The Supreme People's Court pointed out that, in an appeal case of administrative dispute over the revocation of an integrated circuit layout-design, as civil rights, intellectual property rights must be acquired, exercised, and disposed of in accordance with the law and in compliance with the principle of good faith. The Court emphasized that good faith, as a fundamental principle of a rule-of-law society, should also apply in administrative legal relations. The exclusive rights holder of a layout-design shall bear adverse consequences for serious breach of the principle of good faith during the registration application process.
This article involves an integrated circuit layout-design. The specific case is briefly described as follows:
Company A is the exclusive rights holder of the integrated circuit layout-design M involved in the case (hereinafter referred to as the subject layout-design). Company B requested the CNIPA to revoke the subject layout-design, mainly on the grounds that a reference layout-design N is a conventional design prior to the date of creation of the subject layout-design and is identical to the subject layout-design, so the subject layout-design does not comply with the provisions of Article 4 of the Layout-design Regulations and lacks originality.
The CNIPA made the contested decision to revoke the exclusive rights of the subject layout-design. The CNIPA held: the date of first commercial exploitation of the reference layout-design precedes the earlier of the subject layout-design’s application date and its first commercial exploitation date, so the reference layout-design constitutes the prior layout-design against the subject layout-design; the subject layout-design is identical to the reference layout-design; the creator of the subject layout-design may have had access to the reference layout-design, and the subject layout-design lacks originality.
Company A, disagreeing with the decision, filed a lawsuit with the Court of First Instance, requesting the revocation of the contested decision and an order for the CNIPA to issue a revised decision.
The Court of First Instance ruled in favor of Company A, revoking the contested decision and ordering the CNIPA to issue a revised decision. After hearing the case, the Court of First Instance found that: 1. The application date of the integrated circuit layout-design M of the subject layout-design is October 23, 2009, the date of creation recorded at registration is January 22, 2009, and the date of first commercial exploitation is May 3, 2009. 2. The reference layout-design is an integrated circuit layout-design N whose exclusive rights holder is Company C, with the application date being February 2, 2010, the date of creation registered and announced being August 6, 2008, and the date of first commercial exploitation being January 5, 2009.
The Court of First Instance held: The focus of this case is whether the subject layout-design possesses originality. When assessing the originality of a layout-design, the determination should be based on the date of its creation. As a layout-design is necessarily completed when put into commercial exploitation or registered, the date of first commercial exploitation or the application date that can be determined can be presumed as the date of creation if the actual date of creation is unknown. In this case, although the layout-design N, which is the reference layout-design, has recorded dates for its creation and first commercial exploitation, these dates are self-declared by Company C and are not substantiated by any supporting evidence. According to the evidence submitted by Company A in the litigation, Company C was established on November 20, 2009, which was later than the date of first commercial exploitation (January 5, 2009) recorded in the registration application form for the layout-design N, and Company C declared that no development preparations for integrated circuit layout-design had been carried out before the company was founded. Accordingly, the Court of First Instance held that the evidence on file was insufficient to substantiate the authenticity of the date of first commercial exploitation recorded in the registration application form for the layout-design N. The earlier the date of creation of a layout-design, the easier it is to establish its originality; therefore, in the absence of evidence for the actual date of creation or date of first commercial exploitation of the layout-design N, its application date (i.e., February 2, 2010) shall be presumed as the date of creation. The date of first commercial exploitation and the application date of the subject layout-design are both earlier than the application date of the layout-design N. In this case, as there is no evidence that the layout-design N was known to the public before the application date of the subject layout-design, the layout-design N cannot constitute a prior layout-design against the subject layout-design.
Both the CNIPA and Company B were dissatisfied with the first-instance judgment and filed an appeal with the Supreme People's Court.
The Supreme People's Court reversed the first-instance judgment and dismissed Company A's claims in the second-instance review. The Supreme People's Court held: the key issue in dispute for the second-instance review is: whether or not the subject layout-design shall be revoked, and the following two specific issues are involved: (I) whether the statement from Company C is admissible; and (II) the legal consequences for violating the principle of good faith to fraudulently obtain exclusive rights of layout-design.
The date of creation and the date of first commercial exploitation declared in a layout-design registration application both hold significant legal weight. However, these dates are self-declared by the applicant and are not subject to substantive examination by the CNIPA. This necessitates that applicants adhere strictly to the principle of good faith, consciously fulfill their duty of honest declaration, and truthfully report the date of creation and the date of first commercial exploitation, etc., to ensure that the submitted information is comprehensive, accurate, and authentic, thereby preserving the publicity and certainty of the layout-design registration system.
In this case, Company C and Company A are affiliated companies. Company A and Company C, fully aware that the layout-design N is the same as the previously registered layout-design M, successively registered and applied for exclusive rights for both layout-designs, while Company C was aware of the situation and provided assistance. Therefore, it can be directly proved that Company C and Company A colluded and engaged in fraudulent registration, thereby abusing the integrated circuit layout-design legal system to unlawfully secure layout-design rights to the layout-design N. Furthermore, it also casts significant doubt on the authenticity of the date of creation and the date of first commercial exploitation of the layout-design M.
As civil rights, intellectual property rights must, in their acquisition, exercise, and disposal, comply with the principle of good faith in accordance with the law, and the principle of good faith, as a fundamental principle of a rule-of-law society, should also apply in administrative legal relations. In this case, Company A, the exclusive rights holder of the previously registered layout-design, colluded with Company C to apply for and obtain registration for a layout-design, which was identical to the previously registered layout-design, under the name of Company C. This clearly constitutes a dishonest practice that deceives the national intellectual property administrative authority and the public, clearly violates the principle of good faith and also renders the date of creation and the date of first commercial exploitation of both the prior and subsequent registered layout-designs uncertain and questionable. In this scenario, a determination adverse to Company A, the exclusive rights holder of the layout-design, should be rendered, to the effect that the subject layout-design shall not be protected, and Company C shall bear the adverse consequences of the revocation of the exclusive rights of the subject layout-design.
Through this second-instance judgment, the Supreme People's Court has clarified the application of the principle of good faith in administrative legal relations, which holds significant importance for regulating the acquisition, exercise, and disposal of intellectual property rights.
(2022) Zui Gao Fa Zhi Xing Zhong No. 472
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