From Senior Judge to University Scholar

Jody Lu, China IP,[Patent]

 

An Interview with Kong Xiangjun My interview with Kong Xiangjun was set on the campus of Shanghai Jiao Tong University. The international students passing by in twos and threes, the rows of eucalyptus trees stading on both sides of the road, and the western-style buildings covered by red bricks and decorated by gray lines gave out a simple and unadorned atmosphere that seemed to be found only in the late of the 19th century. When I met Kong Xiangjun, he was in plain-colored Chinese-style cotton clothes, looking free and easygoing. Shortly before the interview, a top-grade international seminar was held by Koguan Law School, Shanghai Jiao Tong University. Mr. Kong, dean of Koguan Law School, had personally invited some of his old friends judges from the US Court of Appeals for the Federal Circuit, judges from the German Federal Court of Justice (Bundesgerichtshof BGH), senior judges from the Hague Court of Appeal in the Netherlands, judges from the England and Wales Court of Appeal, the executive director of the Berkley Center for Law and Technology at University of California, Berkley, the dean of the Law School at Nagoya University, and other judges and scholars active in the frontline of international justice to get together and discuss hot IP topics on a global scale. However, there was not much advertisement of the meeting. Except students and teachers of the university, there were few outside professional participants. I didn't want to make it big at the very beginning. I don't like to have a high profile, Mr. Kong smiled. But, this kind of international exchange provides good guidance to academic research on practical issues. We will continue to build a high land and platform for international exchange.

As a matter of fact, he has been found frequently appearing at the global stage for IP-related events in recent years. He was invited to, among others, the Global Innovation Law Summit 2018 in the US, the 1st Roundtable on Online Market Competition and Regulation in the US, and the 7th World Intellectual Property Forum in Singapore. On these international academic conferences, he often makes keynote speeches, to communicate to the world what China has been doing to protect IP. The favor he has received from international organizations is due to his special personal experiences.

In the fall of 1982, the 16-year old KongXiangjun passed the college entrance examination and was admitted to East China University of Political Science and Law. After graduation, he was employed by a local grassroots court, then the State Administration for Industry and Commerce (SAIC), and then the Supreme People's Court. He also held positions as presiding judge of the Third Civil Division of the Supreme People's Court, vice secretary of the Politics and Law Committee of Sichuan Province, vice secretary of the Leading Party Group and vice presiding judge of the 1st Circuit Court of the Supreme People's Court. I have taken jobs in the administrative division, the judicial division and the party committee for a total of nearly 30 years, said Kong Xiangjun. In 2016, after 30 years of being away, he returned to Shanghai to become dean of Koguan Law School at Shanghai Jiao Tong University. Now he is no longer a boy traveling and exploring his world, and what lies before him is different from the past. During the interview, talking about his fondness of the scenery in the lower reaches of the Yangtze River since he was young, he became relaxed to enjoy the talk. I used to think of settling down at a place I love after retirement, the first one that came to my mind was Shanghai. The culture and climate in the lower reaches of the Yangtze River feels different. Not strangely, it is like my home after a long separation.

Those 30 years have passed with a click of fingers, which witnessed him working hard and traveling around the world. Now that he has returned from the frontline of practical jobs to academic studies, he seemed very open and direct in the interview, with the calmness and even indifference to fame and wealth, "I am now not a government official, but a scholar. My desire and pursuit for material gains have long been minimal. I can now delve in academic studies and focus on practical issues from unconventional and neutral perspectives. I will not limit myself to administrative affairs, but consider reasonably what lies before us now, using a neutral and pertinent academic language. He looked cool and satisfied, What I am now should be my best state."

 

30 years of judicial innovation discretionary damages, regulation of trademark squatting, and non-cessation of infringement

The calculation of discretionary damages for IP infringements is now widely used in judicial practice, which provides an effective way for IPR owners to break through the upper limit of statutory damages. As early as 2013, the Supreme People's Court published to media a few typical cases where discretionary damages were applied. It also defined discretionary damages as follows on the basis of evidence that supports some of the data needed for calculation of damages, the people's court may, in light of the circumstance of the case concerned, use its discretionary power to decide on any other data necessary for calculation of damages, so that the amount of damages can be calculated in a fair and reasonable manner.

