Selected Cases from the Supreme People’s Court of the People’s Republic of China

Legal action directed at declaring whether the same patent or related patents constitutes non-infringement of patent rights and patent infringement action fall into the scope of separate litigation. In judicial practices, the jurisdiction over the above two types of cases should follow the basic rules and characteristics of judicial activities by adhering to the principle of facilitating the parties to initiate the litigation and facilitating the independent, fair and efficient exercise of judicial power by the people’s courts in accordance with the law, not all of whose jurisdiction may be transferred for joint trial.

The transaction method agreed in the tripartite business cooperation agreement in this case is a typical confirmed warehouse transaction, which is a new mode of financial guarantee. A confirmed warehouse transaction is premised on the true purchase and sale relationship between the buyer and the seller.

Administrative regulations prohibit mining in scenic areas, yet the party still entered into an equity transfer contract, in which the prospecting right could not be renewed in accordance with later issued policy.

Where a party issues a blank guarantee contract stamped with its official seal to its creditor, such party is assumed to authorize the creditor to fill in relevant content, and such party is bound by the content stated in the guarantee contract, unless there is sufficient evidence to the contrary to refute the finding.

The severance of right to defense of negotiable instruments intends to protect holder in due course and in good faith, when the pledgee took instruments for value and obtained the title of negotiable instruments legally and in good faith, the debtors shall not make the defenses against the pledgee based on the ground of defensing the pledgor.

The mechanism of invalid contract aims to prevent losses to the State, society and the interests of the third party due to performance of invalid contracts, so as to maintain the rule of law and public morality of a society.

As provided in Article 21 of the Guarantee Law of the People's Republic of China (repealed in 2021; hereinafter referred to as Guarantee Law), the scope of suretyship liability assumed by the surety shall firstly be subject·to the agreement under the suretyship contract.

The pledge is created upon the delivery of the pledged property by the pledgor.

The actual builder shall rely on the contract and relevant facts when claiming project payments from the party accepting affiliation.

Liquidated damages have the function of indemnifying the non-defaulting party against the loss arising out of the other party’s breach of contract, namely the indemnification function, and the function of urging the parties concerned to perform the contract in good faith, namely the punitive function.

Where the rights and interests of the resigned legal representative of a company are infringed subsequent to his resignation by the company’s failure to timely register the change to that effect, the lawsuit filed by such resigned legal representative on the ground of the company’s failure to do so constitutes a civil dispute between equal subjects.

In terms of systematic legal interpretation, Articles 194(2) and 218 of the Property Law of the People’s Republic of China (repealed) shall, in the case of mixed security, be applied on the basis of Article 176.

Whether the application for property preservation is erroneous should be grounded not simply on whether the applicant’s claim is supported by the court, but rather on whether the application meets the general requirements for tort liability, i.e., the presence of intent or gross negligence on the part of the applicant, the suffering of loss by the respondent and the existence of a causal relationship between the act of application and the subsequent loss sustained by the respondent.

The sealing-up of the disputed real estate becomes legally effective as of the date when the real estate registry signs for the civil ruling and the notice of assistance in enforcement.

The legal requirements for the objection to enforcement by an equity assigneeupon the sealing-up of the equity by the court include the occurrences prior.

The Summary of the Work Symposium of the Supreme People’s Court on the Adjudication of Cases Involving Transfer of Financial Distressed Debts is a set of special rules established for processing cases involving transfer of financial distressed debts during a specific period of time and in specific fields, and therefore, the scope of application of such rules should be taken into consideration when they are applied, and in cases involving the transfer of ordinary financial distressed debts that are beyond the applicable scope of such rules, the accrual of interest should not be terminated after such transfer is completed.

In the event that a consumer claims for the agreed punitive damages based on the contract concluded between the consumer and the merchant, or based on the promise of the merchant, and that such punitive damages agreed on are excessively high, the merchant may then apply to the competent people’s court or arbitration institution for an appropriate reduction thereof in accordance with Article 114 of the Contract Law.

