Of Trade Secrets, Section 337, AUCL Reform and Evidence Production

When faced with trade secret misappropriation, the United States International Trade Commission can provide a forum for U.S. companies faced with unfair competition resulting from the misappropriation, even if the “theft” occurs entirely in China and/or a misappropriated process is used in China to manufacture a product imported into the United States.  In Certain Cast Steel Railway Wheels, Certain Processes for Manufacturing Or Relating To Same and Certain Products Containing Same, 337-TA-655, Amsted Industries Inc. which licensed certain confidential manufacturing technology to two Chinese companies, Datong ABC Castings Co. (DACC), and Xinyang Amsted Tonghe Wheels Company Limited (Tonghe), claimed the respondent, TianRui Group Co. Ltd, had poached employees from DACC and Tonghe and stolen from them materials and other proprietary information sufficient to establish an identical, competing manufacturing line.  The ITC found a violation of Section 337 and issued a ten-year exclusion order.  On appeal of this landmark case, the U.S. Court of Appeals for the Federal Circuit held that the ITC has jurisdiction to reach trade secret misappropriation that occurs entirely abroad, so long as there is a nexus between the misappropriated trade secrets and the imported product.  Tianrui Group Co. v. ITC, 661 F.3d 1322, 1337 (Fed. Cir. 2011).  Interestingly, in that instance, the Chinese dometic authorities aligned with the United States.  Because railway wheels must be certified for use in China (as is the case in the U.S.), the Chinese Ministry of Railways declined to certify the Tianrui wheels until the U.S. matter was concluded.  The willingness of the Ministry of Railways to decertify Tianrui’s wheels while an ITC action was pending stands as an important contra-factual that suggests the relationship between trade secret theft in China and Chinese domestic industrial policy may be overstated.

More recently, in Certain Rubber Resins and Processes for Manufacturing Same, 337-TA-849, the ITC found a violation of Section 337 based on trade secret misappropriation that occurred entirely in China.  In that case, the Chinese authorities had ruled that there was no trade secret misappropriation in both civil and criminal proceedings.  In Sino Legend Chemical Co. v. International Trade Commission, 623 F. App’x 1016 (Fed. Cir. 2015), the respondents sought to overturn Tianrui, arguing that the ITC does not have jurisdiction to reach misappropriation taking place entirely abroad and that the ITC should have deferred to the Chinese authorities as a matter of comity.  In a nonprecedential judgment, the Federal Circuit affirmed the Commission’s finding.  On September 30, 2016, the respondent in the ITC case, Sino Legend, filed a petition for certiorari asking the U.S. Supreme Court to overrule TianRui, arguing that Section 337(a)(1)(A) contains no clear indication that it should apply extraterritorially and barring the importation of goods made using trade secrets misappropriated in China constitutes the impermissible regulation of conduct occurring overseas.  As an indication of how important this matter is to the Chinese government, in a rare filing, the Ministry of Commerce submitted an amicus brief supporting certiorari.  On January 9, 2017, the Supreme Court denied the certiorari petition.  Thus, U.S.-based companies can continue to turn to the ITC as a viable alternative for relief from trade secret misappropriation taking place in China.  Equally problematic, however, was the willingness of China’s judiciary to misconstrue the 337 decision as a victory for the Chinese defendants and to deem a lower court case as a model case while a related case was still pending on appeal to the court.  This case has also been an important counter-contra-factual indication regarding the relationship between trade secret theft in China and independence of the cour

How does this relate to legislative reform of the Anti-Unfair Competition Law in China?

