An extract from The Intellectual Property Review, 9th Edition
Enforcement of rights
The Chinese court system has four levels, the Supreme People's Court, the High People's Courts (one in each province), the intermediate people's courts (for regions or districts) and the basic people's courts. There are some special regulations for the second instance appeal for patent cases after the establishment of the IP Tribunal in the Supreme Court. For patent infringement cases based on invention patents and utility model patents, the second instance court shall be the IP Tribunal in the Supreme Court, while for those based on design patents, the second instance court shall still be local high courts. For patent administrative cases against invalidation decisions on all these three patents, the second instance court shall only be the IP Tribunal in the Supreme Court. Out of approximately 400 intermediate courts, 76 are designated as trial courts for patent cases (including invention, utility model and design patents), and a few basic courts are designated as trial courts for design patent cases. Increasingly there are special IP tribunals within the courts for civil cases. As of 2019, there are 21 special IP tribunals established and this figure is sure to be on the rise in 2020. These specialised IP tribunals are still part of the local intermediate courts, but are separate from normal civil cases. A case can be tried at a higher-level court if the damage claim reaches 5 billion yuan, depending on the nature of the case and local rules.
Since 6 November 2014, three special IP courts have started working, respectively in Beijing, Shanghai and Guangzhou. As of September 2019, the Beijing IP Court has accepted a total of 70,924 IP cases, with patent cases representing 13 per cent, copyright cases 25 per cent, and trademark and anti-competition cases 62 per cent; Guangzhou IP Court has accepted a total of 41,598 IP cases, with patent cases representing 41 per cent, copyright cases 48 per cent and trademark and anti-competition cases 11 per cent. The IP cases of the first instance for the new IP courts include: (1) patent, new plant variety, integrated circuit layout, technical know-how, and computer software, either civil or administrative cases, (2) administrative cases (i.e., appealed from the administrative decisions of the departments or agencies of the State Council or local government authorities above county level regarding copyright, trademark, unfair competition, etc.), and (3) civil cases relating to recognition of well-known trademarks. The intermediate courts in Beijing and Shanghai no longer accept new IP cases (i.e., serving trial court), and all IP cases there should be filed directly with the new IP courts. Guangzhou IP Court now has jurisdiction over Guangdong Province except Shenzhen city, while other intermediate courts therein will no longer accept new IP cases of these types, those intermediate courts (or basic courts for some cases) should have almost finished cases that were accepted earlier. The Beijing IP Court has the special subject matter jurisdiction over the administrative decisions made by the agencies of the State Council (i.e., the Patent Office and the Trademark Office and its internal functional departments such as the Patent Re-examination Board and the TRAB), regarding the granting or invalidation of rights of patents, trademarks, new plant varieties, integrated circuit layout, decisions about compulsory licences or royalties thereof, and any other administrative decisions relating to the determination of IP rights. As of September 2019, the total number of such granting or invalidation of rights of patents and trademarks is 44,924, with patent cases representing 13 per cent and trademark cases 87 per cent.
A patent trial is a bench trial in China, consisting mostly of a panel of three judges, and maybe five judges if it is an important case. The trial will be conducted, according to the Civil Procedure Law, briefly in an order of opening statement, examination of any evidence for truthfulness and relevance, case presentation and argument and a closing statement. The chief judge of the panel guides the progress of the trial. The panel will not normally deliver the judgment at the end of the trial, but have parties review and verify the trial records by signing the record papers at the end of trial, and it may take one or more months for the court to either mail the judgment, or to have another court session for delivery of the judgment.
The alternative to the aforesaid judicial route, the local administrative authorities for patent affairs (AAPAs), may have the power to receive and try various patent cases, not only infringement cases, but also disputes of patent ownership, via quasi-legal proceedings, similar to the above judicial trial procedures. AAPAs are local governmental agencies. AAPAs will not decide any compensatory or monetary damage at present (but possible monetary damage may be awarded by such authority as specifically set forth in the proposed amendment of the Patent Law), but AAPAs will issue injunctive orders. However, if compulsory execution of the administrative orders is required, the party or AAPA should submit a petition to the local court for enforcement of the administrative order (but the proposed amendment of the Law may give the authorities more powerful means to enforce their administrative order). The documentation and formalities of AAPAs are similar to trial courts and proceedings may be a little quicker.
