Update on Specialized IP Courts

 

Tongji

There are a number of developments in China’s efforts to roll out China’s three new specialized IP courts by the end of the year.  Information is being shared at conferences, via weibo (microblog) postings, emails and other media – along with lots of friendly speculation. Here’s our current summation:

Background: On August 31, 2014, the NPC’s Standing Committee enacted a decision to establishing specialized IP courts in Beijing, Shanghai and Guanghou.  These courts are intended to be a three year experiment in adjudicating technologically complex cases.  I have previously blogged about this issue on two separate occasions, while other commentators such as He Jing have also offered their analysis.

The roll out of the courts have now entered into a less theoretical stage of implementation.  In addition, other developments, such as the recently concluded Fourth Plenum also influences our understanding of what is going on in this important area, and the potential impact of this experiment on other legal reforms.

At a conference on October 25 that I attended at Tongji University (photo above),  IPR Tribunal Deputy Chief Judge Jin Kesheng 金克胜 updated a large crowd of academics, officials, lawyers and students on how the court was going to develop. . Judge Jin had a long experience as a legal academic, and has often commented on the relationship between IP and other legal developments.

He noted that the SPC is actively drafting a judicial interpretation on the jurisdiction of the courts.   He stated that the three specialized IP courts will adjudicate both first and second instance cases.  They will also adjudicate both civil and administrative matters. Current “three in one” adjudication experiments (combining civil, criminal and administrative jurisdiction) will be largely unaffected.   He referred to the Foruth Plenum several times, and pointed out that the pilot in cross-region jurisdiction in specialized IPR court is a pilot for the future court’s reform in cross-region jurisdiction on other subject matters.

In terms of subject matter jurisdiction, he specifically mentioned that antimonopoly law cases and well-known trademark cases will also be under the jurisdiction of the specialized IPR courts.

Regarding court administration, Judge Jin noted that judges in the specialized IP courts will be higher paid, which is attracting interest from other judges.  He also expected that the courts would have an impact on the professionalism and expertise of the judiciary in IP cases, which is already relatively high.

In the past the courts have used experts, such as examiners from SIPO to assist in technologically complex matters.  In the future, technology experts (技术调查官) will serve as the assistant to the judge. In fact these technology experts are set to be included in the Beijing Specialized IP Court launch, which will take place in the first half of November.   Jin cautioned, however, that judges should avoid replying on the technology experts exclusively.

Jin acknowledged the disappointment many observers had that the NPC had not authorized establishment of a national appellate IP court, such as the CAFC, but had instead decided to establish a pilot project involving intermediate level courts.  The views of several prominent academics were conveyed at a meeting of the Legal Affairs Committee of the NPC on August 7.   Some academics urged a specialized IP court like the CAFC to break the problem of territoriality in IP adjudication while others urged that this court should set the standard for a national appellate court. Judge Jin nonetheless believed that the specialized IP courts are a milestone in China’s IP and legal reforms.

What will be the impact of this self-described experiment? In terms of size of their docket, Guangdong has by far the largest docket. Beijing is second and Shanghai is last. Guangdong is about twice the size of Beijing, and Beijing is a bit more than twice the size of Shanghai.  Beijing, however, has the oversized docket of foreign-related cases and administrative cases. Guangdong has the biggest size and population and its experiment in setting up a provincial level intermediate court could be an important precedent for IP and non-IP related jurisdictional experiments.  The loss of jurisdiction of Shenzhen and other important cities in Guangdong over patent, trade secret and AML matters is likely a significant concern to tech companies there.

Beijing’s continuing role in administrative litigation means that Beijing would be a natural venue for a national appellate IP court, such as the CAFC. Shanghai, with the smallest docket and a relatively modest foreign related docket compared to Beijing may appear to have the least “experimental value.”  However, Shanghai brings several important developments to the table. First it is the home to a large and active foreign business community and an active R&D community, especially in the life sciences. Second, it is home to the important foreign trade zone pilot project, with its own IP tribunal. Third and not least, Shanghai is the home to the Chinese Courts International Exchanges Base for Judicial Protection of Intellectual Property Rights (中国法院知识产权司法保护国际交流(上海)基地) which was opened on September 25, and promises to support a wide range of IPR judicial exchanges and educational efforts.   Since foreigners file more cases in Beijing, the Shanghai IP court will need to work hard to attract IP litigation from Beijing, particularly since the Beijing IP court is likely to continue to have a large foreign-related docket with its jurisdiction over the patent and trademark offices.

