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Raising the Bar
A new national Intellectual Property Court marks an increase in judicial protection
By Wang Hairong  ·  2019-01-11  ·   Source: NO. 3 JANUARY 17, 2019
The Xi'an Intellectual Property Court was established on February 24, 2018, in Xi'an, capital city of northwest China's Shaanxi Province (XINHUA)

As the bell chimed the New Year, Luo Dongchuan, the youngest vice president of the Supreme People's Court (SPC), turned a new page in his life. He was sworn in as the chief judge of the national-level Intellectual Property (IP) appeal court unveiled on January 1.

"The official launch of the court marks a new step in intellectual property rights (IPR) adjudication and opens a new chapter in IPR judicial protection in China," said Zhou Qiang, President of the SPC. On the first day of 2019, Zhou observed the oath-taking ceremony, inspected the court and delivered a speech.

He hailed the court as a major institutional innovation for strengthening IPR protection, promoting innovation-driven development and nurturing a first-class international business environment. He emphasized strict and impartial trials as well as equal treatment of both domestic and foreign entities.

"China is now the world's second largest economy, and its future development depends on innovation. The judicial protection of IPR is crucial to protecting innovation," Luo said at a press conference on December 29,

2018, on the day he was appointed chief judge of the court. "Therefore, in order to become a country strong in science and technology and rich in IPR, China must focus on IPR judicial protection," he said.

"China is the first country in the world to establish a standing IP judicial organ as part of its Supreme Court, demonstrating the government's determination to protect IPR," Yao Guanyang, partner and patent attorney with Liu Shen & Associates, one of the leading IP law firms in the capital, told Beijing Review.

Staff members handle the services in the Intellectual Property Rights Protection Center in Yiwu, east China's Zhejiang Province, on November 21 (XINHUA)

Trial standards

In addition to spurring innovation and nurturing a favorable business environment, Luo said that the IP court was set up to prevent inconsistencies in the application of law and improve the quality and efficiency of trials.

China has a legal system where there are two levels of trial, with the second instance being the final judgment. This means that a case is closed after going through the second level.

"First-instance patent cases used to be tried by local intermediate courts, and after appeal, they went to the local high courts. This meant that different trial standards might be applied in more than 30 high courts across the country," Luo explained.

Although many local courts were granted the authority to try IP cases, in 2014, China set up three specialized IP courts in Beijing, Shanghai and Guangzhou. Special tribunals were also set up in local intermediate courts to hear IPR cases. Currently, there are 18 specialized IP tribunals in China, said Yao.

In the past, administrative and civil IP appeals were heard by provincial-level high courts, whereas now, appeals for significant and technically complicated cases will be heard by the national-level IP court, said Wu Handong, former President of the Zhongnan University of Economics and Law.

Thus, the newly established IP court under the SPC allows litigants to appeal directly to the SPC, which ensures the uniformity of trial standards, Luo added.

IPR cases involve patents, copyrights, trademarks, new plant varieties, integrated circuit layout design and monopoly. At present, approximately 200,000 IPR cases are accepted in Chinese courts every year, Luo said. However, a large number of cases involving Internet piracy and trademark infringement are not technically complicated, so they do not necessarily need to be heard by the SPC.

Therefore, he said, of the approximately 2,000 patent cases that are appealed each year, the national-level IP court will mainly hear technically complicated patent cases.

The SPC IP court will hear administrative appeals against invalidity decisions, which previously were reviewed by the Beijing High People's Court, with the corresponding infringement appeals heard by local high courts, which created two legal proceedings that were not synchronized, Yao explained. 

"Having a national-level IP court to hear significant and technically complicated cases will also guarantee the quality of judgments, since more experienced judges in IP fields will work together to analyze in-depth legal issues and technical difficulties," said Yao. This will help enhance judicial credibility and strengthen the judicial protection of IPR, he said.

More than 20 judges who were appointed to the new court were selected from courts around the country. All of them have postgraduate degrees; half hold doctoral degrees; one third received science and technology education; and one third studied overseas, Luo said.

These judges have been active in handling patent disputes, Yao said, adding that Judge Li Jian was the main author of the SPC's Interpretations on Certain Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases issued in 2016; and Judge Jiao Yan was the main judge in Iwncomm v. Sony, a recent high-profile Standard Essential Patent (SEP) infringement case, which refers to patents required to conform to industry technical standards.

On December 3, 2018, the World Intellectual Property Organization releases a report, which reveals that China topped the world in the volume of applications for each category of IPR in 2017 (XINHUA)

Steady progress

Luo is among the first batch of Chinese judges to handle IP cases. Over the years, he has seen the progress in IP judicial protection in China.

"Protecting IPR is a basic Chinese national policy. The IP legal system has been developing alongside the progression of reform and opening up," Luo said. "The aim to start IPR judicial protection is to meet the demand of the reform and opening-up drive," he said.

China's IPR legislation started from scratch nearly four decades ago, Wu said at a press conference held by the State Council Information Office (SCIO) in December 2018. The Trademark Law was promulgated in 1982, the Patent Law in 1984, the Copyright Law in 1990 and the Anti-Unfair Competition Law in 1993.

They were followed by the Regulations on the Protection of New Plant Varieties and the Regulations on the Protection of Integrated Circuit Layout Design. Before its accession into the World Trade Organization (WTO) in 2001, China revised its laws in accordance with the provisions of international conventions, Wu added.