The modified Patent Administrative Enforcement Regulations came into force on 1 July 2015 to strengthen the administrative enforcement. Basically, they target patent infringement acts at trade shows or exhibitions and at the e-commerce platforms, as well as passing-off patent acts. They require the administrative authority to conclude a case within three months of the case being accepted for processing and arranging a mediation session promptly (i.e., within five working days of receipt of a written statement from the party expressing willingness of settling the case). And at the trade show, the enforcement officer may order the exhibitor to remove the infringing products on display; destroy or seal any promotional material; and exchange or cover up the corresponding display board or panel at the show, and as to the e-commerce platform, the enforcement officer shall order the e-commerce platform provider to take necessary measures to cancel the relevant website or block or remove the relevant links. In the case of a passing-off patent, the administrative enforcement authority may impose a fine on the infringer once the infringement is confirmed in addition to the aforesaid measures at the trade show or on the e-commerce platform.i Possible venues for enforcement
A patent case should be brought to a court where one or more defendants reside or are located, and where any infringing act occurs, which means making, using, selling, offering to sell, or importing a patented product; or using a patented process; or using, selling, offering to sell, or importing a product that is directly obtained from a patented process, for business purposes, without authorisation of the patentee (Article 11 of the Patent Law). Likewise, the requirements of venues for AAPAs are the same. The same rules of jurisdiction or venue apply to other IP cases. The modified Supreme Court Interpretation regarding patent infringement of 2015 specifies (Article 5, Paragraph 2) that the places of infringement include: (1) the places of manufacture, use, offer for sale, sale, importation of the infringing products; (2) the place the patented process or method is used, offer for sale, sale, importation of the products directly made from the patented process or method; (3) the place of manufacture, offer for sale, sale, importation of design patent products; and (4) the place of the infringing act of passing-off another's patent, as well as the infringement results of the aforesaid infringing acts. It also defines that the offer for sale means advertising, display in store windows, or display or demonstration at any exhibitions or trade shows with any indication that the products or goods are for sale. Pursuant to a new judgment issued by the Supreme Court, it is not permitted to establish the jurisdiction only considering the place where the infringing products are picked up.ii Requirements for jurisdiction and venue
A declaratory judgment case can be brought to a court where the alleged infringer resides, or where any alleged infringing act occurs. Article 18 of the Judicial Interpretation of the Supreme Court of 2009 for patent infringement cases (see Section I) requires that a party being warned of a potential infringing lawsuit or an interested party send a written demand of non-infringement in reply to the patentee (or other holder of rights) who sent the warning or cease-and-desist letter. The party being warned or an interested party may start a declaratory judgment case at the court, if the patentee or other holder of rights does not withdraw the warning or bring a lawsuit within one month of receipt of the demand.
A more practical issue is to determine what act constitutes an infringement that would qualify for proper jurisdiction away from the residence or location of an alleged infringer. Such an act should be at the place of the direct infringement. The act of making the patented products is direct infringement, and the place of making is where the alleged infringer is, and thus it is not a desired venue. Moreover, the act of making and providing parts for use by others in a patented process or to make the patented products is likely to be indirect infringement, and the place of making the parts may not be a proper venue. The place of using the parts is a proper venue, but not a convenient one because it would bring an end user into a lawsuit that did not necessarily aim to sue a potential end user. An offer to sell is direct infringement, and it may be on a website or on paper or simply over the telephone and may, therefore, not be readily affixed in tangible form to qualify as admissible evidence, and, thus, it may not secure a proper venue.
