The new Tort Law of the People’s Republic of China will take effect on July 1, 2010, ushering in several major changes for intellectual property rights in China. Currently, there are several holes in the body of tort law concerning IP rights, so there has been no legislative basis on which the People’s Courts can determine legal liability for some types of infringement. The new law changes three major areas concerning the enforcement of IP rights: first, it provides a basis for deterring contributory IP infringement; second, it allows for moral damage compensation for infringement; third, it creates new liabilities for network and service providers who allow infringements to continue after they have been notified it is occurring.
Currently, the trademark, patent, and copyright laws do not speak to contributory infringement – that is to say, liability when one party provides assistance to another in the manufacturing or sale of infringing goods. Though the General Principles of the Civil Law indicate that, in theory, contributory infringement should be illegal, there are no specific provisions through which government officials could enforce the provisions. The new Tort Law fills this gap, allowing joint and several liability for all acts of contributory infringement.
There is also a lack of legal authority on whether moral (i.e. non-economic) damages can be awarded as part of compensation in an infringement action. To date, courts have been reluctant to award any moral damages; indeed, they have awarded them only in one instance. In the case of Zhuang Yu v. Guo Jingming the Beijing Higher People’s Court allowed some moral damage compensation after finding that the defendant had plagiarized the plaintiff’s novel, though the moral compensation awarded was equal to only 5% of the economic compensation. The new Tort Law makes it clear that these sorts of damages are appropriate, and its implementation should increase the number of judgments granting moral damages whenever “serious mental distress” has been inflicted as a result of an infringement.
Finally, the new Tort Law holds network users and internet service providers responsible for allowing infringement to continue on their networks. There is no current cause of action for allowing infringement, but under the new system, any damaged party may contact a network user or service provider in order to notify him or her of the infringement being conducted through the network. If the provider does not take timely action to halt the infringement, it will be jointly and severally liable for the infringement that occurred over the network. This process is called the “notice and remove” rule, under which the burden is shifted to the network or internet service provider to remove the infringing content after it has received notice. This, too, should increase the number of damaged parties who are able to recover when their IP rights have been violated.
Edward E. Lehman, Managing Director of Lehman, Lee & Xu, commented that the new Tort Law “fills important holes in the existing law and should help to protect intellectual property rights in China.” He added that, while the laws will not provide complete protection for intellectual property in China, “they should prove to be an important step towards holding infringers responsible, and compensating the parties who have had their IP rights violated.”
