China: New national-level Appeal Court – Cautious hopes for improved consistency and efficiency in high-tech IP / patent cases

Hogan Lovells

On 26 October 2018, the Standing Committee of China’s National People’s Congress (NPC) issued a Decision setting out the establishment of a new IP Court of Appeals at the national level within the Supreme People’s Court (SPC). This Decision will come into effect on 1 January 2019.

The Decision provides that the SPC will have appropriate jurisdiction to handle: (1) all appeals against first instance civil judgments in technology-related IP cases and (2) all appeals against administrative judgments issued by the Beijing IP Court pertaining to invention and utility model patent cases (i.e. appeals against the rulings of the Beijing IP Court regarding Patent Review Board decisions). Technology-related cases here are defined as cases regarding invention and utility model patents, new varieties of plants, layout designs of integrated circuits, technical trade secrets, computer software and anti-trust cases, and thus do not include cases involving design patents  In other words, for patent cases and other cases involving complex technology, the appellant may bypass the higher/highest court at the provincial level altogether and appeal the intermediate or IP court’s ruling directly to the SPC. This is a groundbreaking event for IP in China as this NPC Decision essentially establishes a specialized IP appellate court (within the SPC) to specifically hear complex patent cases- which is akin to the role of the Court of Appeals for the Federal Circuit (“CAFC”) in the United States. Please find below an updated high-level view of the appeals process for Chinese IP matters (click to enlarge):

Even though the creation of a national level IP centric Court of Appeals has been a topic of great interest and discussion in China for quite some time, some aspects of the new IP Appellate Court still come as a surprise for most practitioners.

Firstly, the new appeal court will not be a separate court, like the IP Courts of first instance. Instead, it will be set up as a special division within the SPC. Therefore, although the Decision is silent in this regard- retrial procedures in cases handled by the new IP Court of Appeal seem less likely, but the SPC will have authority to direct a lower court to conduct a re-trial. Moreover, the new appeal court will only handle patent and technology-related cases. As noted in the diagrams above, this means that trademark and copyright cases will follow a separate litigation track. Finally, the establishment of this court may mean an end to a bifurcation procedure of examining patent infringement and patent validity issues in separate proceedings in some cases.

For example, in situations where the appeal of the lower court’s patent infringement decision is filed to the new IP court at roughly the same time as the appeal of the Bejing IP Court’s ruling of the Patent Review Board’s (PRB) evaluation of patent validity, the new court may decide to join the cases and evaluate the appeals together, thereby avoiding bifurcation altogether.

It is also hoped that the new IP Court of Appeals will comprise of a number of judges with special experience and expertise in handling patent and technology-heavy cases.  This will be especially important given the boom in Chinese patent litigation over the past few years, which will require the new court to “hit the ground running” almost immediately once it opens at the beginning of next year. Otherwise, there is risk of further exacerbating the patent backlog which already exists before some of the IP courts.

All in all, the establishment of a national level IP Court of Appeals has been applauded by the industry as a significant step in the right direction for China’s continued efforts to improve IP protection. The IP appeals court will likely lead to greater consistency and predictability in adjudication for high-tech cases among the first instance IP courts and between the trial courts and the PRB proceedings. Establishing this national appeals court is expected to also increase the efficiency of both validity review and infringement actions. For example, previously after the first instance IP court or tribunal issues their decision, the decision could be appealed to the highest court in that jurisdiction and then potentially further appealed to the SPC. Now with a single patent court of Appeals, the step of appealing to the highest courts at the provisional levels is bypassed- establishing a faster procedural track. Moreover, not needing to appeal a patent case through the provisional courts to get the case heard directly at the SPC may help to curb regional protectionism.

We will monitor any further developments, and will keep you posted. Stay tuned.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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