The act of selling or importing may not be just a single act but several acts and the several acts may not always occur at the same place. For instance, placing an order or signing a purchase agreement and acts of remitting and receiving a payment would constitute the complete act of selling or importing. Therefore, it would be at the judges' discretion to determine whether or not all the acts need to be present at the same place to qualify for proper jurisdiction. Most courts may require that the payment element should be present. In any event, this was not always clear, and each of provincial-level high courts may have their own guidance for local courts with respect to the jurisdiction and venue issues.
The Second Interpretations of 2016 (Article 19) says, however, that the court should confirm that a lawfully formed purchasing and sales contract should qualify as an act of sales under Article 21 of the Patent Law. It may mean that the place of formation of such a sales contract may be a proper venue, and it may indicate that the complete or series acts of contract formation and remittance or payments may be no longer required to be present for determination of proper venue.iii Obtaining relevant evidence of infringement and discovery
There is no US-style discovery procedure in China, and, thus, it is always advisable to obtain some admissible evidence that may secure a chance of winning an infringement case before starting the lawsuit or even before sending a cease-and-desist letter to the alleged infringer as alleged infringers may hide their infringing acts once they learn that a potential lawsuit is imminent. The prospect of a case may become relatively clear through investigation in advance and secured evidence that may be obtained as witnessed by notaries public who should not be identified as such.
For any evidence that may be difficult to obtain or may be lost, one can petition the court to conduct a preservation of evidence action before filing a complaint. The court should decide whether or not to issue such an order within 48 hours of receipt of the petition. Within 15 days thereafter, the plaintiff must start the case, and if not, the order will be void (Article 67 of the Patent Law).
Some of the evidence may need technical tests or an appraisal report from a competent authority if the actual substance or contents of the products of the evidence cannot be determined directly. The court may decide or designate an authority if the credibility of a test or appraisal report submitted by a party is challenged.
In view of the difficulty of collecting evidence, the proposed amendment of the Law has added certain power to courts (and perhaps also to the administrative authorities) to order the alleged infringer or infringers to provide or furnish bookkeeping or accounting records and any relevant material, and may impose sanctions for hiding, transferring or destroying evidence. Recent developments show that the Chinese judicial authority and legislators are indeed taking such issues seriously and trying to institute rules to impose more severe sanctions against anyone who commits perjury or otherwise creates obstacles or resists the process of collecting evidence, or any other act that would be disruptive or destructive towards the evidence.iv Trial decision-maker
Trial is by a panel of judges without a jury, and normally there are three specially trained IP judges in a panel. It would be much better now for the cases before the new special IP courts in Beijing, Shanghai, and Guangzhou since the judges there are all experienced IP judges. Usually the court will not accept party-appointed technical experts. When the court has technical questions, the court may ask each party to explain, or some courts may ask independent experts for their opinion. If the parties so request, the court may introduce a technical appraisal agency to give reports for specific technical questions. In any event, the judges will decide for themselves after considering all the facts and experts' opinions.v Structure of the trial
Most trials last just one day or less as the chief judge controls the progress of the trial, and usually the trial may be held within six months, or at the latest a year, of the filing of the complaint, unless there are complications. Sometimes there may be a pretrial hearing for examination of evidence if there is too much to check during a one-day trial.
The exhibiting of evidence may be by various means, such as a projector for slides or movies, or a display of real articles, but most of the time the judges will consider documentary evidence, rarely relying on expert witnesses. The burden of proof is on the party making the claim. There is no clear rule as to what evidence may not be admitted. Both parties may raise an objection to any evidence as to the truthfulness and relevancy of the evidence for the judges to consider. The evidence may not be admitted if truthfulness or relevance are missing or doubtful, but usually the judges may not give their opinion clearly about the admissibility of any particular evidence during the trial, or any analysis of a presumption the parties may present in the arguments.
The aforesaid procedural matters and issues or similar things should apply to other IP cases, and basic people's courts may have jurisdiction over trademark and copyright cases, if the amount of damages claimed is low. Similar to patents, administrative routes for enforcement are available, respectively, for trademarks and copyrights. However, the trend is that the Supreme Court may designate more courts to be first instance or trial courts for patent infringement cases, and it means some basic courts may be designated as patent trial courts too.
