When it comes to IP enforcement, Chinese IP maths: 3 + 15 = more than 18?

What is the current state of IP enforcement in China? In the view of Kat friend Michael Lin from Marks & Clerk in Hong Kong, it may not be what you think.

Kat readers may recall the original three Chinese IP Specialist Courts in Beijing, Shanghai, & Guangzhou, which were set up about three and one-half years ago. While from the outset they already enjoyed pretty good grades, I would say that now they should be considered to have been a great success, to the point where the Chinese Government has greatly expanded the system.

As a result, the original three courts have expanded to 3 + 15, i.e., three IP Specialist Courts (the original three of Beijing, Shanghai and Guangzhou) together with 15 Specialized IP Tribunals (Shenzhen, Xi’an, Suzhou, Wuhan, Tianjin, Ningbo, Fuzhou, Hangzhou, Chengsha, Zhengzhou, Ji’nan, Qingdao, Heifei, Nanjing, and Chengdu). While the courts and the tribunals have different minimum requirements in order to accept a case, foreigners can essentially think of the tribunals as regional/city IP specialist courts as well. Furthermore, each of these courts/tribunals requires that their judges must have significant IP experience. These 18 courts are essentially selecting the best from the regional IP judges,which arguably makes the influence of these courts on Chinese IP jurisprudence significantly greater than just 18 "regular" courts.

Accordingly, it seems to this guest blogger that the common feeling in the industry and legal / IP circles is that China possesses a serious, ongoing commitment to raise the level of expertise and adjudication in the Chinese IP sphere. Furthermore, the impact is increasing beyond simply the jurisprudence, as transparency initiatives allow access to the data behind the judicial curtain. See, for example, Mark Cohen’s excellent China IP blog, reporting inter alia that foreigners: 1) disproportionately win in Chinese IP litigation; 2) enjoy more favourable injunction rates; and 3) receive larger awards of damages than do their Chinese counterparts. See also Mark Cohen’s discussion of the SIPO’s 2017 China Patent Survey Report on point #2.

While two and one-half years ago, the international opinion of these IP Courts was merely hopeful optimism, the comments that I have heard over the past year have been universally positive from Chinese and foreign practitioners alike. Accordingly, I submit that these courts and the growing consistency of their judgments have the potential to increasingly change the world’s perception of Chinese IP enforcement for the better.

In that connection, it is worthwhile to consider several other related developments regarding China IP:

• A month and one half ago, China announced a reorganization combining the Chinese Patent (SIPO), Trademark (SAIC), and Geographical Indications groups into a single ministry – the State Market Supervision Administration (SMSA).

• At a recent One Belt One Road forum, a discussion with government and industry representatives concluded that after the dust from the SMSA reorganization settles, the new SMSA will lead to greater enforceability of IP in China, hopefully with streamlined procedures. Additionally, the SMSA may lead to greater use of Geographical Indications in China.

• Don’t be surprised if a 4th revision of the Chinese Patent Law is quickly proposed and comes into effect. Specific clauses being contemplated include imposing punitive fines/punishments for IP infringement, especially repeated IP infringement and partial designs.

• There has been an increasing trend for the Beijing IP Court to overturn SIPO rulings (e.g., Patent re-Examination Board decisions affirming inventive step rejections).

• A recurring theme recognized by Chinese industry, government, and business is that a large volume of IP (e.g., patents, trademarks designs, and utility models) is not really enough; quality IP must be the next goal. While the transition from focusing on quantity to quality is bound to be slow and difficult, the coming strategic emphasis on quality is a long-term play that will greatly enhance Chinese businesses and Chinese respect for IP.

• The General Office of the Party and General Office of the Council, the top policy-making bodies in China, announced various proposals, including:

* Creating a national IP Appeal Court similar in scope to the US CAFC, with a remit to address inconsistencies in IP cases between jurisdictions;

* Reducing the burden of evidence currently required of IP plaintiffs, which could become a seismic shift indeed;

* Increasing the usage of technology investigation officers to help investigate “technical facts” to maintain fairness when assessing technologies at issue.

In short, the Chinese IP system is not the same system you heard about seven, five or even three years ago. Baby steps have developed into walking and will soon be moving into a slow jog. Can anyone doubt that China will soon be sprinting in the IP space? So my message for the past 10 years remains the same: China’s IP system is not perfect but it IS getting better.

Photo on lower left by Dwight Sipler is licensed under Creative Commons Attribution 2.0 Generic license.