Panels & Furniture Asia November/December 2021

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MARKET REPORT Protecting and defending intellectual property rights in China By Kresly Shen In September 2021, the Supreme People’s Court of the People’s Republic of China (PRC) issued examples of cases regarding antimonopoly and anti-unfair competition, listing 10 such cases including disputes over the optimised saw infringement of technical secrets. It also aims to encourage people to insist on defending their rights and reject monopolies and unfair competition. High speed optimisation cross-cut saw and precisioncutting automation production line Union Brother (Shanghai) Machinery, a manufacturer specialised in optimised woodworking machineries, won a high court case against three former technicians who infringed their technology after a nine-year court trial. The company successfully defended its intellectual property rights (IPR) as one of the typical top 10 cases in China in 2021, and the infringers were charged with full legal responsibilities and fined 6 million RMB. To further understand this case, Panels & Furniture Asia interviewed Chen Zhenjiang from Union Brother (Shanghai). The awareness of IPR in China generally falls behind most western, developed countries, and especially in the woodworking machinery industry, intellectual property (IP) infringement is a serious issue. What do you think are the reasons causing this situation? Before we discuss the defending of IPR, we must first find out the reasons why infringement happens so often. It is actually caused by multiple factors, and on a large scale, it is a microcosm and reflection of social development. From an international perspective, various industries in China have developed vigorously in the past 30-40 years since China’s reform and opening up. However, the standardisation of laws and regulations has not completely synchronised with the rapid economic development, and there are many 16 Panels & Furniture Asia | November / December 2021
MARKET REPORT aspects lagging behind. In terms of social values, the concept of “money matters most” prevails while the fairness and integrity of behaviours and social contributions have gained little attention. It is also common in many industries to seek profit in illegal ways, and moral values are losing their binding force. Additionally, as a traditional industry in China, the woodworking machinery industry has a relatively weak overall IPR awareness. Especially in the past 10 years, with its rapid development, many practitioners have weak legal awareness and no respect for IPR. Therefore, the industry is also one of the many industries with the most serious IPR infringement. The lack of clear and sound legal regulations and the moral deterioration of lawbreakers are the main external and internal causes of many industry practitioners infringing IPR. The origin of the infringement incident of Union Brother (Shanghai) was caused by the disclosure of secrets by the technicians. Can you elaborate more on this? In reality, there are high employee turnover rates in the Chinese woodworking machinery industry in recent decades, and the resulting technology leakage and property rights disputes are common and difficult to make a judgment. Such cases are also complicated during court trials. This time, Union Brother (Shanghai) faced a similar situation: the technicians accessed the company’s commercial technological secrets as part of their job responsibility, and started to register for another external company before leaving their jobs, using the original drawings and procedures of our company for production. Such infringements are common in the industry, and Union Brother is only one of the few who use legal tools to defend our rights. Although the process of defending rights is difficult, fortunately, our efforts paid off. It is also hoped that more of such successful cases can enhance the protection of IPR in the industry. A sound industry order and environment are crucial in encouraging innovation and facilitating development. We should encourage innovative enterprises, strengthen the corporate culture of IPR, enhance protection measures for trade secrets and patented technologies, seek professional legal counsel and services, and protect our IPR by legal means. What challenges have Union Brother (Shanghai) encountered during the nine-year rights defending? Compared to developed countries, IP protection still has a long way to go in China. The status quo is that it is easy for the infringing party to escape the law, and it is difficult for the infringed party to win the lawsuit. Facing such a situation, there are many difficulties in the process of defending rights, which are mainly reflected in two places: I. The difficulty of obtaining evidence According to current IP laws in China, almost all the burden of proof lies with the plaintiff. It is difficult to obtain evidence that needs to be complete, from production to sales, since the other party is often prepared for the disclosure in advance, destroying and concealing relevant production evidence. It is also difficult to obtain the sales evidence from the buyer of the other party because many traditional and extensive enterprises in the industry cannot fully verify candidate sellers before purchasing equipment. Some companies also do not fully verify the equipment at the initial stage of purchase, and they benefit nothing but cheap price from buying these infringing and illegal products. Even if they knew the risks of bringing disputes over property rights, they would still choose to take a chance and buy them. After the purchase, although the quality and performance are far from what was promised, threatened by the future technical-control service from the supplier, the end user would even protect and conceal the manufacturer’s illegal behaviour. Plus, such buyers are often ashamed to speak up after knowing they have been cheated, unwilling to provide relevant contracts and using site. These reasons make the entire process of obtaining evidence difficult. It is also worth reminding users and buyers in the industry to raise their legal awareness to prevent themselves from breaking the law due to purchase of infringing products. Such uninformed purchase does not directly constitute a violation of the law, but if the buyers help the infringer hide evidence or cause litigation difficulty, it becomes illegal. In Panels & Furniture Asia | November / December 2021 17
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