Trademark infringement cases or any dispute relating to trademarks can be handled by local offices of the Administration of Industry and Commerce (AIC), where all local business should obtain registration, and thus local AICs are quite powerful with respect to trademark cases. AIC procedures are very quick and AICs have the power to investigate infringing acts, seize infringing goods and, most importantly, impose fines on infringers. An AIC injunctive order is very effective because the local AIC may suspend the business registration if the infringer does not obey the order. In practice, the new Trademark Law that came into force on 1 May 2014 may have changed some aspects of trademark enforcement.vi Infringement
Almost all principles of claim construction are available in China, or at least may be considered by Chinese judges if they have received suitable training. To determine the scope of a claim or claims, the first approach must always be that of literal construction. The language in Chinese claims is often vague in various aspects, for example the words for singular or plural are not always present. Also, some technical terms are new or not customarily used or not standard. In these cases, the judges may look at whether there is a definition or description in the specification, or whether there is any description implying some meaning. This means the description may be used to construe any ambiguous claim language, and thus may also be used to limit further expansion of the claim scope. The Supreme Court Second Interpretations of 2016 make it even more clear regarding the construction of the claim or claims that the preamble and characteristic portions of independent claims and dependant claims should all read together as limitations (Article 5); and, in case of any ambiguity in the claims, description or drawings, the only possible understanding an ordinary person skilled in the art may get through reading should be adopted by the court (Article 4).
Further, the disclosed embodiments may also be used to limit the expansion of any claim construction if there is a question as to the sufficient support of a broad term used in the claims, while there is only a limited number of examples or embodiments, namely the insufficient disclosure or support issues the examiner may have missed during the prosecution. If the alleged infringing technical solution has additional features as compared with those defined in a close-end composition claim, the court should confirm it does not fall within the scope of the claim, unless the additional features are such unavoidable or inevitable normal impurity (Article 7 of the Second Interpretations).
File wrapper (prosecution history) estoppels are also known in China and so is the doctrine of equivalents. File wrapper estoppels may be more likely to be considered by judges than the doctrine of equivalents, regarding which there were differing opinions among the judges and members of the IP community in China. The 2015 amended Supreme Court Provisions for patent infringement cases states that the scope of patent protection should be determined on what the claim or claims state as a whole (i.e., including all technical features thereof) and may also include any equivalents of those technical features, and the equivalent features means substantially the same technical means, realising substantially the same functions, and achieving substantially the same effects, which may be conceived by ordinary persons skilled in the art without any inventive work or effort, at the time the infringement occurred. The judges are likely to use the doctrine of equivalence from now on.
Now, the Supreme Court Second Interpretations of 2016 makes both doctrines more specific, that is, the court may consider any records of patent examination files of any divisional applications, the effective judgment confirming the grant of the patent to construe the claims and the patent examination files include any written documents submitted by the applicant or patentee during patent examination, re-examination, invalidation proceedings, etc. (Article 6); while any functional features should be those technical features that have functions or effects on the claimed invention in connection with structures, ingredients, steps, conditions, and the relationships thereof, except those that cannot be directly derived or understood through reading, in view of the ordinary skilled person in the art at the time of the alleged infringement (Article 8). Further, if any restrictive amendment made by the applicant or patentee to the claims, specification and drawings was denied or refused during the prosecution, as a rightful owner may prove so, the court should confirm that such restrictive amendment has not led to an abandonment of the technical solution (Article 13).
The Second Interpretations of 2016 also specify the construction of the scope of design patent in view of ordinary consumers in consideration of design space (Article 14), meaning how much further design may be done in a particular area, and the court should confirm that the alleged infringing design falls within the patent scope if it is considered similar to: one of the patent designs of a set of products (Article 15); the patent design of the only possible assembled product (Article 16); and the dynamic state of the patent design (Article 17).