In closed-loop circular purchase & sale transactions among three or more enterprises, a party to such transactions often engage in practices in which the same goods are purchased at a high price and sold at a lower price later within a specific period of time, while all bills and other documents related to such purchase and sale are drawn, issued and received in the same way as in normal transactions, but the goods fail to be traded. Such an abnormal trading pattern is obviously contrary to the operational purposes and business common sense of profit-making legal persons.

In judicial practice, the criterion for determining whether the parties to a contract have fully performed the contract is whether the purpose(s) of the contract have been achieved. In the event that a party to the contract rescinds the contract due to delay in performance or breach of contract by the other party thereto, and therefore the purpose(s) of the contract cannot be achieved, then the deposit-related penalty rules shall apply.

Works of applied art protected by copyright law must be artistic, which is determined by the nature of the applied art itself. Applied artwork is artwork with practical use, lack of artistry does not constitute artwork, let alone applied artwork, but only practical goods, and the copyright law protects the artistry of applied artwork rather than practicality.

The determination of whether an act constitutes false advertising under Article 9(1) of the Anti-Unfair Competition Law of the People’s Republic of China (1993) shall be founded on whether the public is likely to be misled on the basis of such factors as daily life experience, the attention paid by the general public, the fact that a misunderstanding has occurred, the actual situation of the audience being advertised and whether the goodwill of others has been improperly appropriated.

In disputes over damages out of the party’s bad faith or malice in intellectual property litigation, whether parties to the litigation harbor any actual malice or bad faith to launch an action for damages in intellectual property litigation is to be adjudged from such factors as the party’s basis of rights and its ability to recognize such basis of rights, as well as the party’s purpose in bringing the infringement action.

The disputed trademark shall be registered in accordance with the provisions of the Trademark Law (Rev. 2019) and its judicial interpretation. Anyone who claimed that the disputed trademark shall not be registered on the basis of graphic marks registered in other countries and regions, settlement agreements or other relevant evidence, lacks legal standing.

The marks listed in Article 10(1) of the Trademark Law shall not be used as trademarks. When the people’s court examines and decides whether the trademark in dispute constitutes the mark listed in Article 10(1) of the Trademark Law in the administrative case of trademark authorization and confirmation, it constitutes no violation of the provisions of the Trademark Law.

The determination of the scope of protection in patent infringement litigation shall commence with the patent claims, systematically and comprehensively understand the technical solutions protected by the patent, and make an accurate determination of the technical features recorded or specified in the patents claims, irrespective of whether the wording of patent claims is ex facie clear, as opposed to be determined by the meaning solely on the basis of claims per se.

The client list under the protection of trade secrets, shall, in addition to the information about the clients’ names, addresses and contact details, as well as the usual trading habits, intentions, details of transactions and other information, shall comprise specific client information that is different from the relevant public information, not all client lists can constitute trade secrets.

Pursuant to Rules of the Supreme People’s Court on Several Issues Concerning Suspected Economic Crimes in the Trial of Economic Dispute Cases, dispute over licensing contract for trade secrets in breach of confidentiality obligations and the related criminal cases are not based on the legal relationship generated by the facts containing the same legal elements, so the people’s court may continue to hear the dispute over licensing contract for trade secrets while transferring the clues of the suspected crimes for further investigation.

When a patentee only files a request to the patent administrative agency to handle a patent infringement dispute against users of the alleged infringing products, which may make uncertain the businesses of the producers or the sellers of these products and disable the producers or the sellers to participate in administrative proceedings to safeguard their rights and interests, it is in the interests of all the parties and is also conducive to saving administrative and judicial resources to make a determination as soon as possible of whether the alleged infringing products fall within the protection of the relevant patent rights. Such request to handle patent infringement disputes can be deemed warnings of patent infringement issued by the patentee(s), and the party failing to participate in the administrative proceedings shall have the right to file a lawsuit for declaration of non-infringement of patent rights.

