China’s commitment to strengthening IP judicial protection and creating a bright future for IP rights

By Justice Tao Kaiyuan, Vice President of the Supreme People's Court of the People's Republic of China

As an institutional arrangement and incentive mechanism, the intellectual property (IP) system provides a fundamental driving force for innovation and creativity. Strengthening IP protection is necessary for China to honor international rules and fulfill its international commitments. It is also indispensable for pursuing an innovation-driven development strategy, creating a business-friendly environment and building a new open economic system.

Over the past 40 years, China has established, and continued to improve, a modern IP system with Chinese characteristics. It has made remarkable progress and secured historic achievements in various areas, including legislation, enforcement, and international exchanges and cooperation. Today, strengthening the protection of IP rights is widely recognized in China as the most important element for improving rights protection and a fundamental incentive for enhancing the country’s economic competitiveness.

Strengthening “top-level design” of IP judicial protection

In line with national conditions, China has established an IP system where judicial and administrative protection play their respective roles, with the former central to IP protection. Continued strengthening of the “top-level design” is the bedrock on which China has built its historic achievements in IP judicial protection within a relatively short period of time. As noted by WIPO Director General Francis Gurry, in an interview with the China Global Television Network (CGTN), “there is a strategic vision and leadership from the top in China. This concerns building scientific capacity and innovation, which means new products, services or technology entering the economy and intellectual property, whose role is to protect the competitive advantage that is given by that innovation.” The Director General said that the sequencing and vision of how these elements fit together “is extraordinarily coherent in China”.

In China’s Outline of the National Intellectual Property Strategy issued in June 2008, “strengthening the judicial protection system” and “ensuring the leading role of judicial protection of IP rights” were identified as priorities in implementing the national IP strategy. In July 2016, the Supreme People’s Court laid down China’s fundamental policy on IP judicial protection underlining the primacy of the judiciary, strict enforcement of law, differentiated measures, and proportionality. In April 2017, the Supreme People's Court issued the Outline of Judicial Protection of IPR in China (2016–2020), which identifies targets in eight areas, including the creation of “an IP court system with a regional perspective”, better rules governing evidence and more reasonable compensation for damages. The document also introduces 15 measures, including improvement of the jurisdiction system, reform of the technical fact-finding mechanism and special research on procedural law for IP litigation.

In February 2018, another milestone was reached when the Chinese Government issued its Opinions on Several Issues Concerning Strengthening Reform and Innovation in the Field of Intellectual Property Adjudication, the first document on reform and innovation in the field of IP rights adjudication. The Opinions represent an important step in reforming and modernizing IP adjudication in China. They are a blue print for the foundation of a modern, authoritative, optimally resourced and highly efficient IP judicial system that will ensure that China’s IP judicial team is in a position to address emerging IP challenges in the new era.

Establishment and improvement of a specialized court system for the judicial protection of IP

At the end of 2014, three IP courts were set up in Beijing, Shanghai and Guangzhou to creatively explore a specialized IP adjudication system with Chinese characteristics. This development received a very positive response from the public and the international community. In August 2017, the Standing Committee of the National People’s Congress discussed the report by Mr. Zhou Qiang, Chief Justice of the People’s Republic of China and President of the Supreme People’s Court, on the progress of IP courts. The Standing Committee fully recognized the role of IP courts in supporting innovation, improving the quality and efficiency of adjudication and promoting judicial reform.

As an institutional arrangement and incentive mechanism, the intellectual property system provides a fundamental driving force for innovation and creativity.

Since 2017, the Supreme People’s Court has approved the establishment of IP tribunals by intermediate people’s courts in Nanjing and 18 other cities. This enables the pooling of high-quality resources to handle patent and other highly technical cases across regions in a more professional way.

As required by the Opinions on Several Issues Concerning Strengthening Reform and Innovation in the Field of Intellectual Property Adjudication, the Supreme People’s Court has advanced reforms to establish a national-level appeal mechanism for IP cases. On October 26, 2018, the Standing Committee of the National People’s Congress adopted the Decision on Certain Issues Concerning the Litigation Procedure of Patents and Other Intellectual Property Cases. On January 1, 2019, the Supreme People’s Court set up and inaugurated the IP Court. As a permanent agency of the Supreme People’s Court, the IP Court is mandated by the Regulations of the Supreme People’s Court on Several Issues Concerning the IP Court to handle highly technical civil and administrative IP appeal cases from across the country. These cases may involve invention patents, utility model patents, new plant varieties, integrated circuit layout designs, technical know-how, computer software and monopoly, as well as cases where the adjudication supervision procedure is applicable for effective first instance ruling over the aforementioned cases. In cases where the adjudication supervision procedure is applicable for decisions made by the IP Court, the No. 3 Civil Division (IPR Division) of the Supreme People's Court is responsible for reviewing the cases.

