Court’s innovative commercial rulings showing the way
Print Edition
A judge with the intellectual property division of Pudong New Area People’s Court received a special New Year gift — a letter of gratitude from a defendant who lost his case.
Judge Shao Xun heard the case between the defendant, identified by his surname as Shen, and the plaintiff, Shanghai Guofu Longfeng Co, over a trademark dispute.
The Shanghai company produces instant food under the name Longfeng or literally “dragon and phoenix” which is a prestigious brand in the domestic market.
Shen, a Ningbo-based businessman, switched the name of his firm to “Ningbo Longfeng Food Co” and produced similar products. Shen also sold products from other food companies.
The Shanghai company sued Shen’s firm at the Pudong court demanding 3 million yuan (US$430,000) in compensation.
Judge Shao found that a major part of the income Shen’s firm earned was from the sales of food products from other enterprises and ordered Shen to pay the Shanghai company 1.14 million yuan instead.
Shen paid a reasonable price but without worrying about bankruptcy.
Shen said in his letter that Judge Shao made a fair and balanced decision, and sent his respects.
As the biggest grassroots court in China, the Pudong court received 130,000 petitions last year — more than any other court in the country.
Judges at the Pudong court like Shao cope with the demands through nothing but hard work. Each of them heard over 300 cases.
In most cases Shao heard, neither side appealed to a higher court because of his fair and balanced judgements.
In one case, a Chinese company was selling pesticides under the name of another firm. Shao ordered the infringing party to pay 3.32 million yuan in compensation to the plaintiff. Both sides honored the judgement and the defendant immediately paid up.
Some of the cases Shao has heard have been included in the Supreme People’s Court’s case collection or published on the gazette of the Supreme People’s Court.
The intellectual property division where Shao serves is among the first of its kind nationwide. The way Shao and his colleagues hear their cases and deliver judgments has been adopted by most of their peers on the mainland and promoted by the Supreme Court.
The intellectual property division of the Pudong court heard around 40 percent of all petitions over intellectual property infringement filed in Shanghai.
Since the establishment of China (Shanghai) Pilot Free Trade Zone in September 2013, the Pudong court has dealt with more than 4,000 intellectual property cases. Over 3,800 of them have been settled.
Most of the cases related to the free trade zone and dealt with issues such as infringement in OEM (Original Equipment Manufacturer) rules, imports, e-commerce and online services.
Most involved parties were trading firms, e-commerce platforms or entertainment and media companies.
Many of the cases broke new ground in the court due to constant innovations in technology, industrial structures and profit models. Intellectual property infringement in connection with new technology, new industry and new business models is growing rapidly and many involve prestigious companies or famous brands.
Apart from the intellectual property cases, the Pudong court also heard more than 17,000 other cases in the FTZ in the past three years. More than 15,000 of them have been resolved.
Typical of some cases in the FTZ, Hangzhou-based Taobao.com took on Shanghai Zaihe Network and Shanghai Zaixin Software in separate suits over unfair competition. They became the first mainland cases that saw an attachment — an order securing assets before litigation — involving e-commerce platforms.
In another case, an insurance company petitioned for a subrogation right — which allows insurance companies to seek to recover losses from third parties — against a valet parking company.
The court ruling promoted the orderly development of valet parking services and business innovation in the insurance industry.
The 10 most typical cases before the court involved many emerging sectors, including financial leasing, Internet finance and online shopping.
The verdicts that the Pudong court delivered are meaningful to the healthy development of the industries legal, experts say.
The court also issued a guide book for FTZ disputes and offered advice to enterprises doing business in the zone.
One issue that arose was the court found on many occasions it was not feasible to send court instruments to the registered address of an involved party because many enterprises actually worked elsewhere.
It suggested that both parties to a contract set addresses to receive court instruments in their agreement — a measure which has been adopted by many firms operating in the FTZ.
More than 18,000 companies registered for business in the FTZ last year, but many knew very little about solving business disputes, said Cao Kerui, president of the FTZ division of the Pudong court.
“This affects the launch of deals and adds more risks,” Cao said.
“How to solve a dispute through a regulated way and let the process of litigation become more smooth and efficient is what the book sets out.”
At the same time, the guide book is expected to be adopted by other free trade zones on the mainland as seven more such zones have been established recently.
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