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China intellectual property lawyer
China intellectual property lawyer

Previously China has three IP specialist courts. Three IP specialty courts are currently established in Beijing, Shanghai and Guangzhou as a pilot-project, with the aim of improving quality, professionalism, and uniformity in IP litigation in China. All of these three courts are intermediate courts, with local high courts serving as the appeal courts. All of these specialist IP courts were established at the end of 2014.

The Beijing IP Court, Shanghai IP Court and Guangzhou IP court hear different types of cases, but they still have a lot in common.

All three IP courts have the authority to hear the following cases: (1) civil infringement and administrative lawsuits regarding patents, new varieties of plants, trade secret and computer software; (2) administrative appeals against administrative decisions on copyright, trademark, unfair competition made by local government or State Council departments; (3) cases concerning recognition of a well-known trademark; and (4) all the IP appeals against judgments handled by first instance district courts on copyrights, trademark, technical contracts, unfair competition and so on.

The Beijing IP Court has special jurisdiction over the following cases: (1) administrative appeals related to patent application rejection decisions, patent invalidation decisions, patent application reexamination decisions, trademark review decisions, trademark invalidation decisions, trademark opposition decisions and decisions on new varieties of plants and layout-design of Integrated Circuits and (2) administrative appeals against rulings on compulsory licenses or fee arrangements concerning patents, new varieties of plants and layout-designs of Integrated Circuits.

The Guangzhou IP Court has jurisdiction over the whole Guangdong province on the above type (1) civil infringement and administrative lawsuits regarding patents, new varieties of plants, trade secret and computer software and the above type (2) cases concerning recognition of well-known trademarks.

China announced another two IP courts in Nanjing and Suzhou that qualified to handle antitrust cases

China has just announced the establishment of two new intellectual property courts in the cities of Nanjing and Suzhou in the eastern province of Jiangsu to hear the increasing number of IP-related cases, following the establishment of three specialized IP courts in Beijing, Shanghai and Guangzhou. 

China has announced the establishment of two new intellectual property courts in the cities of Nanjing and Suzhou in the eastern province of Jiangsu to hear the increasing number of IP-related cases, following the establishment of three specialized IP courts in Beijing, Shanghai and Guangzhou.  

The Nanjing IP Court and Suzhou IP Court were officially launched today, according to a statement from the Jiangsu High People's Court. The specialized courts will help enhance the judicial handling of disputes over patents and other technical cases, and help protect technology innovation in the region, the Jiangsu High Court said in the statement.  

China's parliament passed legislation in August 2014 to establish three new courts dedicated to handling matters of IP rights in Beijing, Shanghai and Guangzhou. The establishment of specialized IP courts is part of the Chinese government's reform plan to strengthen the protection of IP rights and beef up the ability of courts to deal with the increasing IP caseload.  

The IP courts in Nanjing and Suzhou will hear first-instance IP rights cases in the province, such as issues relating to patents, copyright, technical secrets, computer software, design and trademarks. In addition, they will handle first-instance antitrust cases in the region.  

Both courts are established on the basis of the IPR tribunals at the Nanjing Intermediate Court and the Suzhou Intermediate Court. They will operate independently, and have jurisdiction over cases in the region. The Beijing IP Court was established in November 2014, and has emerged as one of the key battlegrounds for domestic and global companies to solve their IP and antitrust disputes.

What factors should IP owners consider when deciding to bring an action before one of the IP Courts?

The IP owners should first consider whether his/her IP rights are stable enough to survive the challenges of IP rights. Take a patent right as an example. It is permissible for defendants to request patent invalidation when a patent infringement case is initiated. The Patent Reexamination Board will review the patent to provide opinions on patent validity. There would be some risks to the patent at issue being finally invalidated, bringing the patentee into an unfavorable situation. This is also true for trademark holders. For trade secret cases, it would be somewhat difficult to prove the alleged "trade secret" is the real trade secret. One obstacle would lie in how to prove what measures have already taken up to keep such information secret.

Then, IP owners will consider venue shopping issues. Some key issues will influence the results of the lawsuit, such as whether the judges are experienced in the related field, whether the judges are favorable to IP owners to issue injunction and award high damages, whether there are large case loads pending in the court and so on. Another important principle is to avoid lawsuits to be heard where the defendant is domiciled and where the defendant is influential in the local economy. A good strategy is to file the lawsuit before the court where they are is selling the infringing product and sue the seller plus the manufacturer since the place of the seller can often be Beijing, Shanghai or Guangzhou.

Another factor for IP owners to consider is what the damages would be. The amount of the damages will be impacted by the court fee, social influences, the level of jurisdiction (intermediate court or high court) and so on. Claims for high damages, for example over 1 billion RMB, will definitely be put into spotlight.

The IP owners shall also consider the way to discover evidence. Since there is no US-style discovery in China, the burden of proof is on the IP owners' side. Sometimes IP owners might send a cease and desist letter in advance, but this would not be a good legal practice in China because the cease and desist letter will alert the accused infringers to hide the infringing products, causing the IP owners great difficulties to have access to admissible evidence. It is the law that the parties have the right to request the court to preserve evidence, but such a request would not always be successful. As a proposal, it would be favorable for IP owners to prepare all the evidence before moving forward with the cease and desist letter or lawsuit. The evidence most difficult to collect is the evidence to prove damages. No infringers would agree to submit their profit reports. However, in April 2016 the Supreme Court released "Judicial Interpretation II on Patent Infringement Cases" to empower the courts to order accused infringers to provide evidence on damages in the situation that preliminary evidence on profits has been provided by the Patentee and accounting documents are controlled by accused infringers. Otherwise, damages shall be calculated based on evidence provided by the Patentee. This is a breakthrough from the traditional burden of proof, with the intention to deal with the low damages problem in legal practice.

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