The Supreme People’s Court of China (Supreme Court) released the Interpretation (“Interpretation”) of the Supreme Court on Several Issues Concerning the Application of the Law of the People's Republic of China against Unfair Competition (“AUCL”), which was effective on March 20, 2022.
The Interpretation consists of 29 clauses in total, and, based on the revised AUCL, refines and clarifies matters related to general clauses, business ethics, confusion through imitation, false advertising, conducts of unfair competition through the Internet and outside China, and the like.
The Interpretation clarifies that the general clauses of the AUCL shall apply only if clauses of the intellectual property laws and specific clauses of the AUCL are not applicable. In particular, for cases where the clauses of Chapter II of the AUCL or the clauses of the Patent Law, the Trademark Law, and the Copyright Law are applicable, the general clauses of the AUCL shall not apply.
The Interpretation clarifies that the business ethics mentioned in the AUCL should refer to standards generally observed and recognized in specific business fields. Specifically, the court shall judge what is business ethics pursuant to the law, in light of the specific circumstances of a case and in comprehensive consideration of the factors such as industry rules or business practices, the subjective state of undertakings, the willingness of choice for counterparties of transactions, the impact on the rights and interests of consumers, market competition order and public interests, etc.
The Interpretation specifies that there are two basic elements required for a mark to be regarded as having “certain influence” as mentioned in the AUCL, i.e. a certain market awareness, and any distinctive characteristic that distinguishes the source of the commodity bearing the mark. However, it is worth noting that the Interpretation also specifies that even if a mark lacks distinctive characteristic, it could still be deemed as having “certain influence” if it has acquired conspicuous characteristics and a certain market reputation through use. In particular, the Interpretation further specifies that the principles and methods used in judging whether trade marks are identical or similar with each other should also be applicable when judging marks with “certain influence”. In summary, the Interpretation has now clarified the standards for judging the mark with “certain influence”.
The Interpretation specifies that the plaintiffs in disputes arising from false advertising or defamation can claim damages only if they have suffered losses caused by that false advertising or defamation. In this regard, statutory damages should also apply if it is difficult to assess the amount of damages.
The Interpretation identifies two types of unfair competition via the Internet, that is, inserting a link or forcing a URL redirection in an internet product or service lawfully provided another business entity without the consent of others and users, and maliciously interfering with or destroying the network products or services legally provided by others by ways of misleading, deceiving or forcing users to modify, close or unload them without explicit notice and the consent of users. The number of situations listed in the Interpretation in this regard is relatively limited, possibly with the intention of not causing too much negative influence on market competition and technology innovation.
The Interpretation clarifies that for cases where a conduct of unfair competition occurs outside China but the result of this infringement occurs within China, the court of the place where the result of infringement occurs in China shall have jurisdiction. This provides a favourable means for the Chinese rights holders to protect their rights against infringement abroad.
In summary, the Interpretation clarifies many rules for the trial of unfair competition disputes and responds to the current concerns in the market. We will closely monitor how this area is further dealt with in subsequent cases.
For more information, please feel free to get in touch with any of the contacts below. Read more about Herbert Smith Freehills Kewei here.
Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.