The Beijing court has already been sighted by one microblogger, and a picture is available on line: http://www.weibo.com/136766637#_rnd1414651625018.   There have also been numerous postings, emails and rumors about assignments of judges – which I will decline to repeat here. In any event, it is only a matter of weeks before those appointments are officially disclosed.

Prof. Don Clarke in his recent blog on the recently concluded Fourth Plenum noted that there is a proposal to establish courts “that will cross jurisdictional boundaries, again to try cases that are in some sense cross-jurisdictional. Such a proposal would require legislative and possibly constitutional amendments.” The IP courts are part of that initial experiment.    Judge Jin referred to other specialized IP courts and cross boundary proposals, such as in labor and childrens courts. In another related development, Judge Jin also noted that the specialized IP courts will have higher paid, more professional judges – a development consistent with the Fourth Plenum.   –

In sum, these new courts are are a part of the continuing effort to “cross the rule of law river by feeling the IP stones.”

 

New Opinion from SAIC and MIIT on Reinforcing Collaboration on Supervision of Domestic Online Trading Sites

On October 13, 2014, SAIC and MIIT jointly issued  “Opinions on Reinforcing Collaboration on Supervision of Domestic Online Trading Websites and Active Promotion of the Development of E-commerce”. Simone IP Services has provided a translation here.  The original announcement of SAIC is found at: http://www.scaic.gov.cn/zwdt/zxfb/201410/t20141013_177728.html.

The Opinion sets up a collaboration mechanism between these two important agencies.  The intention behind this collaboration is to help address “management of domestic online  trading  websites,  forcefully  strike  against  illegal  operation  of domestic online  trading  websites, strive  to  create  an  online  trading environment of  fair competition, earnestly  safeguard  the  legitimate  rights and  interests  of  consumers  and vendors,  and  actively  promote  healthy development  of  e-commerce,”  The issues that the collaboration is intended to address include “phenomena  such  as forgery and fraudulent  use  of  legitimate market players’ identity for setting up website, intellectual property rights infringement,  the sale  of counterfeit  and  shoddy  goods,  malicious  fraud, unfair  competition,  false  advertising, etc.”

Online infringement has also been a focus of the National IP Leading Group. It issued a “Strategy for Working on Striking Against Infringement of Intellectual Property and the Manufacturing and Sales of Substandard Products in the Online Environment” ( 打击联网领域侵犯知识产权和 售假冒伪劣商品工作方案 ) on June 18, 2014 to step up enforcement and coordination for the second half of 2014.

Although this Opinion appears to be a positive step, greater international collaboration with on-line infringement a focus on the domestic environment may also need to be supplemented with increased international cooperation to address cross-border trade in infringing and substandard products.

 

New Guiding Case on Enterprise Name Protection

The Stanford Guiding Cases project has recently released a translation of an IP-related case on enterprise name protection, Tianjin China Youth Travel Service v. Tianjin Guoqing International Travel Agency, A Dispute over an Unauthorized Use of Another Enterprise’s Name.

The Stanford website describes the case as involving the protection of an abbreviated enterprise name that has been widely used externally for a long period of time and that functions as a trade name, and protecting against keyword purchases by a business operator who uses that enterprise name without authorization causing the public to be confused and misidentify the enterprise.

The court relied upon relevant provisions of the Civil Law, the Anti-Unfair Competition Law and the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Handling of Unfair Competition Civil Cases (2006).  In holding that the abbreviated enterprise name also functions as a trade name, the court also noted that the Communist Youth League Tianjin Committee had issued a certificate stating that “Tianjin Qinglü” was the abbreviated enterprise name of Tianjin China Youth Travel Service, a State Owned Enterprise and that the name had been adopted by media outlets.  This guiding case was decided by the Tianjin High Court, which ordered compensation of 30,000 RMB, an apology and enjoined further infringing conduct.

