ABA Releases Comments on Draft JI on Preservation Measures for IP and Competition Matters

Here are the comments submitted by the sections on Antitrust Law and International Law of the American Bar Association on the draft Judicial Preservation on Action Preservation in IP and Competition Matters that was released by the Supreme People’s Court, about which I previously blogged.

The ABA is to be applauded for its transparency in making these comments widely available, and I personally thank them.  Interestingly, the Intellectual Property Section did not join in these comments.

The Sections’ comments focus on Articles 7 and 8, regarding irreparable damage related to granting a preservation measure (preliminary injunction).  The Sections recommend that Section 8 of the JI should only apply in the context of intellectual property rights disputes and not in context of competition disputes.  Section 8(1) in particular states that irreparable damage is believed to have been caused when the occurrence or continuation of the act of applied-for-preservation will seize market shares of the applicant or force the applicant to operate by using an irreversible low price.  This test, if applied in competition law matters, could be used to serve the interest of individual competitors rather than competition generally.

However, not to be forgotten is that China, and especially foreign litigants in China, need more robust preliminary relief in IP cases.  Infringement of IP rights can cause irreparable harm to patent, trademark, copyright and trade secret owners.  China currently has an overall very low incidence of preliminary injunctions in IP cases (about 1/8000 in 2013).

As Benjamin Bai has noted, it appears that the SPC had taken an interest in making PI’s more readily available even more the promulgation of this draft JI.  However, PI’s still seem to be made sparingly available.  As I noted in an earlier blog:

“The courts accepted 11 cases involving application for preliminary injunctions relating to intellectual property disputes; 77.78% were granted approvals.  One hundred and seventy three applications for pre-trial preservation of evidence were accepted, and 97.63% were granted approval, and 47 applications for pre-trial preservation of property were accepted, and 96.97% approved. 

Of course, one might ask if approval rates for provisional measures are so high, why then are applications for preliminary injunctions only about .01% of the total of disposed cases? The answer seems to be that cases are being rejected in the Case Filing Division of the courts…”

With the courts having recently proposed reforms to the Case Filing Division, it is to be hoped that preliminary injunctions will be made more readily available.

Now why might preliminary injunctions be more necessary for foreigners? Since foreign-related cases are not subject to the statutory time limit of six months for final adjudication of a IP case in China, there is a greater likelihood that relief would be necessary to address irreparable harm that may occur to protracted delays in granting relief.

Of course, both Chinese and domestic litigants, would need preliminary relief to address irreparable harm for newly released content or products under copyright or trademark law, such as in a recent case adjudicated in Guangzhou, involving a new videogame.  Preliminary injunctions can also be critical in addressing imminent  certain deficiencies in China’s IP regime.  For example, a preliminary injunction can help address the harm likely to be caused to a pharmaceutical innovator when an infringing generic infringes an innovator’s pharmaceutical patent, due to the absence of a patent linkage system in China and likely long term harm due to an infringing product having obtained regulatory approval for distribution.

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