22 January 2019

Finally a unified “Court of Appeal” for technology IP in China

On October 26, 2018, China’s Supreme People’s Court (“SPC”) received approval to establish a specialized intellectual property court within the SPC to handle appeal cases involving technology-related IP for both civil (e.g., patent infringement) and administrative (e.g., patent invalidity) judgments. Technology-related IP includes invention patents, utility models, new plant species, IC design, trade secret, software, and anti-trust cases. ^[1] On December 28, 2018, the SPC announced the opening of this new SPC IP Court on January 1, 2019, and laid out some details surrounding how things would work ^[2]. We have summarized some of the details below.

The SPC IP Court is based in Beijing and its judgments, rulings, mediations, and decisions are the judgments, rulings, mediations, and decisions of the Supreme People’s Court (the highest court in China).

The SPC IP Court hears the following cases:
- All appeals arising from technology-related IP “first instance^[3]” judgments in civil or administrative cases arising out of the intermediate courts, high courts, IP courts
- Major and complicated first instance cases
- Other cases the SPC determines should be tried by the SPC IP Court

Major, difficult, or complicated cases shall be discussed by a panel consisting of the President, Vice President, and a number of senior judges

The SPC IP Court will use several electronic litigation platforms or online video to facilitate several aspects of litigations, including the serving or transfer of litigation documents, evidence, conducting pre-trial meetings, evidence exchanges, and more.

Prior basic people’s courts who had been given authority to accept first-instance technology-related IP cases will no longer accept those cases. All technology-related IP cases will be first filed at the intermediate court level.

Additional provisions describe the rules and appeals process for ongoing cases. In summary, first instance judgments decided after January 1, 2019 can appeal directly to the new SPC IP Court.

Benefits

The creation of this SPC level court and the access it provides is monumental news for IP owners around the world. The landscape has fundamentally changed from before, when access to the SPC was done on a discretionary basis. Complicated IP cases can be resolved more efficiently, more cost-effectively, and with greater consistency and quality. Most importantly, all technology-related IP cases have the legal right to be heard by this SPC IP Court as a second-instance decision^[4].

Greater Consistency

The creation of this court is likely to provide harmonized IP decisions at the appeals level by creating a “unified” appeals court for technology-related IP, addressing previous inconsistencies that arose between different provincial High Courts. Additionally, this new SPC IP Court will be the final court of appeal for both invalidation and infringement proceedings^[5], similar to the current function of the Supreme People’s Court (SPC). Under the previous system, parties not pleased with the results of a first judgment (first instance), could appeal to a higher court (intermediate courts or high courts) within the jurisdiction for a second instance (final) decision. Unfortunately, the higher courts have varied in their judgments over the years, leading to inconsistencies across the country on various IP issues.^[6] In fact, many have been asking for years for the creation of a single IP court to handle appeals decisions, so this is a welcomed change for so many reasons.

Higher Quality Decisions

Some of the country’s most respected and experienced IP judges have been tapped to lead this court, which should hopefully lead to higher quality and more consistent IP decisions for the country. Furthermore, all technology-related IP matters now must be initially filed at the intermediate court level^[7], a change from the past when certain basic people’s courts had been given authority to handle first instance technology-related IP cases. This should further increase quality and consistency of IP rulings in China. These latest changes, together with the ever-evolving growth of China’s larger IP court system (see below), will continue to improve the quality of IP court decisions coming out of China.

Major Developments in China’s IP Landscape

The change described above is only one of several major changes in IP that have been sweeping through the Chinese court systems in the past 5 years. In 2014 China created specialized IP intermediate-level courts in Beijing, Shanghai, and Guangzhou to handle technology-related IP disputes. Between 2017 and 2018, China created over a dozen specialized IP Tribunals in multiple different jurisdictions all across China. These IP Tribunals are associated with the intermediate courts in their respective locations, though some have jurisdictions that reach a larger territorial scope (such as the entire province) depending on the locations of the other IP Tribunals. China continues to create more of these IP Tribunals throughout China, hopefully one day providing everyone with a “local” intermediate court in which to file technology-related IP lawsuits. This creation of an SPC level unified appellate court is an important component that fits very well into China’s larger goal of creating a specialized IP court system that can efficiently, consistently, and effectively rule on the many complex technology-related IP disputes in the country. It will be very interesting to see how the new SPC IP Court handles its first several cases. The world is watching, and if the judgments really seem more consistent, fair, and beneficial to patentees, more and more innovation companies, both domestically and worldwide, will see China as a strong, efficient, and beneficial place in which to conduct patent litigation.

Jennifer Che, J.D. is a US Patent Attorney and Vice President and Partner at Eagle IP, a Boutique Patent Firm with offices in Hong Kong, Shenzhen, and Macau. [email protected] ------------------------------------------------- [3] China operates under a two instance system, which means a party is typically only entitled to two trials (essentially, one appeal) on a matter. The second instance is the final decision. Additional appeals are subject to the court’s discretion. [4] China operates under a two instance system, which means a party is typically only entitled to two trials (essentially, one appeal) on a matter. The second instance is the final decision. Additional appeals are subject to the court’s discretion. [5] China has a bifurcated legal system where patent infringement and patent invalidation cases are heard by separate entities. Patent infringement cases are first heard by the people’s court (first instance) which can then be appealed to a second instance case either at the SPC IP Court (new system) or the High Court within the jurisdiction (old system). Patent invalidation decisions are first heard by the Patent Re-examination Board of the CNIPA (China National Intellectual Property Administration or the Chinese Patent Office) before they are appealed to a first instance case at the Beijing IP Court, which can be further appealed to a second instance case either to the SPC IP Court (new system) or the Beijing High Court (old system). [6] Unlike the US, a common law legal system where judges are bound by precedential case law, China is a civil law country, where previous decisions by a higher court cannot be used as binding legal interpretation for lower courts. This leads to a potential for large inconsistencies between courts. [7] Non-technology-related IP cases, such as design, trademark, and copyright cases, will still go through traditional court channels.

Finally a unified “Court of Appeal” for technology IP in China

Benefits

Greater Consistency

Higher Quality Decisions

Major Developments in China’s IP Landscape

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