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RETIRED JUDGE JIANG ZHIPEI

Current Status and Challenges concerning IP Litigation in China

Time:2015-01-12   Click:
 

 

Good morning, ladies and gentlemen, I would first like to introduce myself.  My name is Jiang Zhipei, and I am currently Counsel with King & Wood Mallesons in Beijingand I was formerly the Chief Judge of the IP Tribunal of the Supreme People’s Court of China.

Unfortunately, due to a previous engagement, I am not able to be with you inLondon.   However, I have made this video to provide you with a general introduction to IP litigation inChinawhich I hope that you find interesting and informative.

First, let me tell you a little bit about my professional background.  As a lawyer and, also a former judge with over 20 years of experience “behind the bench”, I have been involved in many Intellectual property disputes inChinaover the years. In that time, I have been witness to an important period in the development of Intellectual Property Rights protection and enforcement inChina. This development has helpedChinagrow into the world's second largest economy and allowedChinato develop a closer connection betweenChinaand the world’s economy. Improved protection of intellectual property rights inChinais benefiting the economy as it recovers from the recent global economic downturn. In many respects,Chinais leading the world out of the global downturn andChina’s improved IP protection regime has played a key role inChina’s recent economic success.

I would now like to give you a very brief overview of the scope and nature of IP enforcement inChina, with a focus on IP litigation.  Chinaoffers three different ways to enforce IP rights – civil, administrative, and criminal enforcement.  In terms of the number of cases adjudicated, in 2012 the courts and administrative agencies inChinaexperienced a huge increase in cases involving all aspects of intellectual property. The number of First Instance IP litigations accepted in 2012 was 87,419 civil cases, 45.99% more than 2011, while there were 2,928 administrative cases, 20.35% more than 2011, and, finally,  13,104 criminal cases, 129.61% more than 2011. 

With these huge increases in case volume, the Chinese courts were able to keep pace as though 87,419 new civil cases were accepted, 83,850 cases were concluded, also a huge increase over the number of cases concluded in 2011. To give you an idea of the types and numbers of IP disputes in the Chinese civil courts, please note that the courts accepted 53,848 copyright cases,; 19,815 trademark cases,; 9,680 patent cases; 746 cases involving technology agreements; 1,123 cases involving unfair competition (of which, 55 were first instance civil cases involving monopoly disputes); 2,207 cases involved other intellectual property disputes.   Of the various types of cases, copyright and patent cases still make up the majority of cases, but we see have seen significant increases in recent years in patent infringement and trade secret misappropriation cases, which, in many ways, is typical for a country like China which is moving up the technological value-added ladder, so to speak.

Among the most high-profile of recent IP disputes was the iPad trademark ownership, where the iPad trademark was registered by a company, Proview, inChina. Apple entered into an agreement with one of Proview’s subsidiaries to purchase the trademark. However, Proview later stated that the iPad trademark inChinawas not sold to Apple under the abovementioned agreement. Apple then initiated a lawsuit against Proview over ownership of the iPad trademark inChina. The People's Court inGuangdongProvinceaccepted and tried this case and rendered a decision which was later appealed by the Plaintiff, though the case was ultimately settled.  This case drew worldwide attention to not only the Chinese courts, but it also highlighted the value of IP rights in today’s world and those measures companies like Apple must take to protect their valuable rights.

As I mentioned earlier, trade secret disputes are growing rapidly inChinaand in these types of cases, maintaining confidentiality of the secrets during court proceedings is always a challenge. The Chinese courts have started to be more supportive regarding evidence preservation, action preservation, and obtaining evidence via the court’s official capacity. For example, in a trade secret dispute between Eli Lily and an individual named Huang Mengwei, Eli Lily accused Huang of violation of his confidentiality obligation during his tenure at Eli Lily where he stored the classified documents of the company in his personal storage device and then refused to delete the documents. Eli Lily filed an Application for action preservation with Shanghai No.1 Intermediate People’s Court requesting that the defendant shall not disclose, exploit or allow others to exploit those 21 documents containing the company’s trade secrets. The Court granted Eli Lily’s application. This represented the first action preservation granted by the court in a trade secret case.

The Chinese courts are also starting to focus on judicial review of the administrative actions such as the granting of patents. The courts are giving more specific instructions in their judgments for those cases regarding the granting or invalidation of patents, where these instructions are intended to give the administrative authorities more clear instructions as to how to facilitate the fundamental resolution of the disputes and to avoid the endless cycle of lawsuits.

Though the IP legal regime inChinahas made huge strides forward, there are certain improvements which still remain to be made. For example, in IP infringement cases, it is extremely difficult for the Plaintiff to obtain evidence on damages. Regarding the calculation of damages, the courts need to give the plaintiffs more alternatives and adopt methods, where appropriate, such as economic analysis, professional evaluation, and accounting analysis so as to resolve this problem. Where the infringer refuses to provide relevant evidence in terms of its illegal gains, based on the circumstances and supporting analysis and evaluation, the court should support the right owners’ claim for damages.

Finally, in patent litigation cases the courts should consider improving the process whereby expert witnesses, technical appraisals, expert consultations are utilized so as to assist in the finding of the facts and in clarifying the technical issues. As I said earlier, the IP protection system inChinahas made huge strides in recent years, but, as noted, there is still room for improvement and I fully expect that such improvements will continue to be made.

That is all for my brief introduction into IP litigation inChina. I have also prepared a PPT from which you may find more information. I thank you all for your time and attention and hope that you all enjoy the rest of the conference.