Moreover, Article 21 of the Second Interpretations of 2016 specifies that the court should confirm the act of assisting another to infringe, under Article 9 of the Law of Infringement Liability, if a supplier provides, knowingly without authorisation of the patentee, any material, equipment, parts, intermediate components, etc., to the other to carry out the infringement for the purpose of production and business; and likewise, the court should confirm the act of instigating others to infringe, under Article 9 of the Law of Infringement Liability, if someone knows the patented product or process and still induces, without authorisation of the patentee, the other to carry out infringement for the purpose of production and business. The indirect infringement acts are now more specified as contributory and inducement, but it is not clearly specified as to whether such an indirect infringing act may be actionable alone (i.e., without bringing proceedings against the direct infringer with the indirect infringer as a joint defendant). In the infringement case of Chinese Patent No. ZL02139508.X, the court found that the indirect infringer was liable regardless of the user or users, that is, the direct infringer should be liable so long as the direct infringement existed. However, on appeal, the second instance court denied this finding and held that the direct infringement should be proved by solid evidence especially for a system involving the co-operation of three entities.
As to any act during the provisional protection period from the publication of the application to the grant of the patent, the court shall confirm that the subject invention has been exploited (i.e., infringed), so long as the alleged infringing technical solution falls within both scopes of the claim as published and granted, even if the two scopes may not be consistent; otherwise it should be considered that the subject invention has not been exploited, provided the alleged infringing act falls only in one of the aforesaid claim scopes (Article 18, paragraphs 1 and 2 of the Second Interpretations of 2016), especially only falling in the published claims, but outside of the granted claims.vii Defences
The available defences in patent infringement cases are: (1) non-infringement (not within the scope of claims as construed and using a process different from the patented process (Article 61 of the Patent Law)); (2) using prior art technology (Article 62); (3) exceptions to infringing acts listed in Article 69; and (4) innocent user or seller with proof of obtaining products legitimately and not knowing about the unauthorised manufacture of the patented products (Article 70).
The Supreme Court Second Interpretations of 2016 set forth the following situations under which an alleged infringing technical solution may not fall within the scope of the claims: (1) if it is not suitable for use in the environments as defined as environmental limitations in the claims (Article 9 thereof); (2) the process for making the alleged infringing products is not the same as, nor equivalent to, the process as defined in the product by process claims (Article 10); and (3) any method steps are different in sequence or order from the sequence or order of the method steps that can be directly derived and clearly confirmed from the description, etc., that set forth the limitations to the claimed process, even if the claim itself is not so clear about such order (Article 11). Still further, terms such as 'at least' or 'no more than' should be construed as the ordinary person skilled in the art may understand them through reading of the application, and any contradicting explanation offered by any patentee should not be accepted (Article 12 of the Supreme Court Second Interpretations).
Invalidity of a patent is not a defence in China, as patent invalidation is handled by the Patent Re-examination Board, not by any courts, and the Board decision of validity or invalidity should be appealed to the Beijing IP Court because the SIPO is located within its jurisdiction and can be further appealed to the Beijing High People's Court.
Accordingly, no prior art references may be considered by other courts for validity of a patent, but may be considered by the courts for the prior art defence to determine if the alleged infringing product or process is closer to the prior art references. In the case of invention patents, the prior art will most likely be a combination of one or more new prior art references since the patent is granted after full examination, and in case of utility models or design patents, the alleged infringing product may be completely based on a single piece of prior art, and in this case, the utility model or design patent is apparently not novel, or at most two pieces of prior art references for inventive attack against a utility model patent as specified in the Examination Guideline, and the court will likely stay the court proceeding, waiting for the invalidation decision of the Board, in most infringement cases of utility model and design patents if either the patent is clearly invalid or there is a likelihood of non-infringement.
The Supreme Court Second Interpretations of 2016 states that the prior art defence should refer to the prior technology or design at the time of filing the patent application (Article 22 thereof), and it should not be a non-infringement defence by claiming own later obtained patent rights so long as the alleged infringing technical solution or design, even patented, falls within the scope of the prior patent at issue (Article 23).
