In Chinese financial and intellectual property law, priority rights are granted to give superior rights against other parties. Priority rights do not exist independently, rather they combine with and enhance other rights. Although they resemble property rights, priority rights differ significantly from classic security interests, such as mortgages and pledges. Given their difference from typical creditor rights and security interests, Chinese law considers priority rights a quasi-security interest.
Trademarks
The principles of priority rights in Chinese law originate in intellectual property. The 1883 Paris Convention on Intellectual Property sought to improve international intellectual property administration. Under this convention, priority rights allowed a filer in one state who later filed in another state to use the initial application’s filing date in subsequent international filings. Thus, subsequent applications filed over the same matters would enjoy priority over competing applications filed after the initial filing date. This concept of priority rights has since been incorporated into Chinese civil law.
Debtor-Creditor
Under the Civil Code, a creditor who obtains a mortgage on property to secure a loan has the right to payment priority if the debtor defaults on the loan or under other events of default. This constitutes a typical financial priority right. A debtor in default on maturing debt or other events of default may reach an agreement with the creditor to provide priority payments from mortgage or sale of the property, which provides superior rights over other creditors.
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