Long Awaited Civil Code

Long Awaited Civil Code

  • Posted by: John Tan
  • Category: Category: Business In China, Category: Intellectual Property
Long Awaited Civil Code

On May 28, 2020, the  Civil Code of the People’s Republic of China (the Country) was adopted at the third session of the 13th National People’s Congress, the top legislature. Since March, 2015, lawmakers of the Country  began to codify the Country’s Civil Code by systematically incorporating existing civil laws and regulations, and modifying and improving them to adapt to new situations in the new era. It is really a long-awaited law.

1.  Awaited Civil Code of P R China:

To some extent, the Civil Code is not a newly formulated civil law, but it covers every corner of life after codification and it is regarded as an encyclopedia for people’s livelihood. By structure, besides general provisions and supplementary provisions, the Civil Code consists of six sections:  Property rights (real rights); contracts; personality rights; marriage and family; succession; and tort liabilities.

As the opening chapter of the Civil Code reads, the personal rights, property rights and other lawful rights and interests of the parties to civil legal relations shall be protected by laws and shall not be infringed by any organization or individual. It is a milestone for legislation in the Country in the field of civil rights, and it will greatly help develop and boost the legal system with Chinese characteristics and modernize the Country’s system and capacity for governance.

Some jurists comment that the section of personality rights embodies a major innovation of the Civil Code,  because this section stipulates  the provisions on a person’s rights to life, body, health, name, portrait, reputation and privacy among others, and it shows that China has reached a new height in protecting the dignity of people.

2. Influence of Civil Code on Intellectual Property Rights:

Besides the above civil rights, intellectual property rights are no exceptions to the rights protected. They will be certainly protected by the Civil Code as well as they are typical civil rights.

Even though a special section for intellectual property rights is not incorporated in the Civil Code, the Civil Code stipulates general rules for protection of  intellectual property rights, and this will be guidance for special laws to follow on intellectual property rights. This is really good news for attorneys in areas of intellectual property rights because we  may refer to the stipulations on intellectual property rights in the Civil Code as general rules or guidance if we could not refer to special laws for intellectual property rights.

For example, the Article 123 of Civil Code states that civil subjects shall enjoy intellectual property rights according to laws. Intellectual property rights are exclusive or proprietary rights enjoyed by the holders of the rights with respect to the objects according to relevant laws. Pursuant to this Article, intellectual property rights include:

  • Works;
  • Inventions, utility models and designs;
  • Trademarks;
  • Geographical indications;
  • Trade secrets;
  • Layout design of integrated circuits;
  • New plant varieties;
  • Other types as prescribed by law.

These definitions are general rules. However, most of the laws and norms for intellectual property rights are not included in the Civil Code as an independent section. Thus, there are special laws to establish for intellectual property rights other than the general terms stipulated in the Civil Code. It is very beneficial to the legislation for intellectual property rights because special rules and new rules are springing up all the time in the fields of intellectual property rights, requiring new and special legislation.

3.  The System of Punitive Damages for Intellectual Property Rights:

Meanwhile, the system of punitive damages for intellectual property rights is stipulated in Article 1185 of the Civil Code. It states that if any one intentionally infringes on another party’s intellectual property rights, the infringed party shall have the right to assert a claim for punitive damages for cases of gross violation.

This article officially establishes the system of punitive damages for intellectual property rights, and it shows the Country has placed great importance on protection of intellectual property rights. This will be extremely helpful to curb serious intentional tort in the field of intellectual property rights.

In fact, early in 1993, the Country first established the system of punitive damages in the Law on Protection of Rights and Interests of Consumers. In the years that followed, for settlement of civil disputes in the product liability, food safety and other areas that are related to national welfare and people’s livelihood, the system of punitive damages  has been used . However, in the field of intellectual property rights, a principle of compensation is practiced instead of the system of punitive damages.  This is not enough to fight infringement on intellectual property rights in bad faith.

As the demand for protection of intellectual property rights increased, the legislature has also realized that the principle of compensation is not enough to fight infringement on intellectual property rights in bad faith and repeated infringement on intellectual property rights.  So, in order to meet the demand, the legislature stipulated the system of punitive damages for the first time in China Trademark Law that became effective as of May 1, 2014 after it was amended as of August 30, 2013. This was also the first time the system of punitive damages was introduced into the field of intellectual property rights.

According to the system of punitive damages first introduced into China Trademark Law in 2013, 1 to 3 times the amount of compensation representing the loss incurred to the title holder, which includes loss of the trademark, profits earned by the infringer, and the royalty fees or license fees for trademarks may be imposed as punitive damages. In the amendment of China Trademark Law in April 2019, this compensation was improved to 1 to 5 times on the basis of the amount of loss of title holder of trademarks, the profit of infringers, or the royalty fees or license fees. This system of punitive damages in China Trademark Law  has been  very helpful to improve protection on trademarks as well as other intellectual property rights, and  overcome the problems of low cost of infringement of intellectual property rights, high cost of protection of intellectual property rights, and law compensation and others.

In the Civil Code, the system of punitive damages has been  upgraded as a general principle for intellectual property rights.  It is like a lighthouse beacon for us to follow in the future for matters in intellectual property rights.

4.  All Is Going to Be The Best:

Obviously, the significance of Civil Code is not just promulgation and implementation of a new law. As a fundamental law, it will be extremely helpful to better protect people’s legitimate rights and interests in all fields, including the field of intellectual property rights.

As the world’s latest civil law, the Civil Code embodies equal protection of rights in various areas and keeps up with the practice and the times. It will take effect on January 1, 2021. Let’s look forward to it!

 

IPO PANG XINGPU, with headquarters in Shanghai China, we have been helping clients from all over the world with their legal matters since 1992. We are a group of dedicated attorneys and professionals with expertise and experience in a variety of legal disciplines.  Clients come to us “When Being Right Matters ®”.

John Tan
Author: John Tan
John Tan, is one of our attorneys with 15 years of experience in his areas. He focuses his practice on general corporate governance, commercial law, intellectual property law, employment law, and litigations in his areas. His clients majorly include entrepreneurs, Fortune 100 companies and SMEs, and span the globe to include clients from the US, Canada, UK, Germany, France, Austria, Italy, Japan, Singapore, Australia, Spain, Portugal, Brazil, Mexico, Russia, and many others. You may write to [email protected] for more support from him.

Leave a Reply