201904.15

Valeo wins historical IP case at the Supreme People’s Court of China

Last 27 March 2019, the Supreme People’s Court (SPC) of China ruled in favor of Valeo, a French global automotive supplier, in a patent dispute against two Chinese car accessories companies. The SPC upheld the verdict of the Shanghai IP court in ruling that Valeo’s patent on a connector for windshield wipers was infringed by the other parties. Valeo was asking for damages and compensation in the amount of 6 million yuan (790,000 Euro). This has been making headlines in the IP industry, and here are three key points to note:

The first ever public trial by the Intellectual Property Tribunal of the Supreme People’s Court

This case was initially brought before the Shanghai Intellectual Property Court (trial court) which rendered a judgment on 22 January 2019. This decision was subsequently appealed by the two Chinese companies before the newly formed IP Tribunal within the SPC. This IP-focused Tribunal which was established on 1 January 2019, was given jurisdiction over all appeals concerning patent cases and other highly technical IP cases.

The establishment of the IP Tribunal within the SPC is believed to centralize and harmonize a nationwide judicial standard for highly technical IP cases. Previously, decisions of the trial courts for IP cases were exclusively appealed to their respective provincial High Courts, which may or may not inevitably be subjected to varying judicial standards. However, under the new procedural rules, decisions involving patents and highly technical IP cases must now be appealed to one court: the Supreme People’s Court. The mere existence of this new institution enhances the predictability that the parties are expecting firmly.

The partial decision rendered by the Shanghai Intellectual Property Court (trial court)

What makes the ruling of this trial court unique is that it rendered a partial judgment for the first time in its  history. The trial court ruled that there was in fact infringement against Valeo. However, upon Valeo’s motion, the court issued an injunction against the two Chinese companies while delaying any decision in relation to the issue of damages and compensation. This was done in order to efficiently enjoin any further infringement against Valeo, thus preventing any additional economic damage. Currently, this issue of damages and compensation is pending before the trial court, while the order of injunction was upheld by the SPC.

What does it mean for IPR owners?

China’s intellectual property system, which had been under construction since China’s opening in the late 1970s, has reached a level of sophistication never before seen: judges and lawyers are specialized; the amount of compensation awarded to injured parties is increasingly important. These are all signs that suggest that China’s legal system of intellectual property is more and more trustworthy. It is widely considered that this case is indicative of China’s institutional will in enforcing and safeguarding IP rights, especially in light of the recent US-China trade dispute among which IP is one of the key issues. Moreover, with plaintiff Valeo being a French company, this proves that Chinese Courts are determined to protect the IP rights of foreign rights holders, effectively and efficiently, as the final judgment in this particular case was rendered in a swift two months after an appeal.

While we may often see China as one of the major challenges to IP rights around the world, a lot can be said about the judicial reforms being instituted in the country in order to provide a fair prompt administration of justice to IP rights holders.

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