On March 15, 2020, the Supreme People’s Court of China issued a notice soliciting public comments on the Implementation Plan for the Enforcement of Intellectual Property Judgments (Draft for Public Comment) 知识产权判决执行工作实施计划（征求意见稿）and the Guidelines for the Enforcement of Intellectual Property Judgments (Draft for Public Comment) 知识产权判决执行工作指南（征求意见稿 ). Comments are due on May 15, 2020.
According to one on-line commentator, one reason for these documents is that in recent years, after the establishment of the punitive compensation mechanism for intellectual property rights in China, a large number of court-enforced cases have emerged. In fact, difficulties in enforcing judgments have been of concern to China’s leadership and the Supreme People’s Court for several years and appear to be independent of the possibility of increased punitive damages. President Xi Jinping identified this issue of enforcement difficulty 执行难 in the Fourth Plenary Session of the 18th CPC Central Committee (2014). The SPC further proposed to solve this problem in two to three years at the Fourth Session of the 12th National People’s Congress. SPC President Zhou Qiang also raised this issue in a report in 2018. None of these high-level pronouncements particularly singled out intellectual property as an area of enforcement concern.
In general enforcement issues that have concerned China involve enforcement of judgments. SPC President Zhou Qiang identified that China has faced such enforcement issues as: (1) judicial difficulties in locating the person and their property because the judgment debtors conceal their property and whereabouts; (2) the traditional liquidation method is subject to a long cycle with a low success rate, and corruption often occurs during liquidation, so the court is unable to liquidate the property to be enforced; (3) local governments and powerful personnel commit corruption and intervene and hinder the enforcement; (4) many unenforced cases accrue year after year, which has led to serious social conflicts.
Enforcement issues that foreigners have identified have included matters arising as part of the judgment, and often before execution of the judgment including: increased infringement compensation, jurisdictional issues of court enforcement, the procedures when a party initiates an enforcement action, enforcement procedures of pre-litigation preservation, enforcement of administrative remedies and criminal remedies including civil compensation for criminal cases, etc.
This is the first time that the Supreme People’s Court has formulated an implementation plan and work guidelines specifically for intellectual property rights enforcement. While this move is explicitly aimed at strengthening the judicial protection of IP rights and ensuring that effective judgment on IP cases are enforced in accordance with the law, another purpose of this initiative is likely to fulfil China’s commitments under Article 1.28 of The Phase 1 IP Agreement of ensuring expeditious enforcement of IP judgments. Article 1.28 “Enforcement of Judgments” 判决执行 provides:
1.The Parties shall ensure expeditious enforcement of any fine, penalty, payment of monetary damages, injunction, or other remedy for a violation of an intellectual property right ordered in a final judgment by its own court.
2. Measures China shall take include executing work guidelines and implementation plans to ensure expeditious enforcement of judgments, publishing its work guidelines and implementation plans within one month after the date of entry into force of this Agreement, as well as publishing online quarterly reports of implementation results.
As the main part of the Implementation Plan, Section 2 “Specific Implementation Plan” 具体实施计划 includes the following provisions: filing of enforcement of IP judgment (Art. 1), pre-litigation preservation (Art. 2), how to quickly identify and control the property of the executed person (Art. 3), assets evaluation (Art. 5), assets disposal (Art. 6), obligations of the executed person (Art. 7), handling enforcement cases offsite (Art. 10), judicial publicity (Art. 12), etc. Generally speaking these provisions point to the specific measures previously promulgated by the SPC, rather than making headway in new policies or experiments, or suggesting more concrete measures or working methods. In this sense the Implementation Plan highlights out IP judicial enforcement issues are tied to general enforcement concerns.
According to Article 13 of the Implementation Plan, a special section of “Intellectual Property Judgment Enforcement Publicity” on China’s Enforcement Information Disclosure Website will be published by the end of June 2020, focusing on publicizing the implementation information of intellectual property judgments, so as to facilitate transparency, public understanding and supervision. This appears consistent with the requirement for publishing online reports of implementation results in the Phase 1 IP Agreement. In fact, as we have previously noted, the disclosure should not only be limited to the disclosure of the enforcement of IP judgments. In order to ensure that China’s civil enforcement is observable and accessible, China would need to publish all of its IP cases, including cases involving provisional measures, as well as dockets that may include motions and settlements. Many observers, including in this blog, have noticed a large drop in publication of foreign-related IP cases since approximately January 1, 2018, which should also be addressed. Finally, it is unclear from the text of the Implementation Plan or the Phase 1 Agreement, whether China intends to publish the actual enforcement decisions to the same extent that it publishes cases, notwithstanding that many enforcement cases are now available on the SPC’s official website.
In addition, over the past several years, there has been an increasing incidence of multinational IP disputes, particularly in technology sectors. As previously noted, the Phase 1 IP Agreement also does not address the problems arising from these cases. An added problem arising from SEP cases in particular has arisen over anti-suit injunctions and whether China should issue its own anti-suit injunctions, which was the subject of a recent conference (January 2019) at Renmin University.
In terms of execution of foreign judgments, Article 7(1) of the Guidelines mention that: “If a foreign party applies for execution, it shall submit a written application for execution in Chinese. If there are special provisions in the mutual legal assistance treaty concluded or co-joined by the country where the party is located and China, the treaty provisions shall apply.” This provision noticeably omits any reference to the Article 282 of Civil Procedure Law, which permits enforcement of foreign judgments on the basis of reciprocity. United States courts have also occasionally enforced Chinese money judgments, including those which have an IP-related element, under the Uniform Foreign Money Judgments Recognition Act. According to Susan Finder, the SPC is working on drafting a judicial interpretation on this issue at some time in the future.
Based on the Implementation Plan and Guidelines, it remains unclear how the enforcement of IP judgments differs from other judgments and, indeed, why it should be different from other civil, criminal or administrative matters. In the past many judicial reforms have been tested in the IP context. The past experience of initially testing legal reforms in IP than reaching out to other areas is less evident in these two documents. While few new specific measures have been proposed, the SPC’s release of these documents does reflect its increasing emphasis on IP rights, perhaps undertaken in response to US pressure.
Written by Mark A. Cohen with the assistance of Xu Xiaofan