This case offers potentially useful guidance for foreign-invested enterprises whose trade names enjoy market visibility and are known to the relevant public.  These trade names may be deemed an “enterprise name” and enjoy protection from unfair competition.  Foreign companies often have trade names thrust upon their trademarked product or enterprise names when the Chinese consuming public believes another name may be more appropriate (e.g., Wrigley’s “green arrow” gum).  This case may offer some guidelines for developing strategies to protect those names from enterprise name “squatters,” including in the on-line environment.

US-China Business Council Ranks IP as a Top Five Concern

The US-China Business Council recently released its annualChina Business Environment Survey Report (http://uschina.org/reports/uscbc-2014-china-business-environment-survey-results). Intellectual property enforcement climbed theranks to number 2, just after concerns over competition with Chinese companiesin China. Companies positively noted certain IP developments, including more administrative actions, greater attention to the IP legislative framework and China’s incipient efforts at developing specializedIP courts.

Forty-nine percent of the respondents indicated that criminal enforcement was not a viable option, and only eight percent of the respondents indicated that criminal enforcement was a successful channel – the lowest of any enforcement channel.

There were other top 10 concerns that related to IP, including concerns over uneven enforcement of the laws and AML enforcement, transparency and national treatment.

Other concerns related to IP include technology transfer (ranked 11th), antitrust enforcement(ranked 22nd), and innovation policies (ranked 24th). Sixty-two percent of companies report that they are concerned about transferring their technology to China, particularly as it relates to the protection of intellectual property rights and proprietary information and the enforcement of technology licensing agreements. Forty-eight percent of the companies also surveyed said that they limited R&D activities in China due to China’s IP environment.

Clearly, IP and licensing concern sare impacting China’s ability to attract cutting-edge technology from foreign companies.

IP Position in Econ Section of US Embassy

The US Embassy in Beijing has extended its search for a local staff economic specialist position with an IPR focus, with a starting salary of 218,000 RMB/year and excellent benefits. The deadline listed has been extended to October 27. The announcement is found at: http://photos.state.gov/libraries/china/913634/wangcx3/VA-Economic%20Specialist.pdf. The listing is found at: http://beijing.usembassy-china.org.cn/positions-open-to-locally-employed-staff.html. The point of contact for applications is: USEmbassyBJHR@state.gov

New Draft Trademark JI on Trademark Administrative Litigation Published for Public Comment

On October 14, 2014, the Supreme People’s Court published a draft judicial interpretation for public comment: “Regulations of the Supreme People’s Court on Certain Issues Related to Trials of Administrative Cases Involving the Grant and Confirmation of Trademark Rights.” (最高人民法院关于审理商标授权确权行政案件若干问题的规定. See: httphttp://www.chinacourt.org/law/detail/2014/10/id/147963.shtml.://www.chinacourt.org/law/detail/2014/10/id/147963.shtml. This is one of two planned JI’s to implement the revised trademark law. The second JI will consider trademark infringement matters. Comments on this draft are due by November 15.

Attached is a  the  translation of this draft JI for public comment, provided by Joe Simone of Simone IP Services.

Two Programs in Two Days This Week in California and Ohio

The seminar US and China Intellectual Property Dialogue – Latest Developments of Intellectual Property Law and Enforcement will be held this Thursday, October 2, 2014 at the Hyatt Regency, Santa Clara.  Additional information is also at http://svipla.org/event-1712495 or via email from info@chinaIPfund.org.  The program will include such notables as former PTO Director Bruce Lehman, former SIPO Commissioner Gao Lulin, Former SIPO DG of Law and Treaties, Yin Xintian, and John Cabeca and Elaine Wu from USPTO. It is free of charge, including breakfast, lunch, and coffee breaks with cocktail reception to follow.

The next day, on October 3, the University of Toledo Law School will be sponsoring another all day programDoing Business in China: A Legal and Commercial Review”.  The fee is only $35.00 and also includes a solid bench, including Tom Moga, Peter Yu, Elizabeth Lai Featherman and me talking about IP issues.  CLE credit is available.