Continued improvement of the IP litigation system

As IP rights are intangible, it is necessary to establish a corresponding set of rules governing evidence. The modern IP system is a product of the market economy. It therefore follows that compensation for IP infringement must be based on market values. It is our firm belief that IP rights create value and right holders should be entitled to adequate return for such value. In light of this, and with a view to building greater respect for IP rights, we are establishing a more rigorous system of punitive damages to curb trademark counterfeiting and trade secret misappropriation. This is an unprecedented and historic step in the transformation of China’s IP landscape.

Rising number of IP cases

In recent years, the IP caseload of Chinese courts has grown rapidly. In 2018 alone, Chinese courts received 301,278 new IP cases in the first instance, of which 287,795 were concluded. These figures represent an increase of 41 percent and 42 percent respectively compared to those for 2017. As far as international IP cases are concerned, China has one of the shortest adjudication periods in the world. So far, multiple Chinese courts have received successive cases involving Qualcomm Inc. v Apple Inc. to adjudicate disputes over patent infringements and abuse of dominant market position. Another case brought by the US firm GPNE against Apple Inc. for patent infringement is currently under review by Guangdong Provincial High People’s Court. In that case the damages claimed by the plaintiff amount to RMB 897.6 million (approx. USD 132.8 million).

China is increasingly becoming the “preferred venue” for settling international IP disputes. The adjudication by a Chinese court on Qihoo 360 and Qizhi Software v Tencent Technology and Tencent Computer System concerning a dispute over unfair competition has been widely recognized by international counterparts. In line with the country’s international treaty obligations, Chinese courts have always sought to remain unbiased in adjudicating cases involving the legitimate rights and interests of both Chinese and foreign parties. This is evident, for example, in handling the dispute over the Qiaodan Sports trademark, which in China is associated with the basketball superstar Michael Jordan. Another example is the review of the case brought by Parfums Christian Dior against the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce of China, which initially rejected the company’s trademark application. These cases demonstrate the Supreme People’s Court’s commitment to protecting the legitimate rights and interests of foreign parties in China and to overseeing the fulfillment of international obligations by administrative organizations according to the law. Such an approach supports innovation and fair market competition.

Commitment to international exchanges and cooperation amid new opportunities and challenges

In this new era, IP development across the world faces opportunities and challenges brought by two new realities. First, a new cycle of technological revolution and industry transformation is in full swing, with an unprecedented pace of technological innovation. The fourth industrial revolution is reshaping the way in which knowledge is created, disseminated and utilized, and is posing a host of new challenges for the judicial protection of IP rights. It is therefore necessary for us to keep a close eye on the latest technological innovations and take proactive measures accordingly. Second, in recent years, there has been an increasing level of uncertainty and instability in the international arena. The rising tides of anti-globalization and trade protectionism are putting a strain on global economic and trade relations. These dynamics will inevitably make it harder for all countries, including China, to realize their economic goals and may well have a negative impact on global innovation. Against this new background, China has always held a positive and open attitude towards the reform of multilateral trade rules. And, as reflected in the remarks of Premier Li Keqiang at the Davos Summer Forum in September 2018, China is willing to push reform forward through consultation to better meet the needs of global development and inclusive growth.

In spite of the reform and opening up in the past four decades, China remains the world's largest developing country. There has not been much change in this basic national condition. While much has been achieved and a great deal of invaluable experience has been acquired, there is still a lot more to accomplish. We are willing to share our experience and learn from others through international exchanges and cooperation. While remaining deeply rooted in China’s reality, we also need to think globally. This is important in fostering the development of IP adjudication in China and beyond.

That is why the Supreme People's Court is committed to fully implementing the Memorandum of Understanding on Judicial Exchanges and Cooperation signed with WIPO, the world’s most authoritative and influential international organization in the field of IP. In doing so, we will continue to expand areas of cooperation and actively support and deeply engage in WIPO’s reform initiatives in the field of judicial protection. The Supreme People’s Court welcomes WIPO’s pioneering work in the area of judicial administration of IP. I am greatly honored to be a member of the WIPO Advisory Group of Judges. Organized as a collaborative effort between the Supreme People’s Court and WIPO, the inaugural “Master Class on IP Adjudication” was held in August 2018 at the National Judges College in Beijing. The event, which was a great success, proved an enriching opportunity to deepen international cooperation and to further enhance judicial protection of IP rights. 

In this new era, we welcome opportunities to work with WIPO, to strengthen multilateral and bilateral exchanges and cooperation with other countries, and to play a more active and constructive role in international protection of IP rights and associated rulemaking. Such engagement is an effective way to promote the modernization of global IP governance, to create a bright future for IP rights and their protection.