China is currently revising its AntiUnfair Competition Law, which is the foundational law for trade secrets.  An important first step in addressing trade secret theft in China was the recognition that trade secret protection is a proper subject of the civil code in recent amendments to the civil code; i.e., that is not simply a matter of market regulation but of theft of a private property rightThe inclusion of trade secrets in the revisions to China’s general principles of the civil code was advocated in this blog, and also noted as appearing in an earlier draft.  The SPC, including Madame Tao Kaiyuan, were also involved in providing expert opinions on the draft.  The NPC comments on  the recent proposed revisions of the AUCL specifically calls out the important role of the SPC in revising the most recent draft of the AUCL, and note that civil compensation should assume a primary role in enforcing the anti-unfair competition law generally (善民事赔偿责任优先、与行政处罚并行的法律责任体系。不正当竞争违法行为首先损害了其他经营者的合法权益,需要民事赔偿优先,调动其他经营者制止不正当竞争行为的积极性。)  The primacy of civil enforcement is also found in Article 20 of the draft law itself with a clarification that a business operator who violates the law shall “bear civil liability” and that civil liability shall take priority over fines (Article 30).  I believe these efforts reflect some of the momentum generated by the SPC’s highly useful report, focusing on civil enforcement of trade secret.  Also of note is that at about the same time as that report, the US China Business Council outlined a number of the evidentiary problems in trade secret cases in its proposals for Chinese trade secret reform (2013), including burdensome notarization procedures, procedures which risk further disclosure of confidential information, difficulties in cooperation with the police, etc

The inclusion of trade secrets as a civil right was accomplished with civil code revisions adopted on March 15, 2017, with an implementation date of October 1, 2017.  (中华人民共和国民法总则)。  Article 63(5) includes trade secrets as a subject of intellectual property rights protection:

第一百二十三条 民事主体依法享有知识产权。知识产权是权利人依法就下列客体享有的专有的权利:    (一)作品;    (二)发明、实用新型、外观设计;    (三)商标;    (四)地理标志;    (五)商业秘密;    (六)集成电路布图设计;    (七)植物新品种;    (八)法律规定的其他客体。

Section 337 and the New Trade Secret Regime?

How do these reforms in trade secret litigation interact with US Section 337 procedures? Issues involving production of evidence between the US and China can be at the heart of many IP cases, but are especially critical in trade secret cases.   While some reforms have already been made in China, such as availability of preliminary evidence preservation measures in trade secret cases, the removal in the recent draft of the AUCL of a provision in an earlier draft that would have provided for a modest burden of proof reversal in trade secret matters is also troubling:

“Where the rights holders of trade secrets can prove that information used by others is substantially the same as their trade secrets and that those others had the capacity to obtain their trade secrets, those others shall bear the burden of proof to show that the information they used came from lawful sources.” (proposed Art. 22)

As the coauthor of this blog, Jay Reiziss, points out in his attached presentation to my recent class at Fordham, difficulties in gathering evidence have often been critical to use of Section 337 proceedings.  US Administrative Law Judges have granted motions to use the Hague Convention, such as where a foreign government formally weighs in (Switzerland indicated that it would cooperate with such a request (Certain Sintered Rare Earth Magnets, Inv. No. 337-TA855, Order No. 8). However other cases have determined that Hague Convention procedures would not be timely due to compressed ITC schedules (Certain Hardware Logic Emulation Systems, Inv. No. 337TA-383, Order No. 65).  Because of the threat of adverse inferences, there have also been several instances where Chinese respondents have reluctantly permitted plant tours to accommodate discovery requests (Certain R-134a Coolant, Inv. No. 337-TA-623.  FlexsysAmerica v. KumhoTire U.S.A., 5:05-cv-156 (N.D. Ohio)  Issues involving obtaining timely production of evidence have also appeared in other cases, notably the Gucci/Tiffany cases in the Second Circuit.

Even if the AUCL may not provide enough support for evidence production in China, the SPC has identified several bottlenecks in cross-border adjudication of disputes, including “hearing cross-border cases–service of process to overseas parties; obtaining evidence crossborder; determining facts that have occurred abroad; determining and applying foreign law”, which suggest that future cooperation with US courts may also improve.   Hopefully, as China improves its mechanisms to obtain foreign evidence and if it takes more proactive stances towards cross border cases, towards allowing production of evidence China, and as it improves its civil system, foreigners will be less reluctant to bring IP cases, especially trade secret cases, in China. In the meantime, it appears that the ITC and U.S. civil actions will continue to play a very important role in driving evidence based decisions on trade secret infringement involving China

 

Coauthored by Mark A. Cohen and Jay Reiziss.  This blog represents the authors’ personal views only and should not be attributable to any client, employer or any third party.

