Brookings Program Highlights China’s Legal and IP Reforms

tao

A program on January 28, 2015 at Brookings in DC, demonstrated how China indeed is “crossing the rule of law river by feeling the IP stones.” Two Chinese judges – Supreme Peoples Court Vice President Tao Kaiyuan and SPC No. Four Civil Tribunal Chief Judge Luo Dongchuan, gave an upbeat overview of China’s quickening pace of judicial legal reform which was deeply informed by their experience on IP matters. The presentation of Judge Tao is available on line.

Judge Tao is well known to many for her stewardship of the Guangdong IP Office, where she served as Director General from 2008-2013. In her current role at the SPC, she oversees the IP Division (No. 3 Civil Division).  Judge Luo now handles foreign-related commercial and maritime cases. He has been outspoken recently about improving foreign-related civil litigation. He is perhaps best known for his many years of work on the IP Division of the SPC, where I had numerous discussions with him on a range of IP issues, including patent litigation and the role of specialized IP courts.

Judges Tao and Luo, in public and in private, were both quick to point out their close relationship with the IP community. As slides 7- 8 point out, numerous reforms are underway and indeed, many of the reforms that are being contemplated nationwide are now being tried out at the specialized IP courts.

The Judges themselves appear to be part of a modest rule of law “charm offensive”, with a prior stop over in Houston.

(Photo above: Federal Circuit Bar Association President Jim Brookshire with Madame Tao Kaiyuan.)

Revised Patent Administrative Enforcement Rules – Is SIPO Building an Administrative System so the Patent Law Amendments Will Come?

On January 27, 2015 SIPO released a revised draft of its Patent Administrative Enforcement rules for public comment.  The released draft includes a line by line comparison with the last version (Feb. 1, 2011) as well as an explanation of the changes. The due date for comments is March 15, 2015. The purpose of these amendments is to address such matters as reducing the time frame for patent administrative litigation, improving procedures, and improving enforcement in the on-line environment.

Separately SIPO Commissioner Shen revealed at a SIPO Party Meeting on January 23, that in addition to rapidly increasing patent filings (2.361 million in total in 2014), , the total number of patent administration enforcement cases was 24,479, increasing 50.9% from the prior year.  This is a nearly 16 fold increase since 2009.  Past efforts like these have typically brought surges in “patent passing off” cases, which is most like false marking.   SIPO’s administrative enforcement in recent years has also shown irregular month to month cycles that are likely tied to enforcement campaigns (see my chart below).Patentadminenf

I estimate that this high level of enforcement activity is likely due to a combination of four factors, including an NPC Standing Committee to supervise administrative patent enforcement in eight provinces and regions that was launched in 2014. a campaign from last year to address counterfeit and substandard products (打击侵犯知识产权和制售假冒伪劣商品), a renewed commitment to amend the patent law, which Commissioner Shen noted in his talk at the meeting to local IP Offices on January 19, and SIPO’s own desire to ensure that its administrative enforcement system is not sidelined by recent efforts to improve judicial adjudication of high technology IP cases, including the establishment o f the specialized IP courts.   Indeed, the explanation advises that this draft reflects the commitments to improving rule of law in China.

The different roles of China’s administrative and judicial systems in patent enforcement has been previously discussed by me in this blog,  I quoted David Kappos at that time as recommending that “China should consider concrete ways of promoting and improving the civil judicial enforcement system by providing more resources, promoting the independence of the judiciary, providing for more training of judges, particularly on technical patent matters, and in general, improvements in the civil legal environment”  Many of these efforts are now underway in the judicial system.   Maybe the administrative system is trying to catch up?

Photo below, from Beijing airport – a foreign company advertising its patented product in 2015.

patentedmakeup.jpg

Updated January 17, 2016.

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.”

 

SPC President’s Report on Adjudication Highlights Some Key IPR Judicial Developments

SPC President Zhou Qiang spelled out some key IPR judicial developments in report to the National People’s Congress and Chinese People’s Consultative Congress on March 10.  A full text of the report is found on the excellent website of former SPC Chief IPR Judge Jiang Zhipei (picture below).  Here are some excerpts:

As a general matter litigation of all types increased in China in 2013, with case filings at local courts increasing at 7.4% or 14,217,000 cases of first instance in China during 2013.   By comparison, Zhou Qiang reported total IP cases at approximately 100,000.  If this number reflects civil, criminal and administrative cases, as well as IPR-related cases, such as antimonopoly law or crimes involving fake and shoddy goods, it would suggest that there has been no significant increase in IP litigation.  If this number is based on civil cases only, then there has been an increase in the civil IP docket, from about 83,350 in 2013.

Total foreign-related commercial cases numbered only 5,364, out of 3,957,000 commercial cases.   It is humbling to think that in 2012, the last date for which we have comprehensive data, there were only 1,429 and 1,349 civil and administrative foreign related IPR cases, respectively.   Foreign-related IPR cases of all types likely remain a small fraction of the Chinese court docket.

In terms of overall transparency, the court continues its effort to increase judicial transparency, as I have previously noted.  In his report, SPC President Zhou Qiang noted that 3,858 SPC decisions have been placed on line, as have 1,646,000 local court decisions.

The court also notes that one of its goals for 2014 is to promote the establishment of IP court(s), and that it is looking at how to experiment in managing resources for courts below the provincial level, in order to create a degree of  “suitable separation” from local administrative influence to improve the management system of judicial personnel.    Such efforts, if successful, could reduce the amount of local protectionism.Image

Chief Judge Jiang Zhipei, Former USPTO Acting Director Teresa Rea, Mark Cohen (the author) and Shi Lan.

The Back Story on the Third Plenum IPR Language

Former SIPO Commissioner Tian Lipu recently revealed the “legislative history” of the language in the Third Plenum regarding IP, as reflected by former Chief Judge Jiang Zhipei in his chinaiprlaw.cn blog (http://www.chinaiprlaw.cn/file/2014020731400.html).

The original language being discussed was that China would “Implement the National IP Strategy and Strengthen IP Protection.”(“实施知识产权战略,加强知识产权保护”).  This was, indeed the language circulated in August 2013, and did not reflect much change from prior years.  A proposed change in language at that time was “Deepen the National IP Strategy,  Strengthen the Practical Protection of IP.” (“深入实施知识产权战略,切实加强知识产权保护”).

Ultimately, the final language was “Strengthen the Utilization and Protection of IP, Investigate Establishing a Specialized IP Court” (“加 强知识产权的运用和保护,探索建立知识产权法院”).   In the words of former Commissioner Tian, the placement of “utilization” as the first priority was a new development. The language regarding specialized IP courts was inspired by the National IP Strategy (2008) which had originally taken up this issue, and promoted it to reduce local influence and improve national coordination.  However this new language on the courts, according to Tian, supports a next stage of concrete implementation of this proposal.

After the adoption of this proposal, Tian and SIPO were delighted with this language, as they had been concerned that the recent establishment of “too many” High and Intermediate IP tribunals would complicate matters and make it difficult to establish an IP court.  Now, according to Tian, development of a specialized IP court is a development direction for China as well as one that is increasingly recognized by other developing countries.

Commissioner Tian Lipu has made enormous contributions to the development of China’s IP and patent systems and has earned the respect and friendship of many IP officials throughout the globe. It now seems that even as he was preparing to retire, one of his visions for improvements to the IPR system is further down the road to success.