In the invalidity declaration proceeding, the modification, as a means, should be aimed at achieving the legislative purpose of the two legal standards of not exceeding the scope of the original specification and claim and not expanding the scope of protection of the original patent, while taking into account the efficiency of the administrative examination and the contribution of the fair protection of the patentee, rather than making too strict restrictions on the specific modification, otherwise this would make the restriction on modification a mere penalty for improper claim drafting by the patentee.

In determining the scope of protection of a functional feature, where there is only one embodiment of the functional feature in the patent specification, and no other alternatives are stated or implied to make it feasible, the functional description cannot be made to cover other ways of achieving the function, otherwise the scope of protection will not match the technical contribution. Where the components and their relationship to the function disclosed in the embodiment are an organic system that is inextricably interwoven, each of the aforementioned components shall be deemed to be essential to the fulfilment of the function in the absence of evidence or sufficient explanation by the patentee as to which components or the relationship between components are not essential to the fulfilment of the function.

When dividing the technical features of the claims, the technical unit that can achieve a relatively independent technical function should generally be treated as a technical feature, and it is inappropriate to classify multiple technical units that achieve different technical functions as a technical feature.

One party to a contract cannot sue the other party for tort liability solely for breach of contract unless the other party acts both in violation of the contract and in infringement of the civil rights and interests protected by the tort law, i.e., concurrence of breach of contract and tortious infringement.

Whether a maritime emergency operation is salvage or pollution prevention and pollutant clearing should be determined through analysis in light of such facts as the initial purpose of the operation, risks encountered by the ship, and the specific actions performed during the operation.

While fraudulent demands under a counter-guarantee may create issues between those parties, they do not override or invalidate the separate original guarantee or necessarily prevent the original guarantor from making payment if properly demanded by the original guarantee beneficiary.

While implementing a “network liability system” for multimodal transport operators has merits, China’s Maritime Law explicitly limits its scope (liability and limitation thereof) under Article 105. It would be inappropriate to extend interpreting the “network liability system” to make it applicable to the limitation of actions when adjudicating cases.

A time charterparty usually provides the charterer solicits freight business and contracts carriage, while the lessor ensures safe navigation but does not sign contracts of carriage with cargo owner. Accordingly, the lessor (like a ship owner or bareboat charterer) agrees the charterer issues bills of lading.

In an administrative case, the disputed administrative act generally refers to only one administrative act made by one administrative agency, or the same administrative act made by two or more administrative agencies.

The registration of separate households is only a measure taken for registered residence management, and does not involve the issue of compensation and resettlement..

After signing an administrative agreement with a counterparty, the administrative agency shall follow the principle of good faith and fully perform its obligations in accordance with the agreement.

Legal substantive hearing of a case concerning sued land expropriation and occupation should proceed on the premise that there is no dispute over the ownership of the disputed land and the plaintiff is clearly eligible.

As the provincial-level offices of the banking regulatory authority under the State Council, the provincial Offices of China Banking Regulatory Commission are responsible for overseeing non-banking financial institutions such as trust and investment companies outside the direct supervision of the Banking Regulatory Commission.

When the equity transfer agreement provided by foreign investors during examination in the administrative license process for mergers and acquisitions of domestic enterprises is determined to be invalid by the legally effective decision, whether the license obtained thereof is bound to be revoked.

The eligible defendant in administrative proceedings should be determined based on the principle “one who conducts the act shall be the defendant; one who conducts the act shall be punished”. Generally, the subject of an administrative act has been determined the moment when the act is made. But in some special circumstances where it is difficult to determine the eligible subject of an administrative act at the time of proceeding, we can only make the judgment through trial and the rules of burden of proof.

In cases where two parties hold opposing interests (such as the aggrieved party and the punished party), if one party applies for administrative reconsideration, and the other party with opposing interests, though not applying for reconsideration, raises an objection to the administrative act in the administrative reconsideration procedure as a third party, then the principle of prohibition of unfavorable changes shall not be applied to such situations.