Specialist Appellate Intellectual Property Tribunal in China

On 26 October 2018, in the Decision of the Standing Committee of the National People's Congress on Several Issues concerning Judicial Procedures for Patent and Other Intellectual Property Cases ("Decision"), the National People's Congress Standing Committee ("NPCSC") of China confirmed its plan to set up an appellate Intellectual Property tribunal ("IP Tribunal") within the Supreme People's Court ("SPC"). This Decision will become effective on 1 January 2019, which means the SPC, via the IP Tribunal, will have jurisdiction to hear appeals of first instance judgments from 1 January 2019. The SPC is required to report to NPCSC on the progress and performance of the IP Tribunal in January 2022.1

The aim of the Decision is to create a unified ruling standard for IP litigation in China to achieve the following: further strengthen the legal protection of IP rights, enhance the legal enforcement environment for technological innovation and advance the implementation of innovation-driven development strategies.2

Further Developing the IP Specialist Courts System

Back in August 2014 the NPCSC passed a decision to establish IP specialist courts in Beijing, Shanghai and Guangzhou to hear IP disputes.3 In 2017, IP specialist court rooms were set up in 15 cities, including Hangzhou, Nanjing and Suzhou. These IP courts and court rooms (collectively, "IP Courts") determine IP cases at the first instance. Under the current system, first instance administrative and civil cases related to patents are under the jurisdiction of Intermediate People's Courts. Appeals of such cases are heard at the Higher People's Courts located in the region of the relevant IP Courts.

Under the new IP appellate system, the IP Tribunal will hear appeals from the IP Courts where the subject of dispute concerns the following IP matters: invention or utility model patents, plant breeders' rights, integrated circuit layout designs, trade secrets, computer software, or antitrust matters.4 The local Higher People's Courts will no longer have jurisdiction over such appeals. The IP Tribunal will also have the power to order the relevant lower courts to re-try these cases. Appeals of other first-instance cases that are unrelated to IP matters mentioned above will continue to be tried at the relevant local Higher People's Courts.

Potentially Higher Degree of Certainty in Judicial Interpretation

The SPC recognises that the areas of IP involved in the IP Tribunal appeals are very specialised and require knowledge in the relevant areas for the purpose of determining a case. If the judges appointed to the IP Tribunal have the relevant expertise, and are willing to consult relevant subject matter experts in reaching a decision, useful reference cases may potentially emerge and help companies navigate the IP enforcement landscape in China.

But What about Hong Kong?

To date, no specialist court, list or judge are available in Hong Kong to hear IP cases. At present, any IP actions are to be filed in the general list at the Court of First Instance of the High Court. After years of discussion in the legal community, the Hong Kong Judiciary appears to be finally answering the calls for the establishment of a specialist IP court or list, and appointing specialist IP judges, to hear IP cases in Hong Kong. Though no official announcement has been made by the Hong Kong Judiciary, in early December 2018 at the Business of IP Asia Forum, Mr Justice David Lok of the Court of First Instance of the High Court discussed proposed changes with respect to IP litigation, including the potential establishment of a new specialist IP list in the High Court in 2019.5

While Hong Kong seeks to develop a knowledge-based economy, the technology and R&D sectors in Hong Kong are still relatively young. An IP list in the High Court is to be welcomed, but its success will depend on the specialist skills that will have to be deployed to guarantee its efficiency

Internet Courts in China

In September 2018, the Supreme People's Court of China ("SPC") issued the "Provisions of the Supreme People's Court on Several Issues concerning the Trial of Cases by Internet Courts" ("Provisions"). The Provisions provide useful guidance for online trial procedures at Internet Courts in China.

