Intellectual Property Rights in China. Zhenqing Zhang
of Chinese patent policy with the country’s ongoing institutional reforms.
Chinese Patent System: Enforcement Function and Beyond
This section provides an analysis of the legal and administrative enforcers of Chinese patent policy—namely, the Chinese IPR special tribunals and patent bureau/IPOs. Previous scholars have already offered a thorough analysis of the organizational evolution of the Chinese State Patent Bureau (SPB); its successor, the Chinese State Intellectual Property Office (SIPO); and SPB/SIPO’s regional branches. They have also conducted an in-depth discussion of the relationship between the Chinese patent administrative apparatus and IPR courts.7 Nevertheless, some key issues that influence their enforcement functions remain underexplored: Do Chinese IPR courts and IPOs have any goals other than patent protection? If patents receive due protection, how do the enforcement decisions influence (and are influenced by) the broader political and economic environment in China? This section situates the operation of Chinese IPR courts and patent bureau/IPOs against the greater political and economic backdrop of the country’s market reform since the early 1980s. I argue that the Chinese IPR tribunals and patent bureau/IPOs not only enforce patent laws but also design patent policy to serve the general scheme of the country’s economic modernization campaign. Hence, the effectiveness of Chinese patent policy is measured by the quantity and quality of enforcement cases and also by its contribution to the country’s technological and economic advancement.
Chinese IPR Tribunals: Between Trial and Mediation
As some scholars have rightly pointed out, Chinese IPR courts are the primary venue for delivering patent protection. Over the years, Chinese IPR courts have handled high-quality patent enforcement cases through trials. Building on these scholars’ analyses, I demonstrate that, in addition to delivering legal enforcement through a trial, the Chinese IPR tribunals have also increasingly introduced pretrial mediation as an alternative means to resolving patent disputes in recent years. Both trial and pretrial mediation serve China’s need to render technological innovation into practical market benefits.
Chinese patent legislation identifies three types of patent violations: patent infringement (qinquan), patent counterfeit (jiamao), and patent passing off (maochong).8 The 2008 Chinese patent law defines patent infringement (qinquan) as “the exploitation of a patent without the authorization of the patentee” for the purpose of making profits.9 Patent counterfeit (jiamao) is defined as counterfeiting the patent certificate or other patent documents belonging to the legitimate holder of the patent. Patent passing off (maochong) is defined as selling or producing a nonpatented product as a patented product.10 When a patent owner identifies a patent violation, the owner can resort to legal protection or administrative protection. Under the current Chinese patent regime, IPR courts are the primary providers of legal enforcement while IPOs at different levels are the primary providers of administrative enforcement. Due to their technical complexity, most patent infringement (qinquan) cases are handled through legal channels. Regional patent bureaus or IPOs are mainly in charge of handling the relatively less complex cases of patent counterfeits and patent passing off. According to some scholars of Chinese IPR policy, high-quality enforcement, featuring consistency, transparency, and procedural fairness, has emerged in the Chinese IPR special tribunals. They attribute this to the high qualifications of Chinese IPR judges, the relatively independent status of IPR special tribunals, and the courts’ stronger authority to resist local protectionism.11 These factors have equipped the Chinese IPR special tribunals with the capacity to handle complex patent infringement cases. Chinese IPR judges themselves are also confident of the quality of their legal decisions and are required by the People’s Supreme Court to post these decisions online for the general public to review.12
Figure 1. Administrative versus legal enforcement of patent cases in China, 2001–2010. Chinese Intellectual Property Yearbook (2002–2011).
Statistical data indicate that, between 2001 and 2010, IPR courts at different levels handled 69.6 percent of the patent disputes while regional IPOs handled 30.4 percent.13 Further examination of the data reveals that IPR courts in China have witnessed a rapidly growing number of hearings on patent disputes over the past decade (see Figure 1).
Statistical data about Chinese IPR tribunals are telling, and one is tempted to conclude that Chinese IPR special tribunals accomplish all their tasks by offering legal protection to patent holders. But a careful study of the history of Chinese patent dispute settlement indicates that the number of court trials is only a partial reflection of their work. Before China established its first IPR special tribunal in Beijing in 1993, patent disputes were mainly resolved by patent bureaus at different levels. Between 1985 and 1992, the patent bureaus settled a total of 1,858 patent disputes, with 1,400 of the settlements resulting in mediation because the disputes were not high-value cases.14 According to the recollection of Cheng Yongshun, one of the founding judges of the IPR Tribunal of the Beijing Intermediate People’s Court, conducting trials of IPR cases was the main way to resolve IPR disputes during the early years of the IPR tribunals in the 1990s.15 As the first of its kind in China, the IPR tribunal in Beijing shared its experience with its counterparts in other provinces. As of 2012, China had established 420 IPR tribunals at the basic court (jiceng fayuan) level, reaching into some remote provinces such as Xinjiang and Yunnan. The IPR tribunals were staffed by 2,759 IPR judges.16
With the rapid growth of IPR special tribunals over the past decade, the complexity and difficulty of patent cases on trial have also increased. Even IPR judges do not deny the challenges that IPR tribunals face. Specifically, these challenges include burdensome evidence collection, expensive lawsuits, lengthy trial processes, and difficulty with calculating economic compensation. These factors make IPR civil enforcement a luxury, particularly for IPR holders with weaker economic status, such as individuals or small and medium-sized companies. Even if companies win the case and the court orders a stop to the patent infringement, the companies may have lost time and business opportunities. As such, they go to court only when absolutely necessary. In light of this, the Chinese IPR special tribunals introduced another important part of their work in the late 1990s and early twenty-first century—the mediation between the different parties involved in the patent cases.
No systematic data exist about when the IPR special tribunals started to adopt pretrial mediation as the major means in the resolution of IPR disputes. Speeches by Chinese judges in the early twenty-first century, however, indicated that the courts increasingly realized the importance of pretrial mediation in solving civil disputes, including IPR cases. For example, in a speech delivered at the annual conference of the presidents of the Provincial High People’s Court in 2004, the Chinese People’s Supreme Court judge, Xiao Yang, stated that the people’s court should “mobilize positive factors in various aspects, explore alternative means other than trials to solve legal disputes, and further improve settlement mechanism of social contradictions.”17 In 2008, Xiao Yang’s successor, Wang Shengjun, elaborated that principle as “mediation first and then combine mediation with adjudication” (tiaojie youxian, tiaopan jiehe) in handling civil cases.18 Applying this principle to IPR cases, the newly appointed director of the IPR Tribunal of the Chinese People’s Supreme Court, Kong Xiangjun, proposed that disputes between different parties in IPR cases should be mainly categorized as “internal contradictions among the people” (renmin neibu maodun). The judge’s role should not only be limited to delivering a high-quality trial for individual cases but also should provide a legal basis for resolving plaintiff-defendant contradictions and enhancing the application of technological innovation to promote social and economic development.19 Under this rationale, mediation mechanisms aim to (1) find common interests between the parties involved, (2) negotiate a technology transfer agreement, and (3) make the parties cooperate. An example cited by an IPR judge in Nanjing illustrates the effect of the mediation mechanism. In 2005, a retired engineer, Mr. Lu (plaintiff), developed a technological innovation that was not put into application until after his retirement. When Mr. Lu discovered this, he