Provisions on the Establishment of a High-Level Intellectual Property Rights Protection System in the Pudong New Area of Shanghai (Mainland China)

Di Wu

On October 28, 2021, the Standing Committee of the Shanghai Municipal People’s Congress announced that, pursuant to the basic principles of law and administrative regulations and the current state of the Pudong New Area, the 36th Session of the 15th Standing Committee of the Shanghai Municipal People’s Congress has adopted the Provisions on the Establishment of a High-Level Intellectual Property Rights Protection System in the Shanghai Pudong New Area of Shanghai (the “Provisions”), which will go into effect on December 1, 2021, to implement the requirements for establishing a high-level intellectual property rights protection system in the Pudong New Area, strengthen the overall protection of intellectual property rights (“IPRs”), and take the lead in building an international IPR protection high ground with a complete institution, a robust system, and a superior environment.  The specific important contents are provided below:

1. More detailed provisions regarding certain issues arising from intellectual property disputes

(1) Units and individuals that retain professional institutions to conduct a patent practice investigation on whether its products or technologies are infringing on the patent of others and prepare a report on the results of such investigation when practicing a patent, before entering a foreign market, or going public may cite them as reference materials in determining if infringement was intentional.

(2) In an administrative procedure for enforcement against copyright infringement involving public interest, a respondent claiming that it is not liable for infringement shall prove that it has obtained the permission of the rights holder or there exists a circumstance where the use of such copyrighted material is allowed without the permission of the rights holder pursuant to law.  If such proof cannot be provided or if there is insufficient evidence, this may be deemed to constitute copyright infringement.

(3) The organizer of an exhibition event shall not allow exhibitors who have not submitted a commitment on IPR compliance or proof of relevant IPR ownership to participate in the exhibition.  If an item on exhibit is subject to an infringement complaint lodged by the rights holder, the organizer shall immediately require the exhibitor to provide proof of non-infringement within a limited period of time; and if it is unable to do so, the organizer shall immediately take certain measures, such as covering up or removing the item from exhibition or disqualifying the exhibitor.  If an exhibition event organizer violates the requirements, a warning will be issued and a fine will be imposed.

2. Stipulations on the infringement compensation amounts and forms of penalties for several types of infringement

In the event of a serious intentional infringement of IPRs, the people’s court may set the compensation amount between one to five times of the actual loss suffered by the rights holder as a result of the infringement, the unjust benefits obtained by the infringer, license fees or royalties.  In case of particularly serious infringement, the compensation awarded may be increased to five to ten times.  If the relevant amounts are difficult to calculate, the people’s court shall, according to the circumstances of the infringement, award a compensation of up to RMB10 million.

If the same patent right is infringed again after a patent infringement judicial decision or administrative ruling has entered into effect, the illegal proceeds shall be confiscated, and a fine equivalent to one to five times the amount of the illegal proceeds shall be imposed.  If the illegal proceeds are less than RMB50,000 or are difficult to calculate, a fine of RMB50,000 to RMB250,000 shall be imposed.

A person who was subject to a judicial decision or administrative penalty for trade secret misapporpriation again engages in trade secret misappropriation within two years of the effective date of the judicial decision or administrative penalty shall face aggaravated penalties.