Chinese IP Courts

The patent battle between Apple and Qualcomm is garnering attention all over the world. But no court ruling has drawn more attention than the preliminary injunction granted to Qualcomm by the Fuzhou Intermediate People’s Court in China in November 2018. However, why did Qualcomm bring their claims at the Fuzhou Intermediate Court?

Generally speaking, there are four tiers of courts in the Chinese legal system. From the highest to the lowest level, they are: the national level Supreme People’s Court, the provincial level High People’s Courts, the prefecture level Intermediate People’s Courts, and the county or district level Basic People’s Courts. Courts at every level has original jurisdiction over cases with “major impact” within their respective geographic areas and appellate jurisdiction over cases from the lower-level courts. The concept of “major impact” is not defined under Chinese procedural laws, which inevitably leads to ambiguity in the courts’ jurisdiction. Consequently, the Supreme People’s Court takes the responsibility for issuing legal provisions and judicial interpretations to clarify the uncertainty.

When it comes to the jurisdiction over patent disputes, the Supreme Court issued relevant provisions in 2015, granting the Intermediate People’s Courts located at provincial capitals, including the Fuzhou court, original jurisdiction over patent cases. Additionally, the Supreme Court has granted such power to several other Intermediate and Basic Courts. While Qualcomm found success in Fuzhou, it did not necessarily engage in strategic forum shopping. Indeed, Qualcomm has filed 23 lawsuits against Apple in five different courts in China.

Intellectual property (IP) protection in China is often questioned by U.S. companies, due to a fear of unfair treatment, especially against the backdrop of the escalating trade war between China and the US. Such skepticism arises from “local judicial protectionism, challenges in obtaining evidence, small damage awards, and a perceived bias against foreign firms.” Putting governmental and political influence aside, the lack of sophisticated IP protection system, the technical demands in IP disputes, and the loss of consistency due to the large number of courts all contribute to the problem. However, China has demonstrated a serious resolve to enforce the IP regime.

One legal reform China has instituted is the formation of a specialized and centralized IP court system. In 2014, the National People’s Congress established three Intellectual Property Courts in Beijing, Shanghai, and Guangzhou. Instead of encroaching on the general jurisdiction of the Basic, Intermediate, and High People’s Courts, these IP special courts serve as a parallel and specialized venue for the parties to the IP disputes. Since 2017, Nanjing, Suzhou, Fuzhou, and 13 other cities have launched specialized IP tribunals that provide exclusive IP jurisdiction within the Intermediate Courts. Furthermore, Intellectual Property Judges and Technical Investigators are appointed to facilitate the resolution of technically challenging disputes.

On January 1, 2019, the Supreme People’s Court officially launched the appellate tribunal for IP disputes. This new body will handle legal wrangles over broad technical subject matters, from new plant species to integrated circuit boards, and will take appellate challenges from every lower court with IP jurisdiction, setting a milestone in China’s effort to unionize and systemize its IP jurisdiction and judicial guidance. Meanwhile, there is always on-going discussion and debate over further reforms of the Chinese IP court system. Examples include further integration of the IP jurisdiction among Intermediate and Intellectual Property Courts, and the establishment of administrative agents with higher legal power, equivalent to the Patent Trial and Appeal Board of the USPTO.

In terms of the substantive law, China most recently revised its Patent Law in 2008, adopting legal doctrines such as the research exemption from the US Patent Law among other matters. Apart from its adjudication function, the Supreme People’s Court also has the quasi-legislative function of issuing judicial interpretations. China has a civil law system, and the laws are commonly drafted in broad and general terms. Judicial interpretations, which address questions of meaning and application of laws, thus play an essential role in guiding the lower courts. The Supreme People’s Court has annually published 10 most significant IP cases and 50 guiding IP cases of the year, another effort by China to improve its IP protection. Moreover, China is in the process of drafting and enacting laws protecting foreign intellectual property and prohibiting forced technology transfer.

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