On August 31st, 2012, the Decision on Amending the Civil Procedure Law of the P.R.C was adopted by the Standing Committee of the National People’s Congress (NPC). This revision covers a wide range of topics and is scheduled to take into effect as of January 1st, 2013.
Here below we will list some changes of the new Civil Procedure Law (hereinafter referred to as the ‘New Law’) concerning IP litigation.
1. Person with expertise
The Provisions of the Supreme People’s Court on Evidence in Civil Proceedings (“the Provisions”), issued in 2001 and came into effect in 2002, has already had the concept of “person with expertise”. According to Article 61 of the Provisions, a party concerned may apply to the people’s court to let one or two person(s) with expertise appear in court and give explanations on specific issues involved in the lawsuit. Where the court assents to such application, the applying party shall bear relevant expenses.
The New Law introduces the concept of “person with expertise” in its Article 79 which provides that, upon request of a party, the people’s court may notify a “person with expertise” (commonly called as an “expert”, or an “expert assessor” or a “judicial expert”) to appear in court and offer an opinion regarding an “identification opinion” issued by an “identifier” or regarding a technical issue.
The opinion of this expert may help the judge to obtain a clear understanding of the facts. What needs to be stressed here is that the expert’s appearance must be applied by a party and approved by the court.
2. Litigation representative
Article 58 of the New Law closes the door for the ordinary citizen to serve as litigation representative. This modification seems to be in order to avoid certain abuses. Therefore, the question arises whether patent or trademark attorneys will have difficulty in serving as litigation representative in the future, which would not be in line with the principle mentioned above of encouraging experts to participate in litigation.
However, according to the explanation of the Legislative Affairs Commission of the NPC Standing Committee, the 3rd paragraph of the Article 58 can be understood as meaning that an ordinary citizen is allowed to serve as litigation representative when he/she is “recommended by the community of (a party)” or by “the entity employing a party” or by a “relevant social group”. Therefore, a trademark attorney and a patent attorney should be trusted as litigation representatives when recommended by the China Trademark Association (CTA) or the All-China Patent Agent Association (ACPAA).
3. Third party opposition to a judgment, a ruling or a consent judgment
A third paragraph is added to Article 56, which allows a third party who failed to participate in litigation, for a reason not attributable to the third party’s fault, to institute an action in the people’s court which entered the judgment, the ruling or the consent judgment, in order to have such decision rescinded if it considers that it is entirely or partially erroneous and causes damage to its civil rights and interests. The action must be instituted within 6 months from the day the third party knows or should know of the decision that it wants to challenge.
In IP cases, it is not rare that, when the plaintiff sues the seller of infringing goods for damages, the seller, without calling his supplier or the producer of the goods, or even colluding with the plaintiff in bad faith, submits to the court an acknowledgement that it has been infringing, in order to have the lawsuit closed as soon as possible. On the basis of such acknowledgement, the court enters a judgment or settlement holding that the defendant’s act constitutes an infringement. However, such judgment may deprive the producer from the possibility to make a defense or a counterclaim based on its own IP right. In such a situation, the newly added paragraph provides an opportunity for the producer to defend itself when the seller has failed (or chosen not) to do so.
4. Timing for production of evidence
The New Law insists on the necessity to provide evidence in a timely manner. The parties are still allowed to provide new evidence in the first instance, second instance or retrial procedure. However, Article 65 provides that where a party provides evidence beyond the time limit, the people’s court shall order the party to make an explanation; and if the party refuses to explain or the party’s explanation is not acceptable, the people’s court may, according to different circumstances, deem the evidence inadmissible or adopt the evidence but impose an admonition or a fine on the party. This should be helpful to avoid the production of “evidence surprise” at the last moment. Besides imposing this duty on the parties, the New Law also requires the court to issue and send to the relevant party a receipts corresponding to each piece of evidence received. .
5. Evidence preservation before trial
Evidence preservation before trial is one of the requirements of TRIPS and has been stipulated in the Trademark Law, the Patent Law and the Copyright Law of China. However, there was no such provision in the Civil Procedure Law.
Based on the IP laws’ legislation experience, Article 81 of the New Law introduces the evidence preservation before trial into the general civil procedure. Three points are noteworthy:
- besides trademark, patent and copyright cases, evidence preservation before trial can be applied in anti-unfair competition cases;
- if a party is not satisfied with an order on evidence preservation before trial, he is allowed to petition for reconsideration that can be granted only once;
- whether the applicant is obliged to provide security or such security is only (like in the prior civil procedure law) an option is a complex issue. Article 81 merely refers for “Other procedures for evidence preservation to Chapter IX”, re-titled as “Preservation and advance enforcement”. This chapter IX, as explained below, is about ordering a party to adopt a certain conduct or allowing the preservation of assets. The party who requests such kind of order, prior trial, must pay a guaranty.
However, when applying evidence preservation before trial according to the Trademark Law, the Patent Law and the Copyright Law of China, security is only an option. So, we need more explanation to solve this conflict.
6. “Active conduct” preservation
Injunction (prohibition to commit certain act, such as infringement) is already provided in the Trademark Law, the Patent Law and the Copyright Law of China.