 

 

 

 

 

 

 

Spring Time for IPR Case Law in China?

Guidingcase.jpgRecently, there have been two important developments involving IP-related guiding cases and precedent that shed light on these different approaches of the Supreme People’s Court, which is in charge of guiding cases, and the Beijing IP Court, which is looking at the role of precedent in China’s court system.  But first some background:

One of the most important continuing efforts on guiding cases is the Stanford Guiding Cases Project (SGCP), which is under the able, enthusiastic and collaborative leadership of Dr. Mei Gelchik.  The SGCP recently hosted a lively seminar at American University to discuss the latest developments, with a keynote by Judge Sidney Stein of the Southern District of New York (picture above).  In addition to the Stanford project, Susan Finder has written about guiding cases in her excellent blog and other postings, Jeremy Daum wrote an excellent recent article on the actual use of guiding cases, and of course there is this blog and others, in addition to  academic articles and recent  SGCP research.

Another significant development in exploring a system of case precedent is the research base established with the approval of the Supreme People’s Court at the Beijing IP Court.  The ecosystem evolving around that research base appears to me to be more practice oriented than theoretical.  As an example of this practice-oriented approach, the IP court is looking at the role of amicus briefs to ensure the interests of non-parties are heard, or en banc rehearings to reverse prior precedent.  A small, but important step in soliciting third party opinions has already been undertaken by the Beijing IP Court in a case involving trademark agents.

Among the two contrasting recent developments  Regarding the guiding cases project, on March 9, the Supreme People’s Court released 10 IP-specific guiding cases; nine of these are civil and one is criminal. The cases span all relevant IP laws, including copyright, trademarks,patents, plant varieties and antitrust.  Here is a link to a Chinese summary of the cases, and a  machine translation of these summaries (source: IPRdaily.cn, google translate).  I assume that the SGCP will do a professional translation of these in due course.  According to the SPC press conference, IPR-related guiding cases now constitute 23% of the total number of guiding cases.

Nonetheless, recent citation data  suggest that there has been little uptake of guiding cases in actual case decisions, as Jeremy Daum’s article points out in his posting:

“Guiding Cases are almost never referenced: Over a five-year period, Stanford found a total of 181 subsequent cases, and PKU found 241. To provide a frame of reference, Chinese courts complete trial of well upwards of 10,000,000 cases per year…

50% of the guiding cases were never referred to at all

Almost half of the references found were to a single case; GC #24. …That case concerns traffic  accidents,…”

If one compared the nationwide references to guiding cases using, as an example, the 561 opinions referencing a guiding case out of 8,723,182 cases on the China Judgments Online website for 2016 (using a simple keyword search to “guiding case”), the citation rate would be about  0.0006%.

These developments on IP related case law at the SPC might be compared to the data in the January 10, 2017 report of Beijing IP Court.  The Beijing IP court cited 279 case precedents in 168 cases since the time the precedent base was established in 2016 until October 2016.  Cases were cited 121 times by parties, and judges undertook their own effort to cite cases in 47 instances.  In total, 117 cases relied on precedent in their decisions.  Of the 168 cases, there were 51 instances where cases were not relied upon due to a difference in facts.  There was no instance where a reversal was obtained of an earlier precedent.  Of the cases cited, 31 were from the SPC, 132 from High Courts (including 117 from Beijing), and others were from local courts.  If this data was further compared to the 8,111 cases concluded by the Beijing IP Court in calendar year 2016, the citation rate was a minimum of 2.1% based on the data provided through October, which is considerably higher than the guiding cases effort.

