Background Opinion Comment

Background

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 has been introduced as part of judicial reforms being implemented across China. Under the new system, all levels of civil, administrative and criminal IP cases will be handled by a single division of the people's court.

Opinion

The Supreme People's Court opinion provides instructions to the lower courts on how to promote the three-in-one system.

The first step is to rename the court divisions in charge of handling civil IP rights cases (eg, the third division) as the 'IP division'. In order to be able to deal with the three types of case (civil, administrative and criminal), the courts must either:

  • establish a permanent division comprising judges from the previous administrative and criminal IP rights divisions and the current judges of civil IP rights divisions; or
  • create temporary panels comprising judges from the three divisions, on a case-by-case basis.

Civil cases The opinion reorganises the jurisdiction levels among the people's courts for IP rights cases. It establishes the category of "ordinary IP rights cases" among general civil IP rights cases, over which certain basic people's courts will have first-instance jurisdiction. All other cases will remain under the first-instance jurisdiction of the intermediate people's court.

'Civil IP rights cases' are cases involving:

  • copyrights;
  • trademarks;
  • patents;
  • technology contracts;
  • trade secrets;
  • new plant varieties;
  • integrated circuit layout designs;
  • unfair competition;
  • monopoly disputes; and
  • franchise contracts.

Among these cases, those involving trademarks, copyrights, technology contracts, franchise contracts and unfair competition are considered 'ordinary'. These cases can be handled at first instance by certain basic people's courts.

Cases involving patents, new plant varieties, integrated circuit layout designs, trade secret technology contracts, copyright of computer software, recognition of well-known trademarks and monopoly disputes must be submitted to the intermediate people's courts.

The opinion also addresses situations where no basic people's court has jurisdiction over ordinary IP rights cases. In these situations, the local intermediate people's court may send a report to the Supreme People's Court via the provincial high people's court. The Supreme People's Court may then designate one of the local basic people's courts to handle the case.

Administrative and criminal cases The intermediate people's court may also accept administrative and criminal IP rights cases. Previously, these courts would handle only first-instance civil cases, leaving first-instance administrative and criminal cases to the basic people's courts. However, according to the opinion, the intermediate people's court may now accept all three types of case.

If several basic people's courts have jurisdiction over ordinary IP rights cases, the Supreme People's Court will determine and adjust the jurisdiction of each court, according to the number of cases, respective resources and other criteria.

If a basic people's court that does not have jurisdiction over ordinary IP rights cases finds that it is handling an administrative or criminal IP rights case, it must promptly transfer the case to a basic people's court that does have jurisdiction over IP rights cases.

Appeals and retrials Regarding the appeal and retrial procedures, the structure remains the same:

  • Decisions of the basic people's court will be appealed to the intermediate people's court; and
  • Appeal decisions of the intermediate people's court will be retried by the high people's court.

In the absence of a basic people's court, the structure is moved up a level:

  • First-instance decisions are passed by the intermediate people's court;
  • Appeals are made to the high people's court; and
  • Retrials are heard by the Supreme People's Court.

Cases that are appealed by the people's procuratorates are processed at the same level as appeal cases.

Lastly, 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.

Comment

The development of the three-in-one system is a positive and welcome step. However, the development of the basic people's court having first-instance jurisdiction over ordinary IP rights cases will have significant consequences that are worth examining.

When a case is handled by the basic people's court, appealed to the intermediate people's court and retried by the provincial high people's court, the Supreme People's Court has no control or ability to establish and harmonise stable national jurisprudence, which could prove problematic. Ordinary trademark and unfair competition cases can be as complex as other 'non-ordinary' IP rights cases. The need for reliable and stable jurisprudence remains.

For this reason, the creation of one national appeal court might be envisaged. Based in Beijing, the court would have jurisdiction over all of the country's IP rights cases, originating from either provincial high courts or local intermediate courts.

The decisions of this unique appeal court would be controlled, through retrial, by the Supreme People's Court, to ensure that the law and interpretations of the law are implemented in a correct and unified manner throughout the country.

For further information on this topic please contact Paul Ranjard at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000) or email (ranjard@wanhuida.com). The Wan Hui Da Law Firm & Intellectual Property Agency website can be accessed at www.wanhuida.com.

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