Nguyen: IP lessons from China

Nguyen

By Xuan-Thao Nguyen

Several years ago, China surpassed the United States in the number of trademark registrations issued per year. China has already become a very important stakeholder in the intellectual property area. This article provides a glimpse into how China has tackled the remedies in IP infringement.

Remedies in Chinese intellectual property law provide an apology-plus model. Under the Chinese Civil Code, trademark statute, copyright statute, and anti-unfair competition statute, courts issue injunctions against the wrongdoer and order the wrongdoer to make payments in the form of compensation or accounting of profits. In addition, courts instruct the wrongdoer to make a public apology in a newspaper or trade publication to eliminate any ill effects from the wrongdoer’s conduct. The content of the apology must be pre-approved by the court prior to publication. If the wrongdoer fails to comply, the court will allow the injured party to publish the apology statement and charge the wrongdoer with the associated cost.

I have examined written decisions issued by courts in different parts of China concerning intentional intellectual property infringement acts wherein apologies are part of the remedies.

Consider the following public apology statement made by China Peking Opera Theater to Mr. Ma Shaobo on Aug. 23, 2000, after the court held that the theater infringed on Ma’s copyrights in three plays. This was documented in “Apology Statement About Copyright Infringement from the Chinese Peking Opera Theater to Mr. Ma Shaobo,” in the publication Chinese Theatre, published in September 2000. It is also available online for the public to view. An excerpt of the apology statement follows:

“Mr. Ma Shaobo, one of the founders of our Theater, while working in the leading position in the past years, devoted much time and effort in organizing the rehearsal of many high-quality plays, and participating in the writing of several plays including: ‘Peroxide Blonde’ (Bai Mao Nu), ‘Inexperienced’ (Chu Chu Mao Lu) and ‘Whole Red River’ (Man Jiang Hong).

“When we were compiling and printing the commemorative album to celebrate the 40th anniversary, we didn’t put his signature on three plays, our conduct severely infringes his copyright.

“We have sincerely accepted the judgment of Beijing No.1 Intermediate People’s Court and the final judgment of Beijing Supreme Court on August 15, 2000, and are determined to correct our mistakes.

“First, the documents, files, and the certifying materials based on these documents that are related to Mr. Ma Shaobo, we released in the past political movements shall all become invalid. Second, we will put his signature in the memorial album on those three plays. Third, we hereby state our apologies to Mr. Ma Shaobo, and guarantee that we will earnestly respect the writer’s copyright in the future performances and publication.”

The apologies in Chinese intellectual property infringement cases are obviously valuable to the IP owners who were injured by the wrongdoer’s conduct. The wide dissemination of public apologies in newspapers and trade publications has a positive impact on the society. Society is involved since everyone can read each apology, its context and content. In other words, the apology is not merely between the wrongdoer and the victim; it is about restoring to society value and harmony.

Most importantly, the apology is meaningful because it is apology-plus. Chinese courts in intellectual property cases order apologies in addition to the order for damages and injunctive relief. Courts instruct the wrongdoers to cease the infringing activities and, in some cases, to destroy the infringing products. The injunctive relief is automatic upon the plaintiff having proved that the wrongdoer has infringed on the plaintiff’s rights. The automatic grant prevents further harm to the plaintiff. The injunction also prevents further harm to society from being misled by the wrongdoer’s conduct.

The court also orders the wrongdoer to pay a pecuniary sum to the plaintiff. The payment is for compensating the plaintiff where the plaintiff can establish economic losses caused by the defendant’s infringing conduct. The various Chinese intellectual property law and civil law statutes also allow courts to strip the wrongdoer of the gains it has benefited from engaging in activities inflicted on plaintiff’s rights. In other words, the payment made by the wrongdoer to the plaintiff helps steer the just recourse.

Both injunctive relief and damages payments are the plus in apology-plus. Chinese courts only order apology in intellectual property bad-faith cases. This means that in ordinary infringement cases, courts limit the remedies to injunction and damages. Reserving apologies only for the more egregious cases, the court signals to everyone that an apology is issued carefully. This suggests that the apology is meaningful because it is not routinely used in all intellectual property cases. Also, the apology is meaningful when it is not used in lieu of injunctive relief and damages. The apology is therefore accorded with significance and importance.

Indiana’s global corporations doing business in China should be aware of the remedies in intellectual property cases in China. Remember that apologies are forward-looking, as seen by the wrongdoers’ words that they promised not to engage in similar conduct in the future, in addition to injunction and damages.•

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• Xuan-Thao Nguyen is the Gerald L. Bepko Chair in Law at Indiana University Robert H. McKinney School of Law and director of the Center of Intellectual Property Law & Innovation. This article is based on Nguyen’s “China’s Apologetic Justice” published in the University of Pennsylvania Journal of Business Law. The opinions expressed are those of the author.