My impressions: the data from the Beijing IP Court suggests that the bar is using cases in its briefs, and the court is looking at these cases and exploring how to handle them as part of an overall system including amicus briefs, en banc review and other mechanisms.  The SPC’s guiding cases project is a more intensely curated project that also addresses a much larger national challenge in introducing a new way of developing law to civil law educated judges and the bar.  The comparisons between the two experiments are inexact as the Beijing IP court sits in one of China’s wealthiest cities, with a well-educated bench and bar, a sophisticated IP environment and considerable foreign (including American) interaction.  It is not surprising that nationwide uptake of a precedent system using a limited number of  guiding cases for a vast judicial system is more theoretical and slower than the one taking place at the Beijing IP Court using the 100,000 plus IPR cases that are adjudicated nationwide each year.

springtimeindc

Jordan/Qiaodan Trademark Case – Translation Now Available Here

Thanks to the hard work of Jessie Zeng 曾 潇 of Tsinghua University Law School, and the support of his professor, former Chief Judge Randall Rader, we now have a translation of the Michael Jordan/Qiaodan case.  Here is a translation of the decision in word formatJessie Zeng has also kindly provided a translation of cited laws in the decision.

On first impression, the case has significant implications for entertainment law, trademark rights for well known foreign individuals in China as well  bad faith issues.  Here are some key points: 

A) The SPC overturned Beijing High Court’s view that required a definitive association between Qiaodan and Michael Jordan, but instead required a stable association.  The court relied heavily on general civil doctrine, including tort law, IP law and advertising law in making its analysis.  The court also noted that, with respect to foreigners,  the key factor is that the relevant public in China has gotten used to calling the foreigner with a Chinese name in translation.

B) The court also admitted a range of evidence to support the fame and reputation of Michael Jordan as proof of bad faith by Qiaodan, including a large number of articles, endorsements and survey data.

C) The court recognized that, with respect to foreign names,  sometimes the public may use a name for the individual that is different from the name the person actively uses, and that this name should be protectable.

D) The court also noted that Qiaodan’s prior investment activities and brand promotion did not give it any “squatter’s rights”, noting that “Qiao Dan Inc.’s operation condition, its efforts in related trademarks’ publicity, use, related trademarks’ awarded prizes and received protection and etc. cannot make the disputed trademark’s registration legitimate.” Qiaodan operates about 6,000 stores in China.  The case is in a sense a warning shot to trademark pirates that a business model based on bad faith is risky in today’s China.

In fact, in the many years that I have followed this case one of my greatest concerns was how much a court would be unwilling to disrupt expectations built around a bad faith business model.  Viewed as a political statement, the SPC is sending a strong and laudable signal by saying that relatively settled expectations based on bad faith registrations will not legitimize these trademark registrations and indeed can end up being quite costly.  Times are changing…

My thanks, once again, to Jessie Zeng! 

(Note: Translation revision: January 6, 2017).

 

Kong Xiangjun Leaves Supreme People’s Court and Enters Academia

 

Chinese and Western media have reported that former Supreme People’s Court IPR Tribunal Chief Judge Kong Xiangjun and former Deputy Chief Judge of the SPC’s first Circuit Court has been dismissed from his work at the SPC.  Shanghai Jiaotong University, Koguan Law School also announced on September 7 that he would be joining their faculty.  

Kong served nine months on the circuit court, when he was dismissed from that position by the NPC in 2015.   He was dismissed from his SPC positions as both a trial judge and a member of the adjudication committee on September 3, 2016 by at the 23rd meeting of the Standing Committee of the 12th NPC.  There had previously been rumors that Kong was going to leave the court when he served on the SPC’s circuit court, which he denied.

Kong pursued his Ph.D. under Jiang Ping 江平 at the Chinese University of Political Science and Law.  He also served as Deputy Chief Judge under the Administrative Tribunal of the SPC, deputy chief judge of the civil tribunal, and as Deputy Party Secretary in Sichuan in 2014.  Among his many honors, Managing IP nominated him to the 50 Most Influential People in IP in 2010 and 2011.

