China will kick off 2019 with a new specialized intellectual property appeals court, a move that may help smooth trade tensions with the U.S.
The National People’s Congress has approved a proposal to create an appellate IP tribunal within the Supreme People’s Court, the highest court in the country. It will open its doors Jan. 1, according to the NPC’s Oct. 26 announcement. Litigants who disagree with a tribunal decision can petition the Supreme People’s Court for a retrial.
Against the backdrop of U.S.-China trade tensions, “it might be good if China can demonstrate that its new structure for handling appeals is more efficient and fairer than the old process,” John Eastwood, a partner in the Taipei office of Eiger Law firm, said.
The tribunal will operate for three years, after which the National People’s Congress and Supreme People’s Court will review its progress.
China created its first specialized IP courts in 2014 in Beijing, Shanghai, and Guangzhou. Those courts largely handle first-instance decisions, with appeals going to local High Courts. The Beijing IP court also hears administrative patent appeals.
Practitioners say the new tribunal reflects the success of that program, and shows Chinese officials recognize such cases require legal and scientific expertise.
“There have been discussions about having a specialized IP appeals court for a while now, for a court like the Federal Circuit in the U.S. with specialized judges and technical experts who can assist them,” Catherine Zheng, a partner with Deacons in Hong Kong, told Bloomberg Law.
The ongoing U.S.-China clash over intellectual property protections may have pushed up the timetable, though local tech companies, like Huawei and Tencent, have also asked the government to improve IP protection, Haifeng Huang, a partner with Jones Day in Hong Kong, said.
“The United States, and other countries, have long complained about their tech companies facing an uneven playing field in China, and if the Chinese do this right it could be a bright spot in an otherwise much worsened trading relationship,” Eastwood said.
The new tribunal will handle cases involving invention and utility model patents, plant varieties, integrated circuit layout designs, technical trade secrets, computer software, and antitrust matters. Its jurisdictions largely mirror the lower level IP courts.
One of the reasons the NPC cited for creating a unified patent appeals tribunal was to apply the law consistently, because of disparities in past rulings from the different appellate courts.
“The high courts in places like Beijing, Guangzhou, and Shanghai are very sophisticated, but some of the other courts may not have the technical expertise to handle complicated patent cases,” Zheng said.
The appellate tribunal also addresses concerns about the influence of local players on Chinese courts. That hasn’t been a problem with the IP courts, but having a unified IP appeals tribunal would ensure that outside local groups can’t try to influence decisions, Huang said.
There will less risk of “corruption and local protectionism,” because any first instance decision could be overturned in Beijing, said Doug Clark, a barrister practicing out of the Gilt Chambers in Hong Kong.
“Judges at the lower levels will be able to resist political or other influences more easily by pointing to the fact an appeal will go to the Supreme People’s Court,” he said.
The tribunal likely will have a big caseload.
Chinese courts accepted 22,000 IP appeals in 2017, Ted Chwu, a partner at Bird & Bird in Hong Kong, said. The courts will probably see even more cases in 2018, so they’ll have to find enough qualified judges to handle a lot of cases, he said.
“Many of China’s best IP judges are assigned to the IP courts, which were created in 2014,” George Chan, partner at Simmons & Simmons in Beijing, said. “It will be interesting to see how they plan to select judges for the new tribunal, which we expect will have a very large caseload and will require many sitting judges.”
The tribunal might not operate at full capacity at the beginning. The appellate tribunal is supposed to have 60 judges, Huang said, so it might be a challenge to get them all hired and trained in two months.
The NPC made the new tribunal part of the SPC, rather than a stand-alone court, because it was faster and easier to do so, Huang said. Being part of the SPC will help get the trial program up and running quickly, he said.
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