Civil Law Reform and IP in China

China is now actively considering drafting a new civil code to replace the General Principles of the Civil Law (1986).

As was recently posted by Yee Wah Chin on the Chinalaw listserve, a draft of the proposed Civil Law has been made available by the China Civil Law Research Society中国民法学研究会for public comment.   This appears to be an academic draft; its relationship to the ongoing NPC process for civil law reform is unclear.  Nonetheless, if implemented, it contains several areas that could be of great importance to intellectual property protection in China, including antitrust-related aspects of intellectual property protection.  Here are some highlights:

Art. 184: The statute of limitations for civil actions is extended to three years from two years.

Comment: China has one of the shortest statute of limitations in the world for patent disputes, at two years.  Certain forms of infringement actions, such as patent and trade secret disputes, can require extensive research and investment.  A longer statute of limitations is welcome, with two years remaining far too short.  In my opinion, the short statute of limitations can lead to situations where infringers are reluctant to seek settlements.

Art 182: Agreements to extend statutes of limitation are invalid.

Comment: Coupled with the short statute of limitation in China, the proposed blanket invalidity of SOL stand-still agreements forces a licensor to litigate rather than seek settlement of its licensing/infringement dispute.    Alternatively, it may mean that a licensor will litigate its rights where claims are not time barred, such as in the United States.    Such provisions, in my opinion, can also undercut the ability of licensors to implement F/RAND obligations.

Article 108: Digital Online Property is protected

Comment: This provision will certainly be a benefit to online gaming companies.

Article 212: Abusive Litigation is prohibited

Comment: This provision states “Harming others for the purpose of restricting competition or illegal exercise of civil rights, shall bear corresponding civil liability.” The relationship of this provision with the Antimonopoly Law, as well as the provisions of the patent law dealing with enforcement of subsequently invalidated patents (Art. 47) is unclear to me. The General Principles of the Civil Code has a more general provision based on harming the property of others which might also apply to abusive litigation (“Citizens legal persons if they have mistakenly harmed the state, or collective properties or harmed individuals properties or health, should bear civil liability.”  Art. 106).

Article 114: Generally provides for protection of intellectual property Under the Civil Law

Comment: As with the General Principles of the Civil Law there is general treatment of intellectual property.   This provision states that “inventions, utility models, designs, works, trademarks, trade secrets, and other intellectual achievements, commercial signs and information are subjects of the civil law.”

Article 10: Courts cannot refuse civil cases

In line with current reforms to the case acceptance practices,  the proposed law mandates that courts not refuse acceptance or decision on cases on the basis that there is no law, regulation, law or judicial interpretation on the subject matter of the case.

Article 12: Relationship between codified law and common law

The civil code also provides that codified law trumps “common law.”  This would appear to implicitly recognize efforts to develop case law within China to fill-in gaps.

Based upon a recent trip I made to China (April 2015), there is considerable interest by intellectual property academics and the intellectual property judiciary in a new civil code.    Many of China’s leading IP jurists have a background in general civil law.  General civil law principles have also had significant impacts on Chinese IP development.  General civil legal concepts can have profound impacts on intellectual property law.  The Tort Law (2009), for example, brought “notice and takedown” concepts (such as are found in the US Digital Millennium Copyright Act), forward into all tort actions (Art. 36), including trademark, patent and other areas.  The latest draft of China’s proposed patent law amendments now includes this concept.

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