Owing to his work in the fair trade division of SAIC prior to entering the court, Kong also had an interest in unfair competition and antitrust matters, and was an example of the many of officials in China who worked on unfair competition and IP issues at different stages of their career.  Kong has also authored several books including on contract law, antiunfair competition law, trade secret law, the TRIPS Agreement, and trademark law.

US & China Conclude High Level Exchange on Judicial Reform and Commercial Rule of Law

WP_20160802_005 (1)(photo by Mark Cohen)

Last week, top U.S. and Chinese judges and legal experts came together to implement the agreement between Presidents Obama and Xi to hold a high level exchange on judicial reform and commercial rule of law, which stated:

China and the United States commit to conduct high-level and expert discussions commencing in early 2016 to provide a forum to support and exchange views on judicial reform and identify and evaluate the challenges and strategies in implementing the rule of law. U.S. participants are to include leading members of the U.S. judiciary, U.S. government legal policy experts, and officials from the Departments of Commerce and Justice and the Office of the United States Trade Representative. Chinese participants are to include officials from the Central Leading Group on Judicial Reform, leading members of the Chinese judiciary, and Chinese government legal policy experts. This dialogue is to result in an improvement in the transparency and predictability of the business environment. This dialogue does not replace, duplicate or weaken existing regular bilateral legal and human rights dialogues between China and the United States.

According to Amb. Baucus’ view of the dialogue: “companies – American and Chinese – need predictability.  An independent judiciary that can resolve civil and administrative disputes fairly, transparently, and according to the law, is critical.  If we can deepen cooperation between the United States and China on judicial matters, it will help improve the investment climate, to the benefit of companies and workers in both of our countries.”

Chinese media reported that there were over 30 experts, officials and judges attending the program, which included several important IP judges such as SPC Justice Tao Kaiyuan,  and Deputy Chief   IP Judge Wang Chuang, as well as Beijing IP Court President Su Chi, as well as He Zhonglin, head of the SPC’s Office of International Cooperation and a former IP judge himself (see picture above).  According to the media, members of the delegation also met with Meng Jianzhu, head of the Party Political Legal Committee.

The US Department of Justice released the opening speech of Bill Baer, Assistant Attorney General, who noted that the Dialogue included many topics germane to IP such as: “How can parties obtain the evidence they need to prepare for trial?  What evidence should be admissible in court?  How do courts and parties use expert witnesses?  What can courts do to handle a large number of cases fairly, transparently, and efficiently, when resources are finite?  What sort of personnel do we need to implement the rule of law, and how do we ensure that they are properly trained and feel they are part of a justice-focused mission? Finally, what is the role of precedents in providing guidance to business as to what behavior violates the law?”

This is not the first such judicial exchange, nor the first exchange with a common law country.   The Federal Circuit has been engaged in two major programs on IP adjudication with the Chinese courts, including one that involved over 1200 people including 200 Chinese judges  in 2012, and a second large sale  program in Shanghai in 2015This year, the focus on the UK judicial exchanges this year is also on commercial law.  Individual US judges, such as Denny Chin and Randall Rader have also traveled to China and engaged the Chinese judiciary on IP and commercial legal matters, including by attending important programs in the United States.  In the UK, Mr Justice Birss was very supportive of these exchanges in comments he delivered at the Fordham IP Conference this year. The  SPC has reportedly established friendly relationships with judicial institutions of more than 130 countries and 20 international or regional organizations.

Chinese media noted that the next meeting of the dialogue of scheduled for Washington, DC.

 

 

CATR’s Report on Copyright Enforcement in the On Line Enviroment

The China Academy of Telecommunication Research (CATR), at the request of the National Copyright Administration,  released a report on April 26, 2016 on Copyright Protection in the Online Environment.

