General Office of Communist Party of China and State Council issued Opinion regarding Reform and Innovation for Trial of Intellectual Property Cases
On February 6, 2018, General Office of Chinese Communist Party and State Council jointly issued the official document namely “Opinion regarding Improvement of Reform and Innovation for Intellectual Property related Trials” (the “Opinion”). Vice President of Supreme People’s Court (“SPC”), Judge Tao, made interpretation to the IP Opinion during the press conference and was interviewed following the issuance on February 27.
The IP Opinion consisting of four parts includes the General Requirement, Perfection of IP Trial System, Enhancement of IP Court System, and Improvement of Arrangement and Coordination, which were specified as follows.
I. General Requirement
The Opinion positioned the IP protection issue as the basic measure for encouragement and guarantee to innovation and creation that builds the foundation to the National Strategy to establish a Nation that is strong in IP as well as science and technology.
Comments by Charles Feng
The Opinion was the first strategic document issued by CPC and State Council, the top administrative body of China, which declared the IP protection as the major approach to protect innovation and development.
II. Perfection of IP Trial System
1. Establishment of Evidentiary Rule that suits the characteristics of trial for IP cases
The Opinion illustrated the importance of perfection of evidence preservation system; fulfill the function of expert assessor. More importantly, the Opinion emphasized the importance of ex officio evidence collection by court without application of related parties, the utilization of notary public for the purpose of evidence collection and recognition, the importance of establishment of rules for discovery, reasonable distribution of burden of proof and appropriate alleviation of burden of proof for right owners, in order to overcome the difficulties for evidence production.
Comments by Charles Feng:
In the past, the Chinese courts have been generally cautious in conducting evidence preservation for right owners. The newly stressed ex officio evidence collection will likely be a useful approach for IP owners in possible judicial actions where the evidence collection was difficult due to the absence of discovery procedure.
The document also mentioned the establishment of rules for discovery, reasonable distribution of burden of proof, specifically under Article 75 of Civil Procedure Law of PRC, and a few Chinese courts which have decided in favor of right owners by adopting the evidence on illegal revenue unofficially disclosed by third parties where the defendant refused to produce evidence to prove the actual profits made by infringing activities.
2. Improvement to the Calculation System for Damages
The Opinion stressed the importance of fulfillment of function of intermediary organizations in evaluation of intellectual properties, in order to establish judicial recognition mechanism for the compensation to right owner as major objective as well as punishment to infringers as auxiliary objective and fundamentally fix the problem of “low damages”.
The Opinion also stressed the necessity of punitive damages against repeated infringements, willful infringements as well as other serious infringements, to effectively deter IP infringements.
Comments by Charles Feng:
The calculation of damages remains a difficult issue. Due to absence of discovery procedure, IP owners always fail to produce effective evidence to prove the actual amount of damages and, consequently, fail to acquire the ideal compensation that they deserve. The active involvements of evaluation organs will likely help to improve the current situation resulting in higher amount for damages.
The punitive damages have been introduced to the 2013 Trademark law, as well as drafted Amendment of Patent Law. Such amendment will facilitate the ruling of higher amount of damages and deterrence against willful infringements.
3. Promotion of Reform of IP Trial System
The document emphasized the fulfillment of the function of judicial protection as the major remedies to IP infringements; enhancement of the judicial supervision against IP related administrative actions and advancement of unification of standards of administrative enforcement and judicial trial. The Opinion also emphasized the perfection of Case Guidance System as well as the division of simple and complicated cases.
Comments by Charles:
The Opinion emphasized the importance of judicial protection for IP which has been frequently compared with administrative protection system, particularly during the discussion of amendment to Patent Law since five years ago.
Judge Tao emphasized during the press conference that judicial protection will remain to be the fundamental and principal remedies for IP infringements. In addition, Chinese courts will further promote the efficiency and completion for judicial protection to satisfy the needs of right holders.
Judge Tao also introduced that 30% of cases tried by Beijing IP Court were foreign related cases and vowed to make Chinese courts the preferred priority venue for lawsuits initiated by multinational IP owners by establishing an IP judicial team that is proficient in law, technology and one with an international vision.
4. Unification of Standard
The Opinion repeatedly empathized the desire of Supreme People’s Court to further improve the unification of standard of judgments. Among others, Judge Tao mentioned three major approaches including trial of cases, Judicial Interpretation and Judicial Opinion as well as Guidance Cases.
With regard to Guidance Cases System, Judge Tao pointed out the following:
(1) Supreme Court has published 92 Guiding Cases, which include merely 20 IP cases.
(2) Beijing IP Court has started to quote the Guiding Cases in its Judgments to illustrate the legal issues and analysis
(3) The Guiding Cases published by Supreme Court although not binding should be referred by other courts.
(4) Guiding cases include not only the official Guiding Cases（指导案例） of the Supreme Court but also the Top 10 IP cases and 50 Model Cases published annually for IP Day (4/26).
(5) Supreme Court has established Guiding Case Research Base（指导案例研究基地）in Beijing.
III. Perfection of IP Court System
1. Establish the complete IP Trial System
The Opinion confirms to conduct research regarding the establishment of IP appellate court system, in order to realize the professionalization of personnel and concentrated jurisdiction and to fundamentally solve the problems of disunities standard of trial of IP cases, complication of trial procedure and other obstacles.
Comments by Charles Feng:
The establishment of IP Court in Beijing, Shanghai and Guangzhou have substantially contributed to the professionalization of personnel and concentrated jurisdiction.
The establishment of IP appellate court in the discussion refers to further expansion of the IP professional court system in other provinces aiming to cover the entire country and finalize the nation-wide appellate court system.
2. Exploration of establishment of Concentrated Jurisdiction for cases in Different provinces
Fully systemize the resources of Beijing, Tianjin and Hebei province, in order to explore the concentrated jurisdiction in Beijing for technical IP cases in Beijing, Tianjin and Hebei Province.
Comments by Charles Feng:
The competence of IP court in Beijing has been widely recognized particularly has advantage against its peers in Tianjin and Hebei. The consideration of concentrated jurisdiction for Beijing, Tianjin and Hebei will likely help to improve the level of trial in the other two provinces.
IV. Improvement of Arrangement and Coordination of IP Trial
The Opinion promised to actively promote the amendment of People’s Court Organization Law, Patent Law, Copyright Law and other procedural laws, as well as to research special procedural law for IP trial, in order to systemize the organization of courts, jurisdiction, evidentiary rule, procedure and method of trial.