As to the innocent user or seller defence, the Second Interpretations of 2016 states that the court may still order to stop a party from using, offering to sell or selling the infringing products, if the patentee demands so, if the party uses, offers to sell or sells the infringing products for the purpose of production or business, actually not knowing the products were made and sold without the authorisation of the patentee and may prove a legitimate source of products, unless it can be proved that reasonable fees have been paid (Article 25).viii Time to first-level decision
Patent litigation in China moves relatively quickly since the trial will usually be held about six months after the filing of a complaint as mentioned above. The trial normally lasts just one day and only some complicated cases (such as chemical or pharmaceutical cases) may have several days of trial, either consecutively or separately. In terms of the trial decision, however, it may take a few months for most cases and potentially much longer for some important cases, on which the three judges of the panel may need to consult with other judges or even a committee formed specifically for such cases.ix Remedies
Pretrial or pre-lawsuit injunctions are available as preliminary measures to prevent the alleged infringer from continuing the infringing acts. A petition may be filed before filing a complaint and the court needs to decide whether to issue a preliminary injunction within 48 hours and whether a bond should be paid, which could be a rather large amount – probably 1 million yuan, mostly in cash, with no bank guarantee note or any kind of collateral. The complaint must be filed within 15 days, if the preliminary injunction is issued, otherwise the injunction will be released (Article 66 of the Chinese Patent Law). The third amendment of the Trademark Law has introduced a similar procedure for trademark cases. Detailed regulations are updated in the newly issued Interpretations on Preliminary Injunction in 2018 with the purpose of limiting such pretrial or pre-lawsuit injunctions.
Reasonable compensatory or monetary damages may be awarded if the plaintiff wins, including reasonable 'litigation cost' and certainly some of the attorneys' fees. The compensation will be calculated or determined on the basis of: (1) actual loss of the plaintiff, if proved; (2) the illegal gain or profits of the infringer, if quantifiable; (3) a multiple (perhaps three times) of the 'reasonable' royalty (consideration may be given for applicable royalties in the relevant fields in China), if any; or (4) statutory damages from 10,000 to 1 million yuan, as provided in Article 65 of the Patent Law. The third amendment of the Trademark Law has introduced a similar way to calculate damages. The principle for damages is compensatory and thus there are no punitive damages for patent cases in China at present. However, punitive damages (of up to three times) have been mentioned in the proposed amendment to the Patent Law, and the triple damage has been written in the new Trademark Law, as mentioned above.
Moreover, Article 62 provides for the confiscation of goods passing-off as patented products, and imposes fines of up to four times the illegal profits, or if there are no goods to be confiscated, imposes fines of up to 200,000 yuan, as well as possible criminal sanctions, if the infringing acts are serious and subject to criminal law. A similar provision is introduced in the third amendment of the Trademark Law.
The 2015 amended Supreme Court Provisions regarding several issues of handling patent dispute cases states clearly the way damages are calculated:
- the actual loss of the patentee may be based on the total of reduced sales of the patentee times reasonable profit of each patented product or the total of sales of the infringing products times the reasonable profit of each patented product, if the reduced sale of the patentee cannot be easily determined;
- the illegal gain or infringing profit may be based on the total of sales of the infringing products times reasonable profit of each infringing product, and the profit obtained by the infringer from the infringement is normally calculated according to the business operation profit of the infringer, or may be the sales profit, if the infringement is the only business; and
- if both the actual loss or illegal profit can be hard to determine, the damage may be based on multiple times the patent royalty, if there is a royalty to be used as a reference, in consideration of factors such as, the type of the patent, nature and situation of the infringement, kind of patent licence, scope and time thereof, and may also be determined based on the factors, such as, type of the patent, the nature and situation of the infringement, if there is no patent royalty as reference or there is a royalty, but unreasonable. In the aforesaid case of patent infringement of Chinese Patent No. ZL02139508.X in March of 2017, the Beijing IP Court granted a damage award of 9.1 million yuan, as calculated on the basis of three times reasonable royalties, which was affirmed by the Beijing High Court at second instance.