The report noted that  there were 2,118 on line civil copyright cases in total, an increase of 28.3% from last year (this total number seems smaller than I would have guessed).  The SPC White Paper reported that overall there were 66,690 civil cases, an increase of 12.1% from 2014.  Regarding civil on line copyright enforcement, 44% of the online cases involved music and 18% involved audiovisual infringement.  Amongst the IP courts, Guangdong had the highest percentage of cases (39.5%), followed by Shanghai (33.5%) and Beijing (16.5).  However, the province with the most cases was Hubei (476), followed by Beijing, Guangdong, Zhejiang, Shanghai and Jiangsu) (see chart below).

graphofcivilcases

The report also notes several important legal and policy initiatives, including directives from the National Copyright Administration on online liability, and a revision to the Criminal Code, making it clear that on line technology providers can be held criminally liable for copyright infringement.  The report also singles out the release of a draft of  proposed rule on Copyright Administrative Enforcement. (著作权行政处罚实施办法 (修订征求意见稿)as well as new rules Concerning Specifications of the Copyright Order In Online Transmissions (关于规范网络转载版权秩序的 通知),  Stopping Online Music Service Providers Transmitting Unauthorized Content(关于责令网络音乐服 务商停止未经授权传播音乐作品 的通知)and the Rule Concerning Specifications of the Order of Cloud Driver Service Provider Copyright (关于规范网盘服务 版权秩序的通知).

Data on copyright administrative and criminal enforcement in the online environment was not made available in this report.   According to the SPC White Paper, there were 523 criminal copyright cases, involved 547 people.  Moreover, news reports accompanying its release reported the following data: during the Sword Network Campaign in 2015, there were 383 administrative enforcement actions, with fines of 4.5 million RMB, 59 cases transferred to criminal prosecution, and 113 websites closed.

Summarizing the SPC’s 2015 White Paper

 

WP_20160420_005China releases much of its IP data in April, on the margins of World IP Day (April 26).  This year there have been important conferences summarizing these reports in advance of their release, including reports from the Supreme People’s Court on IP litigation, as well as white paper reports on specialized IP courts in Beijing, Shanghai and Guangdong.  In addition, there are SPC reports on fifty model cases and 10 big IP casesThe Western media has also reported on some of these reports, as have state run media in Chinese and in English.   This blog has reported on SPC whitepapers and model cases for some time.  As in prior years many provincial courts, such as Hubei, are also reporting out white papers of various kinds, as have IP and administrative agencies, such as Beijing municipality.

As in prior years, interpretation of the data, particularly for the foreign business community, can be challenging.  Here is my digest of the SPC’s important 2015 White Paper:

Foreign Cases Are a Shrinking Share

Perhaps the most dramatic national news from the official national data involving foreigners is that in 2015 foreign related IP cases dropped 22% in absolute numbers from last year, despite an overall increase of 7.2% of total decided IP cases. The total number of civil cases involving foreigners was 1,327.   As a consequence, foreign related IP civil cases as a share of total cases dropped from 1.9% (2013), to 1.8% (2014), to 1.2% (2015).   By contrast, total administrative cases in 2015 were 10,926, of which 4,928 were foreign or about 45%, continuing the trend of an outsized foreign administrative presence, with an undersized infringement role.

Data from other sources also casts some doubt on the “foreign-related” data in the SPC’s report.  The Shanghai IP courts reported that approximately one in six lawsuits received involved an overseas party, with most pursuing trademark or patent infringement claims.  A newly set up database company, IP House, also reported that over 20% of the IP litigation in Beijing involved foreigners.  Former SIPO Commissioner Tian Lipu also cast doubt on data suggesting that the amount of foreign-related IP litigation is under 5%, in a letter to then USPTO Director Kappos.  Conflicting data on foreign-related cases is likely due to the manner of reporting.  Although there is no official explanation I know of, I believe that foreign-related cases are likely those cases reported as foreign related for purposes of suspension of mandatory time frames for adjudication under China’s civil procedure law.  However, litigation commenced by a foreign invested entity in China may be characterized by the SPC as a domestic case.