In those days, the discretionary damages was actually termed judgmental damages. It has been rarely known that this innovative term was first developed by Kong Xiangjun.

In China, too much emphasis has been laid on infringement determination rather than the reasoning of damages determination in IP-related judicial decisions. In 2007, when he was an employee of the Supreme People's Court, Kong Xiangjun first developed the term judgmental damages on the basis of statutory damages during a conference in Wuxi City. "In practice, we had met quite a few cases where the right owners had sustained losses, but could not produce solid evidence. The loss of the right owners was often much more than 500,000 Yuan, which was the upper limit of statutory damages. So we tried every way to find a solution. If the actual loss of the right owners is above 500,000 Yuan, which is proved by preliminary evidence and other referential factors, but if there is no hard evidence, then the judge may use its discretionary power as he deems fit," said Kong Xiangjun.

However, a new concept never came without misunderstanding or debates. Did it violate the law to break through the upper limit of statutory damages No judges dared to award any higher amount of damages. So Kong Xiangjun did a lot of work to explain it. "I explained to them that this was not against the law, but opened a new way for damages determination. I did it for a few years." It was until several years later that the term "discretionary damages" was formally included in official documents and gradually implemented in judicial practice. During the World Intellectual Property Day on April 26, 2018, the High People's Court of Beijing issued and implemented the Guidelines for the Trial of Copyright Infringement Cases, which defined how to calculate discretionary damages for the first time. Referring to that, Kong Xiangjun smiled, "there have been few people who know that I am behind all that."

On April 23, 2019, the Trademark Law of the People's Republic of China witnessed its fourth revision, which was added with the regulation of trademark squatting "Any malicious trademark registration or application that is not for the practice of the trademark, shall be explicitly dismissed." That provision was one of the absolute causes that could be used to challenge a trademark or invalidate a registered one. As the market becomes more competitive, trademark squatting, which is driven by various interests of squatters, keeps increasing. How to effectively regulate it is now an urgent issue. It is responded by the legislature in the current revision of the Trademark Law.

The regulation of trademark squatting can also be found in the third revision of the Trademark Law, which provides for the use of trademarks mainly in Paragraph 2, Article 49 "any trademark which has not been used for three consecutive years after its registration shall be withdrawn." According to the provision, if a trademark is not used (within a specific period of time), it will be withdrawn, which is the only consequence in law. In the fourth revision of the Trademark Law, however, a trademark that is not used will not be registered in the first place. Once again, the legislature employs the use of trademark doctrine as a weapon to crack down on trademark hoarding.

As a matter of fact, Kong Xiangjun was the person who first proposed that operative function of trademarks-"To register a trademark is for the use of it"- in Article 4 of the Trademark Law.

When he raised the opinion for the first time, he encountered much pressure from the outside; they did not understand it as the provision did not seem useful. "As I remember it, I explained it at meetings, saying it IS useful. Why Because with the statutory provision, trademarks can be invalidated or revoked so that trademark squatting can be brought under control," said Kong Xiangjun. "The State Administration for Industry and Commerce issued an official document, requiring that when applying for a registered trademark, the applicant should submit evidence on the future use of the trademark, such as, the business license to be registered. I interpreted from it that an applicant must have the intention to use the trademark he applies for."

Thereafter, Article 4 of the Trademark Law was first applied by the High People's Court of Beijing City in the Crayon Shin-Chan trademark squatting case. "At first, they were not bold enough to apply that provision. So I encouraged them and later the provision was more and more widely applied in judicial practice." The same idea was included in the Trademark and Anti-Unfair Competition Law written by Kong Xiangjun, which was published in 2009.

In July 2018, the Economic Crime Investigation General Brigade of the Public Security Bureau of Shanghai, together with the Pudong Subbureau, cracked an extortion case involving a non-practicing entity (NPE) in which the suspect hoarded up hundreds of patents, brought a number of malicious actions and made malicious reports to China Securities Regulatory Commission (CSRC). The case attracted vast attention and aroused a hot debate in the academic and practical fields. Regarding the case, Kong Xiangjun said that he could hardly agree with the employment of criminal measures to deal with it. "However bad the suspect might be, he owned those patents and had the right to choose to sue any person at any time. The judicial authority needed to deal with it. In an innovative area, criminal means should not be employed easily. Instead, civil means, injunction or other means should be used to improve the mechanism to curb NPEs."

