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China patents: How specialised courts will affect patent cases




China's legislature passed a bill on August 31 to establish specialised IP courts in Beijing, Shanghai and Guangzhou. Under the bill, the new courts will:

  • act as the court of first instance to handle civil infringement cases involving patents, new plant varieties, layout designs of integrated circuit and trade secret cases;
  • in the case of the Beijing IP court, review the decisions of PRB and TRAB;
  • act as the court of second instance to review appeals of trad emark and copyright cases that are handled by the district-level courts; and
  • handle cases that occur in the area of Beijing, Shanghai and Guangdong.

However, the IP courts will not be in charge of criminal IP cases.

The Supreme People's Court will be in charge of the details of implementation and report the outcome in three years to the National People's Congress. The governments have vowed to have the new IP courts start by the end of 2014.

The idea of specialised IP courts is not new in China. Back in the mid-1990s, Chinese IP judges and professors already proposed the idea of establishing specialised patent courts. The idea was brought to life and was heavily researched back in 2006-2008 at the time China was planning the third amendment of the patent law. Many people advocated the idea of establishing a higher court level IP court, similar to the US Court of Appeals for the Federal Circuit, Japan IP High Court, and Taiwan IP High Court. But the government dropped the plan. One reason was that the new establishment of the IP courts would require substantial changes to the various court organisation legislations. It would have consumed a significant amount of political capital to make the change.

While almost nobody believed the specialised court would become possible in China in the near future, the Third Plenum Resolution issued in October 2013 stated that China would "explore" the establishment of specialised IP courts as a way to improve IP protection. The resolution completely changed the momentum. In the last 10 months or so, the discussions and legislative efforts about establishing IP courts intensified and eventually led to the passing of the new bill.

What is most noteworthy is actually the debate about the specialised IP court. Leading scholars, IP judges and IP practitioners heavily debated in what form the specialised IP court should be done. Supporters believe the new courts are indicative of pro-IP policy directions and people genuinely hope that the operation of the new courts may provide opportunities for additional judiciary reform.

On the other hand, many observers admit that it is somewhat disappointing that the new specialised IP courts are just established at intermediate court levels without powers to render final judgments in high-stakes cases. The fact that the IP court decisions may be heard by provincial higher courts defeats the purpose of a specialised court. People were hoping that a high court will ensure that at least some of the complex IP subjects will be taken care of in a uniform and consistent manner across the country. China has about 88 courts where patent infringement cases can be litigated. The diverse jurisdictions make it difficult and challenging for industry. There are further concerns over frivolous lawsuits involving low-quality utility model and design patents.

At a practical level, the new specialised IP courts will continue to prove China has a strong interest to improve IP enforcement. The new courts may have some incentives to deliver positive results in some high-profile patent or trade secret cases. One possible breakthrough is substantially increased damages in patent cases, more assertive preliminary injunctions, and evidence preservation measures in trade secret cases. Premier Li Ke Qiang just announced at the Davos Forum that China is going to impose a "massive sum" of damages against IP infringers. The specialised IP courts should be the place for reflecting the new trend.

The new courts might also make some other initiatives possible. For years China has been hesitant to adopt the system of patent linkage, among other reasons because of arguments that there is no extra capacity for the courts to adjudicate the patent infringement issues arising from the FDA process. Now, the newly established specialised IP courts make this big argument go away. The new courts are supposed to be highly skilful in handling complicated technical subject matter.

At a deeper level, the new courts may be indicative of the upcoming judiciary reforms plan in China. China has commenced pilot programmes for judiciary reforms in Shanghai and other cities. One key measure is to increase staff support for judges and improve the budgeting and other benefits for the courts. Another measure is to increase the "independence" of the judges that are assigned to specific cases, which means minimising any interference from third parties. The specialised courts may be the place for implementing such pilot programmes at full scale.

On the other hand, industry will closely watch if the new courts will cause any dramatic change to the way IP cases have been handled in China. The decisions in high-stakes patent cases are not final and will be appealed to higher people's courts in Beijing, Shanghai and Guangdong. It may take years to see whether or not the IP court may rise up to an appellate level court.

He Jing

AnJie Law Firm

26/F, Tower D, Central International Trade Center
6A Jianguomenwai Avenue, Chaoyang District, Beijing 100022, PR China
Tel: +86 10 8567 5988
Fax: +86 10 8567 5999
wuli@anjielaw.com
www.anjielaw.com


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