The Intellectual Property Court: breakthrough and improvement

With the issuance of the Decision of the Standing Committee of the National People’s Congress on Establishing Intellectual Property Courts in Beijing, Shanghai, and Guangzhou, and the implementation of the Provisions of the Supreme People’s Court on the Jurisdictions of Beijing, Shanghai, Guangzhou Intellectual Property Courts, the IP courts were established in succession at Beijing, Guangzhou and Shanghai. Lawsuits filed in mainland China by foreign enterprises for IP protection, and certain IP cases filed by domestic enterprises against foreign counterparts, will be subject to the uniform jurisdiction of relevant IP courts.

According to the decision and the provisions, the scope of jurisdiction of IP courts is as follows:

1. IP Courts have jurisdiction over civil and administrative IP cases of first instance in highly technical areas such as patents, new species of plants, integrated circuits design, technical secrets and computer software, and determination of well-known trademarks;
2. Administrative cases of first instance filed against the ruling or decision made by a department of the State Council on IP grant and affirmation are subject to the jurisdiction of Beijing IP Court; and
3. An IP court has jurisdiction over appeals of civil and administrative IP cases of first instance concerning copyright, trademark appealed and other IP cases ruled by basic-level people’s courts of the municipality where the IP court is located.

Features of IP courts

1. Uniform jurisdiction. Since the issuance of the Decision and the Provisions, IP disputes between the parties have been subject to the uniform jurisdiction of IP Courts, including lawsuits filed in mainland China by foreign companies for IP protection, and certain IP cases filed by domestic companies against foreign companies. Under previous laws and judicial interpretations, however, in addition to the general rules of territorial jurisdiction, the jurisdiction of IP cases in Beijing, Shanghai and Guangzhou should also comply with the provisions of the Supreme Court on designated jurisdiction.
2. Uniform functions. Apart from the above-mentioned uniform jurisdiction of IP Courts, IP cases between the parties and administrative departments concerning administrative examination and approval will also be heard by IP Courts, leading to “two trials (civil and administrative) in one” for IP courts, i.e. the civil and administrative parts of a dispute no longer subject to separate trials. This will significantly simplify the trial procedures and save judicial resources, improving the efficiency of trial for relevant IP cases.
3. Uniform standards. Since the compensation standards for IP cases varied significantly among different courts, some parties concerned were unwilling to resolve disputes via litigation in certain areas. With the jurisdiction uniformly attributed to IP courts, the relevant standards of trial will also be unified, which will prevent different decisions by different courts within the same area for similar IP cases, and wrong decisions arising from local protectionism.
4. Innovations of court trial. Beijing IP Court in its first case, Zhejiang Wecome Medicine Industry v the Patent Reexamination Board of the State Intellectual Property Office, achieved a number of innovations including announcing the points in dispute of a case before the court, combining the investigation and debate stages, abolishing the previous cumbersome procedures of trial, significantly reducing non-judicial personnel and setting up the bench for judge assistants, all of which “improve quality and efficiency” of the court trial.

Further improvement

Jurisdiction over certain cases yet to be determined. According to Article II of the Notice of the Supreme People’s Court on Adjusting the Standards for the Jurisdictions of Local People’s Courts at all Levels over Civil IP Cases of First Instance in 2010, the civil IP cases of first instance not meeting the standards specified in Article I of the notice – i.e. the civil IP cases of first instance with an object of litigation valued more than RMB200 million (US$32.3 million), or those with the amount at issue valued more than RMB100 million provided that the domicile of a party concerned is outside the jurisdiction of a Higher People’s Court, or a foreign, Hong Kong, Macau or Taiwan factor is involved – are subject to the jurisdiction of Intermediate People’s Courts, unless governed by a basic-level people’s court that, as designated by the Supreme People’s Court, has general jurisdiction over civil IP cases.

Nevertheless, according to the decision and the provisions, IP Courts focus on hearing the civil and administrative IP cases of first instance in highly technical areas, and the Intermediate People’s Courts within the jurisdictions of IP courts shall no longer accept civil and administrative IP cases. Neither the decision nor the provisions specify the jurisdiction for the above-mentioned civil IP cases previously governed by Intermediate People’s Courts, which remains a pending issue awaiting the Supreme Court’s decision.

Cost increase

The dilemma of inter-regional jurisdiction. For civil IP cases of first instance under the inter-regional jurisdiction of Guangzhou IP Court, the parties located in relatively remote areas of Guangdong province might face an increase in litigation costs, for example travel and accommodation expenses. In this regard, Guangzhou IP Court may consider establishing suitable despatched tribunals in the future to hear the civil and administrative IP cases from remote areas.

The case acceptance system reformed? Due to the highly technical nature of IP cases and their large volume at present, the courts tend to be particularly cautious in performing case filing examination, which might involve the substantive part of a case. By way of example, Guangzhou IP Court started accepting cases on 21 December 2014, but failed to file “its first case” by noon although it had received several applications that morning, and the court simply stated that it would make a reply within seven days in accordance with the statutory time limit for case filing examination. Such practice shows a gap with the idea of the Decision of the CPC Central Committee on Major Issues Pertaining to Comprehensively Promoting the Rule of Law, which proposes to “reform the court’s case acceptance system by shifting from the filing examination system to the filing registration system, file and handle all cases meeting the statutory conditions, and protect the parties’ rights of action”. With continuously increasing caseloads, whether the filing registration system can be put in place remains for further study.

Zhou Fusheng is a lawyer at Martin Hu & Partners