and obtained “practical information”.
This General Meeting not only enabled the representatives of member companies to learn about the importance of the pilot program of IPR holders exercising rights in the proceeding against IP crimes, promoted their active participation, but also helped the representatives of member companies understand how to provide evidences for a specific compensation method in civil litigation, how to select a suitable compensation method and other practical work; at the same time, it introduced the guidance issued by the Beijing High Court in depth, and proposed that the judge should specifically explain the reasons for accepting the compensation method and amount selected by the right holder in the judgment document; through recognized the relevant materials issued by the right holders could be used as evidences, and put forward the suggestions such as encouraging the right holders to actively provide case clues and evidence materials, so that the right holders could better participate in the litigation process. Three guests answered some questions in Q&A sessions, which also gave much useful information to the participants and provided good guidance for the representatives of member enterprises to carry out intellectual property right protection in the future.