IPO Webinar on Specialized IP Courts and A Blog Too from Nottingham

Intellectual Property Owners hosted a great webinar on “China’s New IP Courts: What U.S. Companies Need to Know.” Speakers include Benjamin Bai from Allen & Overy, Gang Hu from CCPIT Patent and Trademark Office, and me (Mark Cohen).   The program occurred on December 2 at 12:00 noon. The fee was  $130.00. The content is available on line.

Here’s a recent blog I did for the University of Nottingham on the same topic.

As I noted in the webinar and the blog, the IP Courts are a bit of a misnomer.  The lion’s share of iP litigation (trademark. copyright) will not be handled by them.  The new courts are, however, closely related to judicial reform efforts.   Moreover, the courts are closely related to what China understands to be “innovation” – including utility models, and design patents, and excluding most copyright claims.  The fact that only technical trade secrets are protected and not business secrets such as marketing plans or client lists, underscores that these courts are not comprehensive IP courts but are targeted at China’s innovative sectors — as China understands them.

 

Mark

A Deeper Dive Into the Jurisdiction and Role of Specialized IP Courts

deeperdive

As we previously reported the NPC’s Standing Committee established three Specialized IP Courts in Beijing, Shanghai, and Guangzhou.  The Supreme People’s Court and the cities’ High Courts are now in the process of implementing the NPC’s decision.

On November 3, 2014, the Supreme Court issued a decision and held a news conference outlining the jurisdiction of the Specialized IP Courts of Shanghai, Beijing, and Guangzhou. The court detailed the Specialized IP Courts’ jurisdiction over cases of first instance, over different types of IP cases, and over IP right authorization and verification.

The Specialized IP Courts have jurisdiction over three types of cases:

1.  Civil and administrative cases involving patents, new plant varieties, layout designs of integrated circuits, technical secrets, computer software and other technology cases; 2.  Administrative cases involving copyright, trademark, and unfair competition against the administrative action of the State Council department or above the county level departments; and 3. Civil cases involving the affirmation of well known trademarks.

The Specialized IP Courts will review civil and administrative IP cases challenging the judgment of lower courts. Additionally, the Higher People’s Courts, where the Specialized IP Courts are located, will review appeals against the judgment of the Specialized IP Courts.   Probably the two most important impacts of the jurisdiction of the courts in terms of its impact upon foreigners aspect of the jurisdiction are the jurisdiction of the Beijing Specialized IP Court over appeals over patent and trademark office final decisions and jurisdiction over well-known marks

Foreigner-related cases constitute a large percentage of these appeals from the patent and trademark office while the infringement cases brought by foreigners are about 2% of the docket.  According to various press reports, the overall share of administrative cases brought by foreigners in Beijing hovers near 50%.  Interestingly, in January of 2014, Beijing had already divided its intermediate IP court into two divisions one of which would hear patent appeals and the other would hear trademark appeals.  This experiment, which likely was intended to anticipate one national IP court like the Federal Circuit in the United States,  has necessarily become short-lived.  Nonetheless, in its jurisdiction over patent and trademark appeals, the Beijing Specialized IP Court does retain jurisdiction that is in many ways similar to the Federal Circuit’s  “administrative” jurisdiction over the USPTO.

I do not have precise current data on foreign-related well known mark cases.  However, well known mark status has been of concern to foreign brand owners for some time.  Former China Trademark Office Director-General An Qinghu 安青虎published an extensive analysis in English in 2005 on recognition of well-known marks in China, including the various circumstances by which foreign well known marks have been recognized, which as I recall from prior personal review of that article, was intended in part to address the concern of foreigners over how well-known marks were being protected in China  As DG An noted at that time “Among the 153 well-known trademarks affirmed by SAIC or Trademark Review and Adjudication Board, 132 are registered by Chinese registrants …, 21 by foreign registrants …” (fn. 7), and “SAIC had affirmed some well-known trademarks  in objection decisions in the 1990s, most of which were registered by foreign registrants.” (final endnote).  I do not have current data on well known mark ownership by foreigners.

