Founded as one of three specialised Chinese IP courts in 2014 (see here and here), the Beijing IP Court has just completed its second and most challenging year to date. According to a recent report, throughout 2016, the Court witnessed increasing amounts of high-tech cases, cases involving foreign entities, and cases in which enormous damage claims were at stake.
In the two years since its inception, the court has proven itself a popular and more reliable venue for some of the most complex and technical Chinese IP cases. Its popularity is –partially- due to the fact that its judges are all senior judges with years of experience in IP litigation, and to the willingness of the court to tackle some highly contested issues (see for instance here and here). However, at the same time, the court also seems to be the victim of its own success: over 2016, its caseload went up again by approx. 16%, leading to a larger backlog and stricter case acceptance standards, which sometimes prove difficult to meet for foreign parties. We discuss some of these developments in more detail below.
Increasing Case Load
In 2016, the Beijing IP Court accepted a staggering total of 10,638 IP cases, marking an increase of 15.74% against the 2015 figures. At the same time, the court closed 8,111 cases in 2016 (a 49% increase against 2015). However, since the amount of accepted cases is still far above the amount of closed cases, the court’s backlog is still steadily growing.
In order to tackle this growing case load, the Beijing IP Court established 4 “Expedited Trial Teams” (“速审小组”) whose mission it is to handle certain low-profile cases quicker. In 2016, cases handled by these teams took, on average, 32 days less, resulting in a 31% increase in efficiency.
More liberal in awarding damages, and willing to punish parties obstructing justice.
The Beijing IP Court is an attractive venue for IP owners in China, since it is seen as more liberal in awarding damages (see e.g. here and here) than other courts -which have been traditionally reluctant to award large amounts. Throughout 2016, the court awarded an average of RMB 1.41m for patent infringement, RMB 1.65m for trademark infringement, and RMB 458k for copyright infringement.
Moreover, in the recent Watchdata case, the Beijing IP Court also granted a large reimbursement of legal fees (RMB 1m), and accepted that the ‘reasonableness’ of lawyers’ fees can be established by reference to the complexity of the case and to the amount of “billable hours” (with narratives) performed by the prevailing party’s lawyers.
In 2016, the court has also showed its willingness to punish parties for obstructing justice (fine: RMB 10k) and for parties that refused to carry out effective preservation orders (i.e. a Chinese version of “contempt of court”, fine: RMB 1m)
Looking towards the future
The Chinese IP Courts were initially set up as a three-year pilot project for judicial reform in China (see here). According to these plans, the courts will be assessed in 2017. Now over two full years into their existence, the results of the pilot project are largely positive, with the IP Courts having become a cornerstone for IP litigation in China.
The specialized courts are, by themselves, no panacea for some of the pervasive problems with IP enforcement in China. Furthermore, the courts (and especially the Beijing court) already face a large case backlog and have implemented burdensome case filing formalities. However, given the IP Courts’ professionalism, expertise with complex and foreign litigation, the IP Courts are commonly seen as a step in the right direction.
Moving forward, we think a large amount of IP cases will be brought before the IP courts, and we can therefore hope that the Chinese Government will maintain the courts after the expiry of the pilot project, and expand the courts’ staffing and resources, so they can better handle the increase in cases that is likely to continue. However, the fact that the Chinese Government has recently set up specialized IP Tribunal in a number of second tier cities (see our blog post here), makes it more likely that the specialized IP Courts will also be maintained after the initial three year term.