Another explanation may be that the high level of foreign-related administrative cases may be due to the centralization of IP prosecution in the headquarters of many foreign companies which file these cases in the name of the parent company.  After China’s patent office or trademark office grants the right, the foreign company might then transfer the rights to the subsidiary.  This transfer is validated by the high percentage of related party IP licensing activity which US census also reports. I have not, however, seen any studies that seek to correlate foreign licensing activity, foreign investment and foreign-related litigation, which might support this hypothesis.

As I have noted elsewhere, comprehensive data must, however, await publication of the relevant source cases or data by the SPC and other courts.

IP Cases Continue to Grow Overall

The shrinking reported foreign share contrasts with the rapid growth of IP cases in China.  The SPC reported that newly reported first instance IP cases increased to 130,200, up 11.73% from 2014.  Total cases adjudicated were 123, 059, an increase of 11.68%, of which 101,324  were civil cases, an increase of 7.22%.  Administrative cases adjudicated constituted 10, 926, an increase of 123.57%, most likely due to changes in China’s trademark law which establish a more direct role for the courts.   Criminal cases adjudicated were 10,809, maintaining their slightly decreased level since 2013 (the SPC report notes that the cases are “stable” 同比基本持平)。

Patent Cases Continue to Grow

The SPC reported that patent and licensing cases continued grow, and that they increasingly involved complex areas of technology, with an increase of 22.1% to 13,087 cases.   However, I have not yet seen a breakdown of cases by type of patent or technology type which fully documents this observation.  The data appears too general at this point, considering that perhaps 2/3 of China’s patent cases involve unexamined utility models and designs of varying technological complexity, the relatively small share of licensing disputes, and the reality that many software and unfair competition cases may in fact involve high technology cases (but may not otherwise be reported as such).

Unfair Competition Cases on the Rise

The SPC report shows that unfair competition cases have increased, including those involving the internet and software technologies. Civil cases increased to 2,181, with antitrust cases increasing to 156. The total increase was 53.38%. Trade secret cases have not yet been separately reported out. They are generally a significant share of this relatively small portion of the IP docket. In 2009, for example, there were 1,282 cases under the Law to Counter Unfair Competition in the courts, of which 253 involved trade secrets.

What the Data Suggests on Courts Foreigners May Want to Pay Attention To

A foreigner traveling to China who is considering where to bring a case, or risks of being sued in a particular venue, should not consider all court as equally well situation.  The Beijing courts, for example, clearly play a key role in foreign related IP adjudication. As administrative cases are overwhelmingly located in Beijing, the Beijing IP court hears perhaps 80% of the combined civil/administrative foreign docket.

In addition, the SPC reports that Beijing, Shanghai, Jiangsu, Zhejiang and Guangdong accounted for 70 percent of the first instance IP litigation of all types. Shanghai is also a good place to engage, as it has the SPC has established an international exchanges base there. Indeed, the Shanghai white paper also reported out on its exchange activities, including singling out a significant conference last year with the US Court of Appeals for the Federal Circuit. Still, several courts are assuming increasing importance, and some may pose defensive risks and opportunities for foreigners.   Jiangsu’s docket increased by 38.71%; the docket in Tianjin increased by 50.41%. Anhui saw an increase of 101.26%, while courts in Shandong, Shaanxi, Hunan and Helilongjiang all saw increases of over 30%.

Just as the specialized IP courts were releasing their white papers, the SPC reported that NPC delegates from a number of provinces had been asking to establish their own IP courts in their region, and that the SPC would report out in August on these proposals.  In my opinion, these requests reveal the problem of this otherwise noble experiment in specialized IP courts: if multiple regions have specialized IP courts at the intermediate level, then efforts to insure national unity in reduce local protectionism in IP litigation through a national appellate court may be compromised. However, it is also important to note that these specialized IP courts would replace specialized IP tribunals – a significant difference from US trial court litigation, which  involves courts of general jurisdiction.

At the same time as these papers were being released, a judicial delegation from China was engaging with US federal and state judiciary to discuss the role of IP courts and possibility of future cooperation (see picture above by me from the Wisconsin Supreme Court).  I also believe that we can expect more discussion on these important issue in the months and years ahead.