The Beijing, Shanghai, and Guangzhou Specialized IP Courts have different focuses and differing impact upon foreigners.  As noted, the Beijing court is distinguished by its largely administrative docket.  The Shanghai and Guangzhou courts will deal with hear comparatively more civil IP cases and will hear relatively fewer administrative cases, mostly involving administrative enforcement decisions.  Guangdong has the largest IP docket in China although not the largest foreign-related docket.  Guangdong’s handling of intra-provincial IP disputes could become a model for a national appellate IP court.  Interestingly, an important and rapidly rising part of the overall IP docket in Guangdong involves online infringement owing to the large Internet business community in Guangdong.  However online copyright is not part of the Guangdong Specialized IP Court’s jurisdiction, despite many of those cases involving different regions of China and their rapid rise and complexity.  For example, from 2010-2013, the online infringement docket in the Pearl River Delta of Guangdong increased from 4058 to 9449, increasing from 21% to 38% of the overall IP docket.

The Supreme People’s Court also issued guidance regarding the selection of judges for the Specialized Court.  The judges can be selected either from those judges engaged in IP or related trials, or the judges can be selected if they have the same qualifications and conditions and are engaged in law practice, legal research or are law teaching professionals.

  1. A judge should also have the following qualifications: more than 6 years of relevant trial work experience; a bachelors or higher degree in law; a strong capacity for leading trials and drafting judgments; and Senior judge qualifications.
  2. The standards for other legal professionals as judges of the Specialized IP Court are referenced in further comments.

The candidates for the president of the Specialized Court are appointed by the city’s People’s Congress Standing Committee. The new President of the Beijing IP Court, Su Chi 宿迟, and his deputies, Chen Jinchuan 陈锦川 and Song Yushui 宋鱼水 appear to have such credentials.  Indeed, as if to underscore my analysis on the importance of Beijing to foreigners, the press reports  also underscore their experience in adjudicating foreign-related disputes.

Beijing’s Specialized IP Court will also include “Technology Experts,” (技术调查官)  who will help resolve technology issues that come up in the cases.  The High Court pointed to Taiwanese and Japanese courts that make use of such officials, noting that in those courts the Technology Experts are senior officials.  However, the SPC has also cautioned that the courts should not rely on such experts exclusively.

Here are three charts that demonstrate the jurisdiction of the Specialized IP Court in Beijing, Shanghai, and Guangzhou. See also the Chinese version.

Written by Mark Cohen with the support of Marc Epstein and Yao Yao from Fordham Law School.

Loyola/Berkeley/Renmin Program Highlights Recent US-China IP Developments

On Friday November 7 I attended and spoke at the US-China IP Summit at Loyola (https://chinaipr.com/2014/09/07/loyola-los-angeles-hosts-us-china-ip-summit-november-7/). Here are some highlights:

Prof. David Nimmer (UCLA) talked about whether there is a need to reintroduce a concept of formalities in copyright again, in order to deal with problems in determining rights and better utilize information technologies.

Dean Liu Chuntian of Renmin University, argued that China’s true economic constitution should be a civil code. He took issue with those that argue the Antimonopoly Law is China’s “new economic constitution.” In addition he expressed concern that IP shouldn’t depart from the civil law. Prof. Liu also reiterated his long-standing opposition to administrative enforcement in civil law matters and also argued that copyright law reform issues should focus on matters of economic importance. Copyright protection of sports broadcasting in China was singled out as such an economically important issue.

Regarding specialized IP courts, Dean Liu also noted that several “10’s of members” of the NPC Standing Committee dissented from the NPC decision. Prof. Luo Li noted that the Beijing Specialized IP Court was established last week, just before APEC. Prof. Luo noted that the jurisdictional divisions of the courts were quite complicated, due to differences in adjudication amongs civil, criminal and administrative jurisdiction. Computer software cases (piracy?) would also be heard by the specialized IP Courts.

I raised concerns in this discussion on the courts about how foreigners would be treated by these specialized courts, in light of evidence that suggests foreigners may fare less well in appellate specialized IP tribunals (see: https://chinaipr.com/2014/08/22/specialized-ip-courts-about-to-launch-in-three-cities-and-are-they-good-for-foreigners/)

Prof. Merges of UC-Berkeley described AIA post grant proceedings as a kind of “quiet harmonization” with foreign practices, including with SIPO. As with China, there is no mandatory stay of civil proceedings during these administrative proceedings.

Prof. Zhang Ping of Peking University discussed the Huawei/InterDigital Corporation case as a pioneering effort on the part of Chinese courts to deal with global standardization crises, including by determining appropriate royalty rates for standards essential patents.