The Supreme Court Second Interpretations of 2016 states that the court may first ask the patentee to prove the illegal profit of the infringement, and then ask the alleged infringer to provide the relevant bookkeeping records or material since those are under the control of the alleged infringer, if the patentee has provided initial evidence of the illegal profits of the infringement, and the court may rely on the evidence submitted by the patentee to decide the monetary damage or compensation if the alleged infringer refuses to provide the bookkeeping records or material (Article 27). In the recent case of patent infringement of Chinese Patents No. ZL201520103318.2 and ZL201520847953.1 mentioned above, the Guangzhou IP Court assessed 30 million yuan damages based on the way of calculation offered by the patentee since the evidence from the patentee was more reliable than that submitted by the defendant. This case also raised a new way of calculating damages: 'if the accurate calculation is feasible, then make the accurate calculation; if only an estimation is feasible, then take the estimation'.
Nonetheless, the court shall not support the patentee's claim for infringement after the grant of patent, if a party used, offered to sell or sold, during the provisional protection period after publication, for the purpose of production and business, without authorisation of the patentee, the products that were made, sold, or imported by the other, and the other already paid or promised to pay, in writing, any reasonable fees to the patentee (Article 18, paragraph 3 of the Second Interpretations), that is, exhaustion of the patent rights.
The statutory damage may be used if none of the actual loss, illegal profit or reasonable royalty can be determined. Besides, it is stated clearly in the 2015 amended Supreme Court Provisions that the reasonable expenses the patentee incurred in litigation may be calculated separately, in addition to the damage calculation. This has been applied in the patent infringement case of Chinese Patent No. ZL02823458.8, awarding 1.5 million yuan attorney fees based on the hourly rate work.
When finding the infringement, the court may enjoin any infringing acts of the infringer. There may, rarely, be judgments where the court considered public interests and did not issue a permanent injunction. However, the Supreme Court Second Interpretations of 2016 make it clear that the court may order for monetary compensation in lieu of permanent injunction in consideration of national or public interests (Article 26).x Appellate review
The judgment of the trial court can be appealed within one month to a court one level higher and the appellate court will review not only the legal issues, but also the facts with a procedure similar to the trial. The appellate court's decision should be final. However, a petition for reconsideration or retrial may be submitted to the Supreme Court, which will review the case and will make a decision as to whether a retrial is necessary with a hearing or without a hearing, and if necessary, remanding the case back to the original court for retrial. Owing to the establishment of the three new IP courts, a judgment of the IP court for the first instance may be appealed to the High Court where the IP court is located or the IP Tribunal in the Supreme Court; and the IP court shall serve as appellate court (i.e., the second instance) for any of copyright, trademark, technology contract, unfair competition cases handled and tried by basic courts at the city where the IP court is located.xi Alternatives to litigation
The Chinese legal system lays emphasis on mediation and thus the judges or AAPA officials may first ask the parties whether they are willing to settle and, if they are, the judges or officials may let the parties talk or help the parties to talk to see if they can reach an agreement. This means there may be a private settlement outside the courtroom or a court-monitored and issued mediation, which is recommended because the court mediation may have an effect of judgment, and can be readily enforced.
Arbitration is available if so chosen by the parties. It is advisable for foreigners not to choose local arbitration bodies for lack of language capacity or experience in dealing with foreign parties, but to choose some reputable arbitration bodies, such as the Hong Kong International Arbitration Center (HKIAC) or the China International Economic and Trade Arbitration Commission (CIETAC).
Customs IP protection is another effective route to protect IP rights. Customs authorities can prevent the infringing products from being exported or imported. For example, in 2018, Qingdao Customs found 192 IP infringement cases, freezing 1 million infringing goods worth over 21.8 million yuan. IP right holders are permitted to record their rights in the customs record system, which is valid for 10 years and extensible. When IP rights are recorded, customs authorities should actively make routine inspections on goods to check infringement. When potential infringement is found, the IP right holder should be notified. IP right holders are also permitted to initiate customs checks for potential infringement if the IP right is not recorded. Easily identifiable IT rights such as design patents and trademarks gain advantages in customs IP protection.