China’s 2008 National IP Strategy has sought to improve Chinese IP protection and enforcement, as well as to dispel the perception that IP infringement in China tends to go unsanctioned.
One of the measures implemented included the establishment of new judicial institutions to deal with IP cases and in this article we review some of the procedural and substantive improvements that the institutions have put in practice. Specialised IP Courts were set up in Beijing, Shanghai and Guangzhou in 2014, and in 2017, four new Specialised IP Tribunals were set up in, Nanjing, Suzhou, Chengdu and Wuhan, cities which are seeing a high degree of technology innovation and economic growth. Collectively the new courts and tribunals provide a good geographical spread across the country.
The Specialised IP Courts and Tribunals all have a high degree of IP expertise, presided over by the most experienced IP judges. The IP Courts are equipped with technical investigators to assist judges in their understanding of complicated technology, the aim being to maintain greater neutrality than expert witnesses called by the parties might have.
The IP Courts in Beijing and Shanghai only have jurisdiction over IP cases within their own cities, while the Guangzhou court and the four IP Tribunals have cross-regional jurisdiction over the whole province or several cities within that province.
The Specialised IP Courts have exclusive first instance jurisdiction over civil and administrative cases relating to patents, new varieties of plants, trade secrets, and the layout of integrated circuit and computer software. They also have jurisdiction over certain first instance civil copyright, trademark, technology contract, unfair competition and franchise cases (depending on value of the claim and whether there are foreign elements to the case). They may also review decisions on copyright, trademarks, technical contracts and unfair competition by the “Basic Courts” (county level courts) within their territorial jurisdiction. However, they may not hear IP-related criminal cases whose jurisdiction still lies with the general courts. Some commentators have suggested that the ability to hear all IP matters under one roof would be administratively more straightforward and avoid overlapping judgments and possible conflict of decisions within the same case. The Specialised IP Tribunals do have the jurisdiction to hear civil, administrative and criminal IP matters under a single tribunal and some suggest that this is the better approach.
The Beijing IP Court also has jurisdiction to review administrative decisions on patent validity, particularly those by the Patent Re-examination Board of the State Intellectual Property Office, and the Trademark Review and Adjudication Board. It has overturned a relatively high number of decisions, suggesting a genuine willingness to re-examine decisions.
Procedural Developments in the Specialised Courts
A number of improvements to ensure robustness of IP protection have been observed in the functioning and decisions of the Specialised IP Courts. This includes awarding significantly higher damages than were previously available, particularly for patent infringement. The Specialised IP Courts have been more willing to impose maximum statutory damages, contrary to a more cautious approach previously adopted by the general courts, and to award punitive damages for intentional infringements. Further, they have been more willing than the general courts to provide interim relief such as interim injunctions to protect claimants.
The Specialised Courts have also shaken up evidentiary procedure which had previously put a high onus on claimants. Without court intervention, disclosure of defendants’ accounts and invoices were a frequent difficulty that claimants met in trying to show an account of profits. The current approach sees the burden of evidential proof fall on the defendant once the claimant has made reasonable efforts to show an account of profits from an infringement. Courts have also sought to improve evidentiary procedure by being more willing to make orders for preservation of evidence and to summon witnesses. Where the defendant fails to disprove a claimant’s account, the court may find for the claimant and adopt the claimant’s account. These measures send a clear message that IP infringers can no longer rely on the claimant’s lack of evidence to be easily let off the hook.
Appeals – towards an IP appellate court?
Appeals against decisions of the Specialised IP Courts and Tribunals are currently heard by the Provincial High Courts. The establishment of an IP appellate court has been discussed, with the aim being to address a number of issues including ensuring uniformity of judgments. In theory, the High Courts of different provinces, which currently hear appeals, may reach different outcomes in similar cases. It is also thought that a unified appeal court will eliminate any perception that there is potential protectionism shown by local courts showing favour to particular parties.
Furthermore, a specialised IP appellate court would ensure a higher level of IP expertise to hear cases on appeal from the Specialised IP Courts than might currently exist within the general High Court.
The Specialised Courts currently have a very high case load, particularly the Beijing IP Court, and some suggest that this pressure means that it may be challenging to come to well-reasoned decisions. An IP appellate court could take some of this pressure off by streamlining the appeals process by hearing patent validity review cases from the Patent Re-examination Board and bypass the Specialised IP Courts where such cases are currently heard before going on appeal to High Courts.
The approach taken by the Specialised Courts and Tribunals seems to indicate a forceful shift towards strengthening and harmonising IP protection. Further positive infrastructural measures may be implemented, such as a unified appeals court, in the not too distant future. China hopes that as jurisprudence builds up in the Specialised Courts and Tribunals, businesses may be reassured by the shift in approach towards IP infringement, and that investment will boom as a result.