In the Interpretation of the Supreme People's Court on Several Issues with the Application of Laws in the Trial of Patent Infringement Dispute Cases (II), which was issued by the Supreme People's Court in March 2016, Article 26 provides that the court may, in light of the interests of the State and the public, decide that the infringer may not cease the infringing act sued, but pay a reasonable fee instead. That means that the claim for cessation of infringement is restricted, which is a breakthrough in the judicial practice in China.

Again it has been rarely known that Kong Xiangjun was the first one to develop the concept of "non-cessation of infringement" in the judicial system of China.

In 2007, Kong Xiangjun visited and studied at University of California, Berkeley. A patent litigation between eBay and an NPE caught wide attention. In the end, the Supreme Court of the US rendered the final judgment, noting that whether patent infringement was found or not, did not directly lead to the issuing of permanent injunctions. The case first established the "non-cessation of infringement" doctrine in the patent field. It is centered on not ceasing the infringing act, but on compensation instead of injunction. As a result, it gave full play to compensatory remedies and protects the interests of the public.

Referring to that case, Kong Xiangjun was very frank, "I have been involved in practical work for 30 years, and in the process I have gradually developed a solid practical thinking. Whenever I encounter anything that is fit for me, I will go and borrow ideas from it." The eBay case enlightened him. In 2007, upon completion of the study at University of California, Berkeley, Kong Xiangjun returned to the Supreme People's Court of China. He proposed the non-cessation of infringement in a report to the president of the Supreme People's Court and also pushed the issuance of related official documents. In fact, the proposal was doubted and misunderstood by many - "if a case was closed but the infringer was still in the infringing state, that meant that he was still infringing.v As a result, the earlier judicial interpretations still defined it as the infringer may not cease the infringing act. I said the expression was incorrect. The accurate one should be that (the infringer) 'may not cease the act', because after compensation, his act become legal, as he had been given a mandatory license," said Kong Xiangjun. "Why was I so particular about the details Because of my understanding of the institutional background."

Ten years later, in 2016, the non-cessation of infringement doctrine was finally included in a judicial interpretation specially prepared by the Supreme People's Court.

 

A sober mind in the new situation not bound by slogans, nor swayed by labels

Now the trade war between China and the US has intensified. As one of the commanding points that the big powers are vying for, the competition in hi-tech and IP areas has gradually surfaced. "During the 40 years since the reform and opening up policies were first implemented, China has gone from passive to active protection of intellectual property. Now with the trade war between China and the US, and the new round of globalization pushed by the US, European countries and Japan, there are pressure on China. Our IP protection is facing major challenges of the new globalizing process that has been just unveiled," said Kong Xiangjun. "The more challenging the time is, the soberer and more objective we should be in our judgment, and the more reasonable and calmer in our mind. We should not exaggerate it, nor act rashly. Our regime should stay neutral, and not go to extremes. We should not get tied up by slogans or swayed by labels."

In recent years, the IP protection in China has been labeled and described as little compensation, high protection cost, and lengthy litigation. In the opinion of Kong Xiangjun, though concise and even strongly inciting, these words oversimplify the situation and fail to reflect the true condition objectively. Despite that, the judicial authority could be easily bound by these labels and slogans in their practice.

Recently, the ever increasing amounts of damages awarded in IP infringement litigation have been a good example. In particular, since 2006, the amount of compensation has increased rapidly. It seems to become normal to award tens of millions Yuan. Some media even make a billboard of the amounts of damages awarded by various courts for comparison. For that, as the first person who developed and pushed the concept of discretionary damages, Kong Xiangjun calmly but sharply pointed out that, to blindly seek for a higher amount of damages is unnecessary. "To strengthen the award of damages does not mean to blindly increase the amount or seek for a higher amount, but to stand on the basis of applicable laws and facts, to fully look into and effectively deal with the complexities of compensatory issues. Different circumstances should be handled differently, so that each issue can have its suitable solution. In particular, to strengthen the award of damages does not mean to award a higher amount through discretionary or punitive damages, but to keep improving the evidence system and enhancing the operability of other litigious means. Solve compensatory issues from the systemic perspective," said Kong Xiangjun.