Prof. Huang Wushuang of East China University of Politics and Law discussed current efforts at trade secret legislative work. He noted that he had submitted proposed revisions on the Antiunfair Competition Law regarding trade secrets, by expanding the current one article to 10. His discussions focused on several issues, including what constitutes reasonable precautions to protect trade secrets and the role of non-compete agreements and how to strike a balance between rights of employers and employees. He noted that he did not think it reasonable for injunctions in trade secret matters to be permanent, since every trade secret has its own life span. Regarding damages, he thought that a traditional hierarchy should apply by basing calculations on the plaintiff’s loss, the defendant’s profits, reasonable royalty and statutory damages. He also noted that there were few cases in China which showed a causal relationship between damages and infringing cases.

The last panel discussed trans-border cases and was one where I participated. There was an especially lively discussion on issues involving recognition of judgments and the timely implementation of Hague Convention requests for evidence. Various speakers noted efforts to settle global IP disputes such as by suspending cases in favor or one or more venues, using Hong Kong arbitration for cases involving Chinese entities, and the need for means to resolve increasingly more complicated trans-border disputes.

There were many more great speakers — my notes are hardly complete. Hopefully a transcript or summary of the presentations will be compiled shortly. Kudos to the organizers, including Prof. Song of Loyola, for another great program.

New SPC Guidance on Appointments to and Jurisdiction of Specialized IP Courts

There have been two documents released recently on specialized IP courts. One is the “Guiding Opinion of the Supreme Peoples Court on on the Work of Choosing Judges Rules for the IP Courts” (Provisional) 知识产权法院法官选任工作指导意见(试行) and the other is the  “Regulation of the SPC on Jurisdiction of Cases of the Beijing, Shanghai and Guangzhou IP Courts” 《最高人民法院关于北京、上海、广州知识产权法院案件管辖的规定》.

I welcome commentary and analysis on these two.

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.”

 

MofCOM’s September 12 IP Program in DC Covers A Wide Range of IP Developments

Here is a digest of some of the highlights of the half day program hosted by MofCOM on IP in Washington DC on September 12.

The Supreme People’s Procuratorate gave a useful overview showing the policy reasons for the big increase in criminal IP cases, including the expanding role of the procuratorate.

SIPO underscored the increase in its examiners and the decreasing pendency periods to 22.2 months.   SIPO has also conducted a social survey which showed a relatively high approval rating of its procedures (81.8%).

The Chinese side did not address the foreign-related impact of the Specialized IP courts. However the low foreign utilization of the civil IP system was generally acknowledged.

Regarding the new TM law, procedures for auditory marks was discussed, oppositions for non use, and changes in the recordal system for licenses. SAIC was careful to underscore that its recordal system did not require submission of business confidential information.   SAIC also discussed the changed provisions for liability by reasons of “providing convenience” to infringement, including storage, transportation, mailing, printing, concealing, providing a business premises and providing an on-line goods trading platform.

SAIC also noted that the TM law also sought greater coordination with other laws, including the anti-unfair competition law and criminal laws. For example, it provided support for demonstrating “intentionality” in  TM infringement when other indicia, such as trade dress infringement, are present.  Chinese IP Attaché Chen Fuli also noted that a key provision of the new TM law was its including of concepts of honesty and credibility into the TM system, which were borrowed from the civil law.

The National Copyright Administration noted that there were now at least 632 million Internet users in China, and 527 cell phone users, with 2,730,000 websites. NCA also noted that there were widely differing opinions on the types of amendments that were necessary for the copyright law.  In revising the law to address recent developments, NCA was looking at earlier State Council regulations on on-line liability, and recent civil and criminal JI’s.  NCA also noted that the on-line “Sword Campaign” resulted in 201 cases sent to criminal referral.  In addition NCA was supervising 25 websites for their content of top movies, and TV programs.  In NCA’s view, music and published works were continuing to experience significant problems, and NCA hoped to address these through a black-list system.  Also, NCA noted that many IP addresses for companies that were subject of its enforcement campaigns were located overseas, including in the US.

The Leading Group reviewed its numerous, generally successful, efforts at improving coordination on IP enforcement, including its recent campaigns. Unfortunately, its special campaign on trade secrets had only resulted in 21 administrative enforcement cases in the first half of 2014.

Regarding China’s sui generis system of GI’s, AQSIQ noted that this system was based on China’s Product Quality Law, and was initially implemented in 2004 by the Department of Science and Technology of AQSIQ. AQSIQ noted that relevant rules governing operation of the sui generis system included the Provisions on Protection of Geographical Identity Products, and the Working Rules on GI Product Protection, which provide for opposition and cancelation of GI applications.  Describing GI’s as a “public rights” system, AQSIQ also noted that it has set up a  GI working group, it has started work on a GI products encyclopedia,  it had promulgated over 1000 standards for GI products,  and that it had set up exemplary zones for GI products..  AQSIQ also noted that NAPA Valley had secured GI protection in China.  Its GI application was published in August 2011 and there had been no opposition to it.