Rising Popularity of Pilot Hangzhou Internet Court

The first Internet Court was inaugurated in August 2017 in Hangzhou, the city that is sometimes dubbed China's "Silicon Valley"6 , which is of course home to Alibaba, one of China's e-commerce giants. As at August 2018, the Hangzhou Internet Court has heard over 12,000 cases and concluded over 10,000 cases. The average duration of a case at the Hangzhou Internet Court is only 41 days, which amounts to a time saving of approximately 50% compared to litigating at a traditional court in China.7

Online Trials: Keeping up with the Times

The Hangzhou Internet Court also sanctioned the use of blockchain as evidence in judicial proceedings in a copyright infringement dispute.8 Given that the Hangzhou Internet Court is a lower court that hears cases at first instance only, the Provisions provide a welcome confirmation in relation to the admissibility of blockchain evidence in judicial proceedings in China. Article 11 of the Provisions specifies that if a litigant can prove the authenticity of any evidence involving digital data by, for example, using blockchain, digital timestamp and electronic signature, the Internet Courts will accept such evidence. The other party can also apply for submission to the Internet Courts for reports to be prepared by experts with specialist digital data knowledge to contest the reliability of such evidence. It seems that for now the courts in China are leading the way with regard to the acceptance of new technologies to support the provision of evidence.

Internet Courts: Geographic Expansion and Expanded Case Coverage

In addition to confirming the applicability of blockchain, the Provisions specify the jurisdiction of Internet Courts, and trial and appeal procedures relevant to online trials. The Provisions will be useful guidelines for the Hangzhou Internet Court going forward, as well as for the Beijing and Guangzhou Internet Courts, which were set up in early and late September 2018 respectively. Each of the two additional Internet Courts heard their first cases in October 2018, with plenty more to follow. As at late October 2018, almost 5,500 cases had been received by the Beijing Internet Court9 , while the Guangzhou Internet Court had received over 1,100 cases10.

The Provisions confirm that the three Internet Courts can hear cases at first instance that involve disputes regarding: e-commerce terms of service; service agreements that are executed online; loans executed online; copyright and neighbouring rights; domain names; and product liability in relation to defective products purchased online. They also have jurisdiction over internet-related public interest litigation brought by public prosecutors, and other internet-related civil or administrative cases assigned by a higher court.11

The new Internet Courts also have jurisdiction over domain name disputes. Given the two-year limitation period for .cn DRP disputes, and the fact that Internet Courts deal with cases in a comparable time-frame to that of .cn cases brought under the .cn DRP, we expect to see them become a popular forum for .cn disputes, especially in cases outside the two-year limitation period.

The Future of IP and Technology Disputes may be Online

The success of the Hangzhou Internet Court so far, both in terms of efficiency and the embrace of technology in trial proceedings, and the prevalence of e-transactions in China coupled with the setting up of two new Internet Courts in China signals a new era for dispute resolution underpinned by an open-minded approach when it comes to using new technology to accept evidence and deliver decisions.

Footnote

1. Article 4 of the Decision.

2. Preamble of the Decision.

3. Decision of the Standing Committee of the National People's Congress on Establishing Intellectual Property Courts in Beijing, Shanghai and Guangzhou ("Decision on Establishing IP Courts").

4. Articles 1 and 2 of the Decision on Establishing IP Courts.

5. Mr Justice David Lok, "The Proposed Changes in the Conduct of IP Litigation in the High Court of Hong Kong", Business of IP Asia Forum, HKSAR Government, Hong Kong Trade Development Council and Hong Kong Design Centre, December 7 2018.

6. Maggie Zhang, Hangzhou, "China's answer to Silicon Valley, is a hit with returning graduates, study finds", South China Morning Post, 2 July 2018, https://www.scmp.com/business/companies/article/2152935/hangzhou-chinas-answer-silicon-valley-hit-returning-graduates.

7. Please refer to an article published in Chinese by the Office of the Central Cyberspace Affairs Commission with the translated title "How to run an online trial – reporter visits the Beijing Internet Court" at: http://www.cac.gov.cn/2018-09/10/c_1123404946.htm

8. Please refer to a report on the case published in Chinese on People.cn with the translated title "Copyright dispute - Blockchain as 'witness'" at: http://ip.people.com.cn/BIG5/n1/2018/0724/c179663-30165424.html.

9. Please refer to an article published in Chinese by Xinhua News at: http://www.xinhuanet.com/legal/2018-10/31/c_1123637834.htm

10. Please refer to an article published in Chinese by the Office of the Central Cyberspace Affairs Commission with the translated title "Guangzhou Internet Court delivers first decision – Litigants attends online court" at: http://www.cac.gov.cn/2018-10/31/c_1123636937.htm.

11. Article 2 of the Provisions.

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