We have been keeping followers of LimeGreen IP News informed about the newly-established specialized IP courts in Beijing, Shanghai and Guangzhou (see Specialized IP Courts in China are Open for Business).  Last week, the US-China Business Council (USCBC) invited the head of the Shanghai IP Court, Judge Wu Xielin (???), to speak to its members regarding the operation of the new court, and we had a front-row seat.

According to Judge Wu, the Shanghai IP Court started accepting cases on 4 January 2015 and, by 4 February 2015, had already accepted 119 cases.  The accepted cases include 107 first-instance cases and 12 appeal cases.  More than 75% of the cases are infringement cases, and most of these are patent disputes.  Thirty-six of the infringement cases involve foreign companies, and, interestingly, the foreign companies are the plaintiff in all of these cases.  Judge Wu also reported that U.S. companies filed most of these cases (30 cases).

The statistics cited by Judge Wu are consistent with trends reported in our prior post, China as Innovator? Recent Thomson Reuters Report Examines Trends in Chinese Patent Filing & Litigation, where we observed:

Innovation can be measured not only by patent filing trends but also by patent enforcement trends. The Thomson Reuters report notes that the number of patent infringement cases accepted by the People’s Courts has more than tripled from 2006 to 2013. The report also notes that foreign patent plaintiffs have a 75% win rate against Chinese defendants versus a 63% win rate for domestic plaintiffs. This, of course, tells only part of the story, but it is generally consistent with our experience.

Judge Wu also discussed a new feature being rolled out with the IP courts to address the rise in patent and other technically complex cases – technical departments and investigators.  Details for these technical departments and their staff are set out in the Provisional Regulations Concerning Technical Investigators Participating in Litigations, promulgated on 21 January 2015 by the Supreme People’s Court.  In essence, the IP Courts are required to set up a Technical Department staffed with Technical Investigators to assist on technical cases as needed.  Depending on the circumstances of the case, judges can appoint Technical Investigators to assist in cases involving patents, plant varieties, integrated circuits, trade secrets or computer software.  Based on the judge’s request, Technical Investigators may carry out the following responsibilities:

  1. Reviewing court documents and evidence and ascertaining the key technical issues;
  2. Giving suggestions on the scope of the investigation and its relevant steps and methodologies;
  3. Participating in the investigation and evidence preservation, and providing suggestions with respect to the relevant methodologies and steps;
  4. Participating in the court investigations, hearings and trials;
  5. Providing technical opinions and participating in the judicial panel discussion;
  6. Assisting the court in organising experts in the relevant technical fields to provide appraisal opinions; and
  7. Undertaking other responsibilities as requested by the judges.

Judge Wu admitted that the IP Courts are still working out the role and functions of Technical Investigators, and while the use of Technical Investigators could be a positive supplement to the parties’ own experts and the “appraisal system” adopted widely in patent infringement cases, “the devil is in the details.”  Highly capable and truly unbiased technical advisors, operating in a transparent manner, may resolve some of the issues that arise when parties present their own (often conflicting) technical experts or non-technical judges must rely on highly technical appraisal reports and other information to decide cases.  However, the competency, neutrality and transparency of the Technical Investigators are still unknown and untested.  It is crucial that the IP Courts address these issues since the Technical Investigators will likely (or at least be perceived to) wield significant influence over a judicial panel’s decision and it is in the IP Courts’ interest to foster public confidence in the judicial system and their decisions.

Judge Wu’s overall message to the USCBC membership was that the Shanghai courts are some of the most efficient and impartial courts in China.  He reiterated that Shanghai is committed to providing foreign investors with the best possible environment for IP protection and a level playing field in court.  Having observed first-hand the positive development of Shanghai’s IP enforcement regime over the past decade, we agree that Shanghai is a good venue for IP owners to enforce their IP rights and we look forward to helping our clients do so at the Shanghai IP Court.