Luo recalled that when he started his first job in the late 1980s, there was no established IPR legal system, so IPR cases were settled according to the General Principles of Civil Law, as well as international treaties and conventions.

Later, judicial organs specializing in trying IPR cases were slowly established. In 1993, China set up its first special IP tribunal in the Beijing No. 1 Intermediate People's Court. Luo started working there at its inception, becoming its vice chief judge in 1995 and chief judge in 2000. In the same year, he began to serve as the vice chief judge of an SPC division specializing in handling IP retrials.

Regarding China's progress in IPR protection in the past 40 years, Wu pointed out that the general public's increasing awareness of IPR has also promoted their protection.

"Forty years ago, Chinese people didn't know what IP was. I remember that in the 1990s, the term didn't even exist in the legal lexicon," he said. "But today, it has become a buzzword in people's work and life."

Today, politicians, entrepreneurs and other members of the general public are learning about IP and are aware of their rights, he said.

Hu Guohua, a retired researcher, was the first person in China to apply for a patent. He filed his application on April 1, 1985, the first day the Patent Law went into effect. Back then, he was working in an aerospace research institute, where he created a device that can turn black-and-white satellite images of Earth into colored ones to capture more information. Upon learning about the impending patent law, he decided to patent his research results.

"Since then, I have applied for more than 20 patents and I have been granted over a dozen patents. Recently, I acquired two more patents," Hu said at a press conference held by the SCIO in December 2018.

Yin Xintian, a former official retired from the China National Intellectual Property Administration (CNIPA), started working at the administration in 1980. He recalled that in 1985, a total of 14,000 applications for inventions, utility models and design patents were filed.

In recent decades, however, the number of patent applications has soared. In 2017, CNIPA received 3.7 million patent applications, granting 1.84 million, according to its annual report.

"In just a few decades, China has constructed an IP system, encouraged homegrown innovation, joined the ranks of the world's IP leaders and is now driving worldwide growth in IP filings," said Francis Gurry, Director General of the World Intellectual Property Organization (WIPO).

The annual World Intellectual Property Indicators (WIPI) report released by WIPO in December 2018 showed that China recorded the highest volume of applications for each category of IPR, including patents, trademarks and industrial designs from innovators and creators inside the country, as well as foreign entities seeking to protect and promote their work in the country.

"Demand for IP protection is rising faster than the rate of global economic growth, illustrating that IP-backed innovation is an increasingly critical component of competition and commercial activity," said Gurry.

Equal treatment

Chinese courts are receiving an increasing number of IP cases involving foreign entities, said Song Xiaoming, chief judge of the SPC's IPR division.

To date, approximately 20 percent of the IP cases handled in Chinese courts have involved foreign entities, with nearly 30 percent of the IP cases in the Beijing Intellectual Property Court being foreign-related.

The trial period of foreign-related cases in China is among the shortest in the world, Song said, adding that in the Beijing Intellectual Property Court, the average period for handling such cases is four months, shorter than the average of 18 months in major EU countries and much shorter than that in U.S. courts.

"Chinese courts treat all parties equally when dealing with foreign-related cases. Particularly since its accession into the WTO, China has been strictly abiding by the international conventions and the bilateral treaties it has signed, and has implemented the principle of national treatment," Song said.

A recent widely covered foreign-related case was launched by U.S. basketball star Michael Jordan against Chinese firm Qiaodan Sports and the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce. The SPC ruled partly in favor of Jordan's claims on December 8, 2016.

In 2012, Jordan accused the Chinese sportswear and shoe manufacturer of unauthorized use of his name. He also requested the Trademark Review and Adjudication Board revoke the sportswear company's trademarks bearing the Chinese translation of his surname. After he lost the case, Jordan brought the trademark authority to court.

In 2015, the Beijing Higher People's Court issued a second-instance verdict, rejecting Jordan's request on the grounds that the trademarks at issue bear the translation of a common family name, which is not exclusively associated with the surname of the basketball star.

In the same year, Jordan filed for a retrial with the SPC. The high court retried the case and partly overturned the second-instance judgment, holding that trademarks bearing the Chinese translation of "Jordan" violated the basketball star's right to his name, whereas those bearing "Qiaodan," the pinyin rendition of the Chinese translation, did not.

Another recent foreign-related IP case was the Iwncomm v. Sony case, which involved Iwncomm, a network security access provider and developer based in Xi'an, capital of Shaanxi Province, and the Beijing subsidiary of Japan-based Sony Corp.

In 2015, Iwncomm sued Sony Mobile Communications (China) in the Beijing Intellectual Property Court for infringing on one of its SEPs.

In March 2017, the Beijing Intellectual Property Court made a first-instance judgment on the case. It found that patent infringement did exist and ordered the defendant to compensate the plaintiff 9.1 million yuan ($1.33 million). The defendant appealed to the Beijing High People's Court, which rejected the appeal on March 28, 2018, maintaining the first-instance judgment.

"From our experience in legal practices, all parties are treated fairly and equally during the trial of foreign-related cases," said Sean Chen, partner and patent attorney with Liu Shen & Associates.

Copyedited by Rebeca Toledo

Comments to wanghairong@bjreview.com

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