Chinese SPC’s Guidelines on Enforcement of IP Judgments
A successful enforcement of judgment is no less important than winning the case and can be very challenging in the real world. For the purpose of improving judicial protection on intellectual property (“IP”) rights and enabling efficient enforcement of IP judgments in China, the Supreme People’s Court of China released “Guidelines for Enforcement of Intellectual Property Judgments (知識產權判決執行工作指南)” (“Guidelines”) on 10 December 2020.
A copy of the Guidelines (Chinese only) can be found: LinkThe Guidelines contain 3 sections with 29 articles in total, setting out the procedural framework for the enforcement of three types of IP judgments; namely, judgments for (i) civil cases concerning IP rights such as copyright, trademark, patent, trade secret, new plant variety and integrated circuit (collectively “IP rights”) and disputes as to unfair competition, monopoly and franchise contract; (ii) administrative cases against administrative decisions in respect of the IP rights and unfair competition; and (iii) criminal cases concerning crimes of infringement of trademark, patent, copyright and trade secret (as specified in Articles 213-220, Section 7, Chapter 3 of the Criminal Law of the Peoples’ Republic of China).The Guidelines are particularly helpful for the successful party to civil IP cases by giving the procedural details on how to identify and preserve assets of the losing party and thereby enhancing the chance of success in full enforcement of the judgment.Summary of the key provisions of the Guidelines is as follows:(1) Enforcement of Civil Intellectual Property Cases(a) Preservation Measures (Pre or During Ligation)A party may apply to Court for preservation measures including asset preservation, mandatory injunction and/or prohibitory injunction against the other party before or during litigation under the following circumstances: (i) Pre-litigation: where an urgent situation arises which would cause irreparable damage to the legal rights of the interested party if the interested party does not apply for such measures. (ii) Pending litigation: if it is difficult to enforce a judgment or a party would be prejudiced as a result of the other party’s behavior or for other reasons. Such measures can be granted on a party’s application, while the Court may also make such an order on its own motion as necessary.A party applying for the preservation measures must give a guarantee of a stipulated amount at the time of application: (i) Asset preservation: an amount equivalent to the requested preservation amount (for pre-litigation application), or an amount not exceeding 30% of the requested preservation amount or 30% of the value of the preserved subject matter as the case may be (for application pending litigation).(ii) Injunctive measures: an amount equivalent to the losses that the other party suffered as a result of the execution of the measures (for pre-litigation application), or an amount equivalent to the losses that the other party may suffer as a result of the execution of the measures, including reasonable losses such as sales income and storage costs for the preserved products (for application pending litigation).Upon successful application, the Court will adopt the usual means and precautionary measures in accordance with existing regulations related to the execution procedures to implement the preservation measures.(b) Mandatory Enforcement and Identification of AssetsIf a party refuses to perform its obligations under a judgment (“Respondent”), a party (“Applicant”) can apply to the Court to seek assistance in enforcing the judgment within 2 years from the last day of the performance period specified in the judgment (or if the performance is to be carried out in instalments, the last day of the respective performance period specified), or the effective date of the judgment if there is no performance period so specified.Application for recognition and enforcement of judgments issued by foreign courts can also be made to an Intermediate People’s Court which has the competent jurisdiction, or be made in accordance to the agreement / treaty entered into between China and the relevant foreign jurisdiction or under the principle of reciprocity.The Applicant has the responsibility to provide the Court with information in relation to the Respondent’s assets at the time of the application. The Applicant, however for the purpose of identifying the Respondent’s assets, can apply to Court for (i) an order that the Respondent reports its assets as well as any changes to its assets within 1 year after the date of receiving the notice of enforcement of the judgment, and (ii) an investigation against the Respondent’s funds, tangible assets and intangible assets using the Court’s enforcement inquiry and monitoring network system. Penalties such as fines, detention and criminal prosecution could be imposed on the Respondent for refusing to report its assets, making false reports, or delaying the reporting without justifiable reasons.(c) Asset Preservation Measures for Mandatory EnforcementUpon successful application on mandatory enforcement, the Court can take various asset preservation measures against the Respondent’s assets such as seizure, impoundment, freezing, transfer and conversion of assets, or requiring third parties to perform due debt.Different types of assets can be frozen for different durations. For instance, bank accounts and online accounts (e.g. Alipay and Tenpay) can be frozen for up to 1 year, while tangible assets can be frozen for up to 2 years. For intangible assets, equity and intellectual property, the maximum freezing period would be 3 years. Yet, extension on the duration is possible on application to the Court.(d) Non-Asset Preservation Measures for Mandatory EnforcementApart from asset preservation measures summarized in part (c) above, if the Respondent fails to perform the underlying payment obligations, the other party can also apply to the Court for other measures: (i) restraining the Respondent’s spending (e.g. restricting any high consumptions, or consumptions that are not necessary for daily consumption or business operation), (ii) prohibiting the Respondent from leaving the country, and (iii) placing the Respondent in China’s “List of Dishonest Enforcees” (if statutory circumstances are met).A person who refuses to perform his/her obligations under the judgment could be punished by fines or detention and faces criminal charges.(e) Timeline for Execution of Mandatory EnforcementWhere assets are available for the purpose of enforcement of judgment, the Court is expected to complete the enforcement of judgment within 6 months after the date of filing of the application for mandatory enforcement.Upon receipt of the judgment debt, the Court shall dispense the sum to the judgment creditor within 30 days.If enforcement of judgment is contrary to the laws and regulations, parties or interested parties to the judgment may oppose to the enforcement by way of a written objection to the Court executing the enforcement. The Court should adjudicate and decide on the written objection within 15 days from the date of filing of the written objection. The parties may apply for a further review against such decision with a higher court.(2) Enforcement of Administrative Intellectual Property CasesWhere an administrative agency does not enforce a judgment, the relevant party may apply to Court for enforcement. The deadline to apply for enforcement is 2 years from the last day of the performance period specified in the judgment (or if the performance is to be carried out in instalments, the last day of the respective performance period specified), or the date of delivery of the judgment to the party if no performance period is specified on the judgment.Enforcement of administrative IP judgment shall follow existing procedures prescribed in the Administrative Law, the Administrative Procedure Law and the relevant judicial interpretation, or if there is no corresponding provision in those laws and interpretation, follow the procedures prescribed for the enforcement of civil IP judgment.(3) Enforcement of Criminal Intellectual Property CasesIn respect of criminal IP cases, Courts can enforce the following parts of the judgment: (i) fines and confiscation of assets; (ii) an order to make restitution or to pay compensation; (iii) disposal of illicit money and property; (iv) confiscation of defendant’s property that was used in the course of committing the crime; and (v) other related matters that should be enforced by the Court.Enforcement of criminal IP judgment shall follow existing procedures prescribed in the Criminal Law and the Criminal Procedure Law and the relevant judicial interpretation, or if there is no corresponding provision in those laws and interpretation, follow the procedures prescribed for the enforcement of civil IP judgment.The Court should complete the enforcement within 6 months but the period can be extended with the approval of the president of the Court. ********* If you would like to know more about this topic, please contact our Senior Associate, Mr James Choi (email: [email protected]), or our Trainee Solicitor, Ms Alice Wong (email: [email protected]).