Articles 100 and 101 of the New Law, which modify the previous articles 92 and 93, introduce in the general civil procedure the concept of “conduct preservation”. According to Article 100, the People’s court may, upon request from a party during trial, order the preservation of assets of the other party and may also prohibit the other party from committing certain acts (such as infringement acts). The People’s may order the applicant to provide a financial security. Article 101 provides for the possibility to apply for the preservation of assets prior trial, in which case the judge must order the applicant to pay a financial security.
It may be noted that, since these new measures are now in the general procedure law, they may be implemented not only in trademark, patent or copyright cases, but also in unfair competition cases.
In addition to these asset preservation and “conduct prohibition” measures, the New Law introduces a measure, which provides for the possibility to issue an injunction against a party to actively perform certain acts. This measure is inspired from the Maritime Procedure Law, where special circumstances may exist that justify urgent decisions (for example impose an urgent uploading, or downloading of shipment, in order to avoid very costly delays), Whether this new possibility may be used in IP litigation remains to be seen.
7. Summary procedure for small claims
Article 162 of the New Law provides for a “small claim system”: if the amount of the subject matter is lower than 30 percent of the previous year’s average annual wages of workers in a province, autonomous region or municipality directly under the Central Government, and if “the facts are clear, the relations of rights and obligations are definite”, the adjudication of the basic people’s court or detached tribunal shall be final.
A question may therefore, arise: how about a dispute of IP ownership or a dispute of the existence or non-existence of IP infringement acts. In this case, there are no subject-matter amounts of money. Would this qualify such a case for a “small claim single trial”? Most probably not. Such a claim cannot be deemed as a case in which “the facts are clear, the relations of rights and obligations are definite”. Therefore they cannot be tried with a summary procedure under the system of first instance being final.
With regard to foreign IP cases with the amount of subject matter lower than the above standards, we need further explanation on whether they should be tried by the basic court with the summary procedure.
8. Time limit to petition for retrial
Article 205 of the New Law distinguishes two situations:
- The time limit for the parties to petition for retrial is six months starting from the effective date of a judgment or ruling. Compared to the two years limit stipulated in the old law, this time limit is greatly shortened;
- Subject to certain conditions, the six months period may starts at a later time. Such conditions are (i) there is new evidence which is conclusive enough to overrule the original judgment or ruling; (ii) the main evidence used in the original judgment or ruling to find the facts was forged; (iii) the legal document on which the original judgment or ruling was made is cancelled or revised; or (iv) when trying the case, a judge has committed embezzlement, accepted bribes, has practiced favoritism for personal gains, or has adjudicated by bending the law.
In the above four conditions, the six months period only starts from the day when the party knows or should have known about the occurrence of the situation concerned. It may be noted that the old law only covered situations mentioned under (iii) and (iv) and, in such cases, the period was three months.
It is not clear whether transitional measures will be stipulated. It is advisable, therefore to apply for retrial in time before the New Law takes effect (January 1st 2013).
9. Application to the people’s procuratorate
Article 209 of the New Law strengthens the supervisory role of the People’s procuratorate over the work of the Judiciary. The article adds three circumstances under which a party may directly apply to a people’s procuratorate for “procuratorial recommendations” or “protest” :
- The people’s court dismisses a petition for retrial. Under this circumstance, there will not be duplication of effort if the party apply to a people’s procuratorate for procuratorial recommendations or appeal because that the court have examined the retrial application,
- The people’s court fails to issue a ruling regarding a petition for retrial within the prescribed time limit. Article 204 of the new law stipulated that the retrial period is three months. This circumstance can be used as a remedy if one’s retrial application fails to get a due response, which reflects the people’s procuratorate’s supervisory role;
- The judgment or ruling entered after retrial is clearly erroneous. Under such circumstances, allowing the party to apply to a people’s procuratorate for procuratorial recommendations or appeal will urge the court to make a decision on whether to raise the retrial procedure and rectify the mistakes quickly.
It is to be noticed that although right of the party in Article 209 plays an important role in the prosecutorial supervisory, it can be used only once, lest that the litigation cannot be terminated.
10. Publicity and rationale of judgments
Publicity of judgment is one of the bases of the public hearing principle. To make the judgment public, the rationale of the decision of the court should be clearly stated in the judgment, and the judgment should be open to all the litigation participants and the society. Three articles, Articles 152, 154 and 156 of the New Law concern the publicity of judgments.
- Article 152 provides that a written judgment shall state the results of judgment and reasons for entering the judgment.
- Article 154 provides that a written ruling shall state the results of ruling and reasons for issuing the ruling;
- Article 156 provides that the public is entitled to consult effective judgments and rulings, except if the content involves any national secret, trade secret or individual privacy;
As for the IP litigation, it will be beneficial for all IP owners to be able to know the court’s reasoning. This will help planning and organizing the protection of their rights.
The issue of the 2012 Amendments of China Civil Procedure Law is a landmark event of the development of China procedure law. We can see that China is striving to achieve a balance between justice and efficiency. Some provisions, such as “person with expertise”, “evidence preservation before trial”, “active conduct preservation” etc., will have a great effect on IP litigation, which is deserve the attention of the IP right holders and IP practitioners.