In a case of reconsideration concerning act preservation in a dispute over infringement of exclusive rights to layout-design of integrated circuits, the Supreme People's Court, upon comprehensive consideration, ruled that the act preservation measures adopted by the Court of First Instance were justified, and upheld the act preservation ruling made by the Court of First Instance to cease and desist from the infringing activities. The case is briefly described as follows:
Company A believed that Company B and Company C had infringed its exclusive rights to layout-design of integrated circuits, and applied to the Court of First Instance seeking order against Company B and Company C to cease reproducing the disputed layout-design and selling the allegedly infringing products containing such design, as well as against a third-party to assist in halting the delivery of the allegedly infringing products. The Court of First Instance ruled that from the date of this ruling to the date the final judgment of the case becomes effective, Company C should cease and desist from producing the allegedly infringing products and Company B should cease selling the infringing products. Both Company C and Company B were dissatisfied with the ruling and filed an application for reconsideration with the Supreme Court.
Upon examination, the Supreme Court holds:
(I) Company A's layout-design involved in the case has been registered under the CNIPA, and Company B and Company C have not submitted an application for cancellation to the CNIPA, so it should be considered that the validity of the exclusive rights to the layout-design is relatively stable; evidence issued by Company A preliminarily shows that the layout-design of the allegedly infringing products is highly similar to the layout-design of Company A.
(II) The disputed products of Company B and Company C were about to be delivered, and the situation is urgent. If these products entered the market, Company A would not only suffer direct the economic losses, but also face additional harms such as reduced trading opportunities and price erosion. Act preservation can immediately prevent the allegedly infringing products from entering the market, and effectively prevent further escalation of infringement and their consequential damages.
(III) Considering that Company A’s application for act preservation is supported by factual basis and legal grounds and provided with adequate security, the potential damages to Company B and Company C if act preservation measures are taken are relatively minor compared to the potential damages Company A would likely to suffer if such measures are not taken.
(IV) The allegedly infringing products have ample substitutes available in the market that do not concern public health, environmental protection, or other major public interests; therefore, whether to grant act preservation does not involve the issue of being detrimental to public interest.
(V) The allegedly infringing products involved in the case are about to be delivered and enter the market, and even slight judicial delay can render it impossible to effectively prevent the delivery of the allegedly infringing products. Consequently, given the urgency, the direct ruling of the Court of First Instance to adopt act preservation measures, without a hearing, is justified and proper.
To sum up, the Supreme People's Court ruled to reject the reconsideration request of Company C and Company B.
Through the above ruling, the Supreme Court points out that the granting of act preservation requires a comprehensive assessment of multiple factors including stability of the rights, existence of infringement, the presence of irreparable harm, the risk of imbalance of interests, and potential impact on public interest.
(2024) Zui Gao Fa Zhi Min Fu No. 3
If you have any question about the protection of intellectual property rights, please feel free to send us emails. For patent-related matters, please send to info@afdip.com. For trademark/litigation/legal matters, please send to info@bhtdlaw.com.