On the other side, as Kong Xiangjun sees it, in the growing clamor for a higher amount of damages, there is a tendency to enlarge the scope of punitive damages and lower the bar for their application. "As one of its basic purposes, compensation is to make up for the loss caused to the victim. Punitive damages, as a punishment of private law, are only supplementary and statutory. They are exceptional rather than normal. The right owners should not be excessively enriched with inappropriate punitive damages, as any excessive gain of the right owners is also unfair."

The same applies to the anti-squatting of trademarks. Driven by their interests, more people try to forestall their competitors by registering trademarks. There are also more applications for withdrawal of trademarks that have not been practiced within three years. "Tag it with an anti-squatting tag will make it possible to fight against trademark squatting, without considering the specific situation of the case. In practice, it is possible that a trademark owner begins by hoarding up trademarks and then starts to use some of them. If each of these trademarks is not dealt with on its own merits, but all of them are revoked solely on the grounds that they were squatted, that would go too far."

After joining Shanghai Jiao Tong University, Kong Xiangjun has mainly engaged in legal application research, which, simply put, studies how to apply laws in practice. In fact, this is generally much the same as what I did before. The only difference is that I did more in the research of laws and policies in the past, but now more in jurisprudential studies. Despite that, I am still studying hot practical topics by the guidance of questions. The Anti-Unfair Competition Law was being revised when Kong Xiangjun joined Shanghai Jiao Tong University. He said that he spent more than half a year researching the law.

"My current opinion is that we must be cautious with the application of the Anti-Unfair Competition Law."

In fact, repeating at various events, he said that the Anti-Unfair Competition Law 2017 should be understood and applied as a competition law. In particular, it should not be used solely to deal with IP-related issues. "The AntiUnfair Competition Law and the IP Law are two separate branches. Broadly speaking, the Anti-Unfair Competition Law can be included into the IP Law, solely because some of the contents of the former are connected with IP protection. Those contents can be supplementary to IP in terms of their functions. Despite the above, the two laws belong to separate sectors," said Kong Xiangjun. "If in judicial practice, for an issue which is regulated and dealt with by a special law, the Anti-Unfair Competition Law is applied instead solely on the grounds that the special law is disputed or contains unclear understandings, so that the monopoly right concerned is granted or the scope of protection is enlarged inappropriately, then it would lead to such adverse consequences as encroachment of the public domain, obstruction to innovation or the lessened regulative power of the special law." For example, the court still relies on the "server" doctrine to protect the right of communication through the information network, so that the remedy is not readily available for bandwidth theft as direct infringement. As a result, the right holder has to turn to the Anti-Unfair Competition Law for protection of his right. This kind of cases can be found everywhere. In his opinion, the Anti-Unfair Competition Law should not be used as a backdoor to other special laws.

At the end of the interview, Kong Xiangjun kept mentioning the word confidence. During the 40 years since the reform and opening up, China has made rapid progress in IP development, not without the pressure from the international society. With the passing of the last round of global pressing, as we were frequently taken to tasks by a few other countries for our IP protection efforts in many years, there have remained some old ideas. "For example, we should always design our regime that is consistent with the international practice. Our criteria of judgment should always be consistent with those prevalent in other major countries. The root cause is, as Kong Xiangjun puts it, we seem to have a moral disadvantage."

His ideal is that the court keeps cautious and neutral in its judgment, especially in the sensitive stage of the trade war between China and the US. "Staying neutral and confident, responds to the social demand to deal with urgent social issues, not simply caters to it. How to make us an innovative country What are the needs of our society We should base our laws, standards and policies on the answers to these questions. We should use them cautiously, but should not blindly follow the practice of European countries or the US, or make their criteria our own measurements."

Translated by Ren Qingtao

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