Thought leadership from our experts

Preliminary injunctions in China are back!

Benjamin Bai, Allen & Overy, China

Preliminary injunctions are powerful weapons in patent infringement suits. A successful application – and sometimes even an unsuccessful application – for a preliminary injunction (PI) will often lead to an early resolution of litigation. Chinese law authorizes courts to issue PIs, either before or during an infringement action. In other words, there are two kinds of PIs: pre-suit injunctions (sought before filing a main infringement case) and in-suit injunctions (sought during the pendency of a main infringement case).

In early 2000, Chinese courts experimented with some relatively aggressive PIs in patent cases. Unfortunately, some of the PIs were wrongly issued. For example, the patent in suit in some cases was later invalidated. That prompted courts to be less enthusiastic. By mid-2000, the Chinese Supreme Court started to urge caution in issuing PIs and instructed lower courts that PIs should not be issued in patent cases involving non-literal infringement or complicated technologies. This judicial conservatism heightened through the rest of 2000, with few PIs issued in patent cases in China.

In mid-2013, the pendulum started to swing back, with the Chinese Supreme Court urging a balance of proactivity and reasonableness in granting PIs. This set the stage for some landmark PI rulings.

A. First Patent PI in Beijing

The Beijing courts had never issued a PI based on patent infringement until Abbott Laboratories sought to enforce its design patent on its Similac® SimplePac design before the Beijing Third Intermediate Court in November 2013. The accused infringing product was almost identical to Abbott's patented design.

The Beijing Third Intermediate Court found that (1) there was a high likelihood that Abbott could prevail on its infringement claim; (2) Abbott would suffer irreparable harm; (3) Abbott's harm, if a PI was not issued, would be greater than the infringers' harm if a PI was issued; (4) Abbott posted an adequate bond; and (5) no public interest would be adversely impacted. Accordingly, the court issued a pre-suit injunction, prohibiting the infringing party from making, selling, or offering to sell the infringing products. This is the first PI based on patent infringement in the history of the Beijing courts.

B. First PI against Cross-Label Use in China

About three months after the first PI obtained by Abbott, the Beijing Second Intermediate Court granted Novartis' request for a PI against a generic company for infringing its indication patent relating to the drug Glivec®. The active pharmaceutical ingredient for the Glivec® drug is imatinib mesylate. While the compound patent on imatinib mesylate has expired, the use of imatinib mesylate for the treatment of gastrointestinal stromal tumor, a form of stomach cancer, is still protected by the indication patent. However, the generic company's drug insert and promotional materials for the generic imatinib mesylate contained certain information regarding the use of this drug for the treatment of gastrointestinal stromal tumor. Finding for Novartis, the Beijing Second Intermediate Court issued an in-suit injunction, prohibiting the defendants from making any reference in their drug insert to "the treatment of gastrointestinal stromal tumor" in the course of the manufacture, sales, and offer for sales of the generic imatinib. It is noteworthy that this is the first PI against cross-label use in China.

C. First PIs in Trade Secrets Cases

PIs in patent cases are not the only ones that are getting traction in China. In January 2014, the Shanghai First Intermediate Court issued China's first pre-suit injunction in a trade secret dispute between a Chinese subsidiary of Novartis and its former employee. This is the same court that issued China's first in-suit injunction in a trade secrets case in July 2013, where the PI was applied for after Eli Lilly had brought a trade secret claim against its ex-employee. In the Novartis case, the ex-employee downloaded about 880 documents containing trade secrets from the company's database after he resigned. He later joined a competing company. Novartis timely applied for a pre-suit injunction against the ex-employee before the Shanghai No. 1 Intermediate People's Court, seeking to restrain the ex-employee from disclosing, using, or allowing others to use the documents containing trade secrets and related confidential information. The court accepted the petition on the same day and issued a PI order within 48 hours thereafter.

D. First PI Against Construction Project

Tensar International owns Chinese Patent ZL 03154700.1 (corresponding to UK Patent 2,391,832B) which encompasses geogrids. A geogrid is geosynthetic material used to reinforce soils and similar materials. Geogrids are commonly used to reinforce retaining walls, as well as subbases or subsoils below roads or structures. Two subsidiaries of China Communications Construction Company were found to use infringing geogrids to build an expressway outside of Wuhan. In September 2014, Tensar sought a PI from the Wuhan Intermediate Court and convince the court that the accused geogrids literally infringed its patent. Tensar also provided an undertaking that it would provide the construction project with its geogrids if the infringing product was enjoined. Consequently, the court issued the PI. It is noteworthy that this is the first successful IP infringement case against subsidiaries of China's central SEO.

Concluding Thoughts

After more than ten years of PI "darkness," the pendulum has swung back – PIs have come back with a vengeance. The recent groundbreaking PIs issued by Chinese courts are exciting developments. They should motivate others to follow suit. Notwithstanding the new glimmer of hope, PIs based on patents or trade secrets are likely to be an exclusive province for clear cases of infringement (like everywhere else in the world).