In May, China’s IP landscape demonstrated a clear shift from “rule laying” to “rule implementation.” Rules on patent administrative adjudication and pharmaceutical data protection advanced in parallel; the Supreme Court and local courts issued significant judgments on core issues such as trademark squatting, punitive damages, and shareholder joint liability. A series of “nation’s first” rulings in the AI domain outlined the preliminary boundaries of liability for AIGC service providers, platforms, and intelligent agents.

These developments indicate that China’s IP system is upgrading toward precision and accountability-oriented protection, which will directly affect foreign enterprises’ IP portfolio strategies, dispute resolution pathways, and compliance approaches in China.

Legislative and Policy Upgrades

The China National Intellectual Property Administration (CNIPA) released the Guidelines for Handling Patent Dispute Administrative Adjudication and Mediation Cases for public comment, clarifying the acceptance criteria for major cases, refining the adjudication rules for pharmaceutical patent linkage and the steps for infringement determination, and improving tools for the quantitative calculation of compensation amounts. The guidelines also set strict evidentiary standards for using licensing fees as the basis for calculating compensation.

The Measures for the Implementation of Drug Trial Data Protection, effective 15 May, provide tiered protection of 6 years for innovative drugs, 4 years for improved drugs, and 3 years for first generics. It marks a shift from a “dual-track” patent and regulatory data system toward systemic integration.

The State Council’s 2026 Annual Legislative Work Plan expressly schedules multiple IP legislative initiatives, including integrated circuit layout design and the Copyright Law Implementing Regulations, and accelerates comprehensive legislation in AI, data, algorithms, and cybersecurity. This moves fragmented policy toward concrete, enforceable rules.

Industry and Market Directions

The CNIPA issued the 2026 Action Plan for Advancing the Construction of an Intellectual Property Powerhouse, listing 106 tasks and emphasizing equal focus on quality and transformation, multi-department and diversified protection, and participation in shaping international rules. In addition, eight laws and regulations including the Trademark Law will be formulated and revised within the year, the pilot program on data IP will be deepened, and the guidelines for licensing of SEPs will be refined.

The 2025 China IP Protection Status annual report was released, providing detailed statistical data on the progress of intellectual property protection in China. The annual report shows that courts nationwide newly received 473,000 first-instance civil IP cases, and customs seized 86.42 million items of suspected infringing goods, both representing an increase compared to 2024.

The CNIPA Trademark Office launched an “image-based search” function, enabling intelligent online comparison of similarity for figurative trademarks. The office also announced that all trademark services will be digitized from 1 July, further enhancing public service efficiency.

Selected Cases

The Supreme Court clarified multiple key principles:

“SCHIFF” case - the Court set the framework for determining “hoarding-type” and “free-riding-type” trademark squatting. The defendant had preemptively registered 82 trademarks and repeatedly re-registered them after being revoked. The court accordingly overturned the original judgment;

“Fengye” case - the Court reversed RMB 30 million in damages and found no infringement, holding that when both parties have registered trademarks, the likelihood of confusion among relevant consumers should be the core criterion;

A software copyright infringement case - the Court clarified the acceptance criteria for counterclaims, holding that where a counterclaim directly involves the determination of software ownership, it shall be heard together with the main claim to avoid fragmented adjudication.

At the local court level, punitive damages and piercing liability are becoming common tools.

Shanghai courts issued multiple trademark infringement judgments applying punitive damages, where defendants continued infringing after settlement, used similar marks to commit commercial disparagement, or exhibited other willful conduct. The average award exceeded RMB 10 million (approx. USD 1.4 million), and in several cases pierced through to hold the actual controlling shareholder of the company or the trademark applicant jointly liable for infringement.

The Jiangsu High Court also pierced through associated companies and individuals providing assistance, raising the damages on appeal from RMB 820,000 to RMB 2.02 million.

AI-Related Developments

A series of “nation’s first” AI judicial rulings were recently pronounced:

The Hangzhou Intermediate Court, in the first AI-assisted drafting recommendation article case, introduced the “Four-Element Determination Method,” and set the reasonable duty of care for AIGC service providers.

The Hangzhou Internet Court, in the first “AI hallucination” infringement case, held that AI has no civil subject status, and its “promises” are not provider intent; split review duties into harmful content checks and non-result inspection for general inaccuracies.

The Shanghai IP Court, in the first large-model AI copyright case, set the infringement determination standard for reproduction rights as “replication of original expression,” and defined the boundaries of “limited technological neutrality”;

The Nanjing Intermediate Court, in the first large-model AI defamation case, rejected the defense of AI hallucination exemption, emphasizing that defamatory content targeting specific individual represents foreseeable and controllable risks;

The Guangzhou Internet Court, in the first unfair competition case involving AI intelligent agents, issued a behavior preservation against bypassing platform technical controls by intelligent agents.

In addition, seven mainstream financial media outlets jointly issued an AI copyright statement, prohibiting the use of original content for AI training without permission. A leading online video platform launched an AI celebrity database intended for commercial use of celebrity portrait rights, provoking widespread controversy. This marks the transition of training data compliance and digital persona licensing into a more intense stage of confrontation, and AI companies’ training data costs become increasingly explicit.

Overall, China’s IP protection is entering a “refined rules + strict liability” new phase, creating a window of opportunity for foreign enterprises to actively leverage rights enforcement in China. We recommend:

Reassess “administrative + judicial” dual-track strategies for patent disputes and prepare solid licensing-fee evidence under new guidelines.

Use established standards for punitive damages and piercing liability to act against malicious filing, free-riding, and repeat infringement of core brands, and claim substantial damages and joint liability;

Build monitoring and evidence mechanisms for emerging AI-related infringement such as unauthorized training data use, digital persona misappropriation, and intelligent agent rule circumvention.

If you are interested in exploring these developments in greater detail, we invite you to reach out to us for further discussion.