The number of intellectual property lawsuits filed in Chinese courts is steadily growing, and nearly one in six are being filed by non-Chinese entities. According to a report complied by the Shanghai Intellectual Property Court, which reflects on the cases it oversaw in 2015, the majority of lawsuits were based on claims of trademark or patent infringement. The plaintiffs have included luxury brands like Burberry, Louis Vuitton, and Gucci, and Fortune 500 companies, such as General Electric, Hewlett-Packard and Microsoft.
The Shanghai Intellectual Property Court, China’s first specialized intellectual property court, was initiated in November 2014 as a result of Decision of August 31, 2014, of the Standing Committee of the National People's Congress on the Establishment of Intellectual Property Courts in Beijing, Shanghai and Guangzhou, and for the purpose of strengthening the handling of intellectual property disputes. Its establishment came on the heels of China’s newly amended Trademark Law, which took effect on May 1, 2014, and represented a major step in enhancing the country’s IP system. The IP courts have jurisdiction over the strong professional technical civil and administrative cases concerning patent, new plant variety, layout designs of integrate circuits and know-how.
Among other aims, the aforementioned revisions to the national trademark system give brands increased access to the Chinese Trademark Review and Adjudication Board, which has the power to invalidate registered trademarks, which has proven useful for non-native brands that have fallen victim to the trademark squatting practices (intentional filing a trademark application for a second party's registered trademark in a country where the second party does not currently hold a trademark registration) for which China is known. Hence, the rise in intellectual property-related actions filed by non-native entities, such as Apple, Goldman Sachs, Christian Dior, Hermès, Costume National, Iceberg, Michael Bastian, Moncler, and Ermenegildo Zegna, among others.
As for recent growth in filings, Li Shulan, Vice President of the court, says: "IP cases have been surging at more than 20 percent year-on-year in recent years.” Last year, more than 1,640 IP-related cases were filed, an increase of nearly 127 percent from those filed in 2014. Shulan notes that the court of working vigilantly to fight the rampant intellectual property infringement that occurs in China. “The court will impose heavier compensation according to the law on violations of intellectual property as a stronger deterrent, and will increase the intensity of punishment for repeat violators and those who ignore court verdicts," she said.
Chen Huizhen, a presiding judge for the IP court, has echoed this notion, saying: "When we talk about trademarks, it refers not only to the product but also the service.” In one case, the defendants, which were selling genuine Gucci bags, misled customers into believing they were an authorized exclusive shop for the brand and the court found this to be in violation of national unfair competition law.
The decisions handed down by the intellectual property courts can be appealed to the high people’s courts where the IP courts are domiciled. The three high courts are Beijing High People’s Court, Shanghai High People’s Court and Guangdong Provincial High People’s Court, respectively. The decisions of the high courts may also be reviewed on a discretionary basis by the Supreme People’s Court, which is the ultimate authority on the judicial standards.