On July 5, 2016, the Supreme People's Court published its Opinion on the Promotion of the "Three in One" for the Trial of Civil, Administrative and Criminal Cases Involving Intellectual Property Rights in Courts Nationwide.

The "three in one" system is part of the judicial reform currently implemented, step-by-step, by China (the creation of the three IP courts being one of the aspects of the reform). It means that in all People's courts, at all levels (first instance and appeal), IP cases of all type, i.e., civil, administrative or criminal, shall be handled by one single division of the court.

The Opinion provides instructions to the lower courts on how to promote this system.

The first step shall be to change the name of the divisions of the courts which are already in charge of handing civil IPR cases (for example the n°3 division) and call them the "Intellectual Property Division". In order to be able to deal with all the three types of cases, the courts shall either (i) set up a division permanently equipped with judges coming from the administrative and criminal divisions who will join the existing staff of IPR civil litigation judges, or (ii) create on a case-by-case basis, and whenever necessary, panels composed of judges coming from the three divisions.

The Opinion reorganizes the jurisdiction levels among People's courts for IPR cases.  It establishes a category of "ordinary IPR cases", among the general IPR civil cases, on which certain basic People's courts may have first instance jurisdiction, while the rest of the IPR cases continue to be fixed by the Intermediate Court level for the first instance.

IPR civil cases refers to cases involving copyrights, trademarks, patents, technology contracts, trade secrets, new plant varieties and integrated circuit layout design, unfair competition, monopoly and franchise contracts.

Among these cases, some are considered as "ordinary": trademarks, copyright, technology contracts, franchise and unfair competition. They are those that can be handled, at the first instance level, by certain basic People's courts.

The other cases that involve patents, new plant varieties, integrated circuit layout designs, technology secrets (part of the wider category "trade secrets"), computer software (part of the wider category "copyright") and cases that necessitate the recognition of the well-known trademark status as well as cases involving monopoly disputes, are to be submitted to the Intermediate courts.

The Opinion, then, addresses the situation where, in a certain location, there is no basic People's court having jurisdiction over ordinary IPR cases. In such case, the local Intermediate court may send a report to the SPC (via the Provincial High court), and the SPC may designate one of the local basic people's courts to take IPR cases. The Intermediate court may also accept IPR administrative and criminal cases, and the difference with the previous situation (where Intermediate courts only take first instance civil cases and leave administrative and criminal first instance litigation to the basic courts) is that, according to the Opinion, the People's Intermediate IPR court may accept all three types of cases.

On the other hand, if there are several basic courts having jurisdiction over ordinary IPR cases, the SPC shall determine and adjust, according to the number of cases, the respective resources and other criteria, the respective jurisdiction scopes of each court.

It may also happen that a basic court, which does not have jurisdiction over ordinary civil cases, finds that it is handling a case that falls within the definition of administrative or criminal IPR cases. It will have to promptly transfer the case to another basic court which does have jurisdiction over IPR cases.

Regarding the appeal and retrial procedures, the structure remains the same: Intermediate level is the appeal level for basic court decisions, and High level is the retrial level for Intermediate appeal decisions. If there is no basic court, the structure is moved up: Intermediate for the first instance, High court for the appeal and SPC for retrial. Parallel to the appeal levels, are the cases that are protested by the People's Procuratorates.

Last, the three in one system operates everywhere in China at all levels of jurisdiction, but is not implemented in the three cities where IP Courts have been established.

Comments:

The development of this "three in one" system is definitely a good evolution, and generally welcome.

The development of basic courts having first level jurisdiction on ordinary IPR cases, however, will have significant consequences that are worth examining. When such a case is adjudicated by a basic court, the appeal level shall be the Intermediate court and the third (and final) "retrial" instance shall be at the Provincial level. The SPC will not have any possibility to control and harmonize the establishment of a national and stable jurisprudence, which might become a problem. Ordinary trademark cases, or unfair competition cases, can be as complex as other "non-ordinary" IPR cases. The need for a reliable and stable jurisprudence is just the same.

This is why it might be envisaged to create one national appeal court, in Beijing, which would have jurisdiction over all the IPR cases coming from the entire country, either from provincial higher courts or from local intermediate courts.

The decisions of this unique IPR appeal court could be controlled, on the retrial basis, by the SPC, who could make sure that the law and the interpretations of the law are implemented in a correct and unified manner throughout the country.