Court calls for judicial aid to inspire innovation

China's top court has reiterated the importance of safeguarding the lawful rights and interests of private enterprises, emphasizing the need for strong judicial support in the field of innovation and for companies expanding globally.

In a statement released on Thursday, the Supreme People's Court disclosed 12 prominent legal cases involving private enterprises and called on courts nationwide to improve the rule-of-law environment to promote the high-quality development of the private sector economy.

One of the highlighted cases involved a patent dispute involving three researchers from two companies over a drug to treat osteoarthritis and its manufacturing method.

According to the top court, the three researchers returned from overseas studies in 2018 and jointly established a technology company based in Shenzhen, Guangdong province, with the aim of advancing research in osteoarthritis treatment methodologies.

In September 2019, one of the researchers, surnamed Hu, founded a separate company. In June 2021, Hu's company applied for a patent for the drug, which was granted by intellectual property administrators in October that year.

The other two researchers argued the patent belonged to the original company and filed a lawsuit with the Shenzhen Intermediate People's Court seeking a determination of patent ownership. The court rejected their claim, and they then appealed to the top court.

In addition to the patent issue, the two companies involved were also engaged in several other lawsuits related to trade secrets and contractual disputes.

To help the researchers focus on innovation rather than litigation, the Supreme People's Court consolidated the cases. Judges visited the companies, held in-depth discussions with the three individuals and reviewed their overseas education and entrepreneurial experiences.

Thanks to mediation efforts, the three agreed in December to end the litigation and committed to continuing their work in biomedicine and healthcare.

"The swift resolution of these disputes shows our high attention to protecting private enterprises and our strong support for innovation and scientific talent," the top court said. "This result will also bolster innovation and researcher confidence, fueling creative vigor and fostering industrial integration and advancement."

Another case involved a contract dispute between a company in Zhejiang province and a Spanish firm. Between March 2014 and October 2018, the Chinese company exported more than $1 million worth of triangular traffic warning signs to the Spanish firm without specifying quality standards in the documentation. Subsequent transactions similarly lacked clear agreements on quality specifications. Following a disagreement, the Spanish firm filed a lawsuit in a county court in Zhejiang, seeking $248,000 in compensation and interest.

Upon review, the court found that the two companies had no explicit agreement on quality standards in prior transactions and that the Spanish firm had not raised objections at the time. Relevant quality standards were not mandatory for triangular traffic signs, the court said. It dismissed the Spanish firm's claim, and the foreign firm did appeal the court ruling.

"This was a typical international sale of goods contract dispute," the top court said. "The decision by the grassroots court demonstrated the correct application of the United Nations Convention on Contracts for the International Sale of Goods, and reflected the legal protection available to Chinese private enterprises going global."

Other cases disclosed by the top court involved protecting companies' reputations and efforts to combat internal corruption.