Facts to consider when safeguarding IP rights

By Li Jialin, Tiantai Law Firm
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While providing daily legal consulting services, the author has often found that enterprises face a dilemma in subsequent work due to their negligence in making strategies to safeguard intellectual property rights (IPR). Some enterprises even face the risk of losing their rights, bearing compensation, suffering reputational damage, losing business opportunities, etc. The author will identify what considerations should be taken by enterprises to safeguard their IPR.

Cautiously set targets of safeguarding rights

rights
Li Jialin
Associate
Tiantai Law Firm

The common process of filing civil IPR litigation is as follows: the plaintiff firstly obtains basic information on the infringer through sufficient investigation and interview, then preserves evidence through notarization or administrative complaints, and finally files civil proceedings. Before taking action to safeguard its rights, an enterprise should first know its targets in safeguarding its IPR, focusing more on result or efficiency.

To seek good results, more focus should be laid on obtaining relevant IPR, or promoting settlement through proceedings and resultingly licensing relevant rights, or gaining financial compensation, deterring competitors, holding the main responsible persons liable, and so on.

Available measures for an enterprise to safeguard its rights corresponding to this focus include, but are not limited to, administrative complaint, applying for temporary restraining order, taking action for determination of rights, infringement action, and reporting the case to the public security organ to hold the legal or natural person criminally liable. Since different measures have their own advantages and disadvantages, an enterprise should strive to implement the measures and amend them cautiously after defining its target.

For an ordinary case, it may take up to 18 months to obtain a binding judgment after trials by the primary court and intermediate court. If the rights owner focuses more on the efficiency of safeguarding its rights, and needs to take rights safeguarding action for multiple subject matters of infringement at the same time, it may consider filing an administrative complaint instead of litigation, so as to more conveniently achieve its purpose.

However, due to the limited law enforcement power of an administrative department, it is hard for a rights owner using such a method to obtain financial compensation anywhere near that obtained under court proceedings. If a rights owner wishes to obtain more compensation, the better choice is to take civil action.

Fairly use relief

Before formally taking rights safeguarding action, a rights owner may, in the face of pressure from different parties, publish a letter to warn the infringer, and help consumers or downstream customers distinguish the true products from the false ones, so as to regain the initiative as early as possible.

In practice, some rights owners have published such letters, and even described the other party with words such as “cheap copy” and “shameless” without obtaining a legally effective instrument specifying that the actions of the other party have constituted an infringement, and thus the information publisher faces the risk of unfair competition. If the case is serious, the information publisher could, among other things, be liable for financial compensation and have to make a public apology.

In order to prevent further losses, the party safeguarding its rights should always exercise restraint and take pre-action activities in the form of a non-public letter of enterprise, or lawyer’s letter, with rigorous and objective wording, before a final conclusion is made for the case.

If there is evidence that the failure by the other party to immediately stop infringement will cause material damage to the interests of the rights owner, then the rights owner may consider applying to the court for a temporary restraining order, so as to suspend the infringement by the infringer through legal means.

Fully understand costs of safeguarding rights

An enterprise’s costs of safeguarding its IPR mainly refer to economic and time costs. IPR safeguarding involves various systematic processes. The participants of the processes possibly include a professional investigation team, notary organization, expertise organization, administrative organization, court and other entities or departments, in addition to the rights owner and lawyers.

Although reasonable costs incurred by a rights owner in rights safeguarding may be finally borne by the infringer according to law, the enterprise still needs to fully estimate the time and economic costs to be incurred in all processes before taking a safeguarding action.

Investigation and notarization are generally indispensable in an IPR safeguarding action. If infringers and places of infringement are different, an enterprise should make careful arrangements for all safeguarding targets, and determine the order of actions to be taken, to make a reasonable cost plan. For example, an enterprise may focus on taking action in the first stage against infringers who have been involved in a broad scope of infringement for a long duration, and who obtained higher profits from the infringement, and then take action against other infringers in the second stage. This way can help an enterprise avoid making undifferentiated efforts to tackle all infringements during the same period, which may cause multiple burdens such as case management and costs.

In addition, in a foreign-related IPR safeguarding case, if the evidence obtained by the rights owner is formed in a foreign country, such evidence shall not be used in litigious activities in mainland China until it is introduced through notary forwarding. The introduction process may require co-ordination between multiple entities including foreign lawyers or organizations, domestic lawyers, and notary organizations, which may pose new challenges to the enterprise’s management and annual financial planning, either in terms of time or costs.

Finally, in selecting a course of action, an enterprise may take into consideration the costs of action. In certain IPR cases, enterprises are often torn between the actions for determination of rights and infringement. If, through assessment, it is considered that the two actions overlap in terms of effort, work of a lawyer, cost and other factors to a certain extent, the enterprise may, from the perspective of saving costs, consider selecting infringement action, so that the costs of safeguarding rights are borne by the infringer.

Li Jialin is an associate at the legal adviser centre of Tiantai Law Firm

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