Altogether, it was a useful and informative program.

Full disclosure: I co-moderated the program, although this summary represents my personal views only.

Specialized IP Courts Established in Beijing, Shanghai and Guangzhou; Song Xiaoming New Chief IP Judge

According to Xinhua, on August 31, the NPC passed legislation establishing specialized IP courts (http://news.xinhuanet.com/politics/2014-08/31/c_1112298943.htm) (“Decision of the NPC Standing Committee on Establishing Specialized IP Courts in Beijing, Shanghai and Guangzhou”)

As indicated, the courts are to be established in Beijing, Shanghai and Guangzhou.    Some basic aspects:

1.  The types and numbers of cases are to be decided by the SPC

2.  The court will hear technically complex first instance civil matters and administrative appeals (patents, technical trade secrets, plant varieties, semiconductor layout designs, etc.).

3.  The Beijing IP court will hear first instance appeals of validity / invalidity decisions of State Council IP agencies (patent office, trademark office, etc.).

4.  The courts will have cross-territorial jurisdiction for the types of  cases determined by the SPC noted  in the first paragraph above within three years.

5.  The court will also hear appeals from first instance trademark and copyright cases that originate at the basic level court in its municipality.

6.  Appeals of first instance decisions of the specialized IP courts will go to the high court of the province or city where that court is located.

7.  The specialized IP courts will be supervised by the SPC, the local high court and, “according to law”, the procuratorate.  Note that  no specific procuratorate – national or local is indicated.

8.  The President ( 院长) of the local IP court will be decided  and appointed by the local people’s congress.

9.  The Vice President of the court, chiefs of tribunals and adjudicating judges will be decided by the President and subject to appointment by the local people’s congress.

10.  The SPC will report on the implementation of the IP courts to the National Peoples Congress three years from now.

11.  The specialized IP courts are established as of August 31, 2014.

There are clearly some additional details and kinks to be ironed out.  For example certain copyright cases can be as technologically complex as patent cases;  there is no legal definition of “technical” trade secret as opposed to trade secrets involving business information; having the heads of these specialized courts be appointed by local people’s congresses may also continue to result in significant local protectionism; cross border jurisdiction for first instance cases for the courts could also result in cross border jurisdiction of the local high court, which could also increase local protectionism.  As I have noted several times before, I am unclear if anti-monopoly  cases qualify as “技术秘密等专业技术性较强的” (technologically complex, technically specialized) cases.

It  also appears likely to me that these courts would also be first instance courts for trademark and copyright cases which involve foreigners.  Such cases are typically now filed in the intermediate court or higher.  The NPC decision notes only that the specialized courts however have jurisdiction over appeals from the basic level courts which heard trademark and copyright cases.  As foreigners do not file cases in the basic courts, the specialized IP courts may be their courts of first instance.   知识产权法院所在市的基层人民法院第一审著作权、商标等知识产权民事和行政判决、裁定的上诉案件,由知识产权法院审理.  One question that arises is whether these courts would then also have cross border jurisdiction – which could then make them an effective tool in dealing with cross border counterfeiting and piracy involving foreigners and others.

The decision does further commit Beijing city to hearing administrative and civil IP cases in one specialized court, which is likely a good development for foreigners who bring many administrative cases.   If the Beijing IP court were granted jurisdiction over all cases where there is a validity challenge to a patent or trademark anywhere in China,  it could also result in a significant efficiency in the Chinese system.

These first instance specialized courts for technically complex cases will still be subject to review by at least one, possibly two appellate courts.  In this respect, the reform may be less like the Court of Appeals for the Federal Circuit, which established one national patent appellate court.  Rather, it appears to mostly be a reform of first instance adjudication, which might include consideration of venue, jurisdiction, consolidation of cases and further training of judges.

In a contemporaneous development, according to the People’s Daily (http://rmfyb.chinacourt.org/paper/html/2014-09/01/content_87088.htm?div=-1), Kong Xiangjun孔祥俊 is no longer head of the No. 3 (IP) Division of the SPC.  He has been replaced by Song Xiaoming 宋晓明, formerly chief judge of the No. 2 Civil Division.  Kong had  reportedly been scheduled for promotion and was working in SIchuan for the past several months.  It is unclear to me where Kong is next headed.