Opinion: Why specialised IP Courts are not enough

Since 1993, when the first intellectual property (IP) division was formed within the Beijing court, the number of IP divisions in the Chinese court system has increased to over 500. In order to streamline the court system for adjudicating IP cases, the Standing Committee of the National People's Congress issued the Decision to Establish Intellectual Property Rights Courts in Beijing, Shanghai and Guangzhou (Decision) in August 2014. After the Decision, the first specialised IP court in Beijing opened on November 6 2014. The Shanghai and Guangzhou courts opened on December 28 and December 16 2014 respectively. The new specialised IP courts are expected to improve IP jurisprudence in China by producing better quality and more consistent court decisions on IP legal issues. The State Intellectual Property Office (SIPO) has praised the specialised IP courts as pioneers in PRC legal reform.

Jurisdiction clarified

On October 27 2014, the Supreme People's Court (SPC) issued a regulation setting out the jurisdiction and type of cases the IP courts will be hearing in its Provisions for Jurisdiction in Cases by the Beijing, Shanghai and Guangzhou Intellectual Property Courts (Provisions). The Provisions empower the three IP courts to hear:

• Civil and administrative cases involving patents, new plant varieties, layout designs of integrated circuits, technical secrets, computer software and other technologies;
• Administrative cases involving copyright, trademark, and unfair competition against administrative actions of the State Council Department or above the county level departments; and
• Civil cases involving the affirmation of famous trademarks. The Provisions also note that the Beijing IP court will focus on administrative cases and the Shanghai and Guangzhou courts will deal with civil cases.

The exclusive jurisdiction of these courts covers their respective directly controlled municipalities in the case of the IP courts of Beijing and Shanghai, and the entire Guangdong province in the case of the Guangzhou IP court. For these three territories, which cover the most important business centres in China (and where most of the foreign businesses operate), all first instance civil cases as well as appeals of administrative IP cases within their jurisdictions will be heard by the specialised IP courts. This is intended to promote more consistent and predictable decisions in IP cases.

The Guangzhou IP court has province-wide jurisdiction, which allows it to hear IP cases for all cities in Guangdong province. The Guangzhou IP court essentially takes over the jurisdiction for IP cases from 20 intermediate courts in the province. It is hoped that this province-wide jurisdiction will reduce the risk of local protectionism and favouritism. Another important benefit is the promotion of uniform court guidelines and decisions, where all cases are heard by one court regulated under the same guidelines. While this arrangement may make it inconvenient for parties located in other parts of the province, it will certainly be of great benefit and comfort to foreign businesses who wish to pursue IP claims in Guangdong province.

IP appellate courts

Under the current framework, appeals from the new IP courts are to the respective local Higher People's Courts, rather than a specialised IP appellate court. Without an IP appellate court, IP appeal cases (which often involve complex issues and which will have considerable impact on IP law and policy) will be decided by non-specialised judges. Arguably, it is even more important to have specialised IP courts at the appellate level, which unfortunately is not available under this new system. To further improve the IP court system, IP appellate courts should be established in Beijing, Shanghai and Guangzhou. In the future, these specialised appellate courts can also act as regional appeal courts for other provincial first instance IP courts that may be eventually established.

Criminal cases left out

There has been some disappointment that the IP courts will not have the jurisdiction to hear criminal IP cases. When the specialised IP courts were first proposed, the SPC considered whether a three-in-one regime (encompassing civil, administrative and criminal) would be a feasible option. The pilot three-in-one schemes in the current IP divisions have proven to be a success. No official explanation has been given as to why criminal cases were not included in the new regime.

There has long been a jurisdictional split in the three types of IP cases in China, as civil and administrative cases IP cases were heard in the intermediate courts while criminal cases were heard in the basic courts. The present two-in-one IP courts are expected to raise the quality of both civil and administrative IP cases, but criminal IP cases will still be heard by the basic courts. Since criminal prosecution for IP crimes only arises when the cases meet certain seriousness thresholds (with imprisonment being a potential consequence), these should also be dealt with by specialised courts rather basic lower courts.

Technical investigation officers

Another feature introduced in the IP courts is the added new post of “technical investigation officers”, who will advise judges on scientific/technical issues for patent cases. While these officers should help the judge in understanding complex technical issues, the SPC has cautioned judges that these officers should only be assisting the judges and should not be offering opinion on the legal merits of the cases. Further, judges must also consider the parties' evidence and expertise when determining issues of technical facts and not rely solely on the view of the technical investigation officers. The use of court technical experts is not new to China's IP regime as SIPO has been using expert examiners to assist in technically complex matters for some time. However, this is the first time that permanent court positions have been created for this purpose. The final number and the technical background of the technical investigation officers to be hired in the Beijing IP court are yet to be seen. It is also currently unknown whether these officers will be sufficient to support the technical breadth and scope of the patent cases handled by the IP court judges.

Updates and improvement

By December 5 2014, the Beijing IP Court has accepted 221 cases, 36% of which were filed by foreign parties. On December 16 2014, the first administrative case went on trial at the Beijing IP Court and was led by Su Chi, the president of the court. The Guangzhou IP Court started operating on December 16 2014 and the Shanghai IP Court opened on December 28 2014. We will soon be able to see the implementation of the reform efforts of the SPC. The specialised courts are definitely an important step in the right direction for improving IP enforcement and jurisprudence in China. However, as mentioned above, there is still much room left for further improvement and refinement.


Matthew Laight and Hank Leung, Bird & Bird, China/Hong Kong


More from CLP:
Decision to Establish Intellectual Property Rights Courts in Beijing, Shanghai and Guangzhou
Provisions for Jurisdiction in Cases by the Beijing, Shanghai and Guangzhou Intellectual Property Courts
Unilever interview: Fitting China into a global patent strategy
Why China's judicial reform has a long way to go
Opinion: Patent disputes make headway