24 April 2013Copyright

China sees surge in IPR suits

Chinese courts handled 83,850 civil lawsuits relating to IP rights in 2012, a 44.1 percent increase on the previous year, according to a paper released by the Supreme People’s Court of the People’s Republic of China on Monday.

The report cites a number of factors as instrumental in the increase, including an improvement in adjudication quality and efficiency, media coverage of IP infringement cases and greater cooperation with the administrative and law enforcement authorities.

“Adjudicating intellectual property-related civil disputes is essential to the people’s courts. Civil litigation is an important means to protecting intellectual property,” the paper said.

It reported an increase in civil cases in all areas of IP; copyright cases brought to Chinese courts increased by 53.0 percent year-on-year, while trademark cases were up 52.5 percent and patent cases 23.8 percent.

There was also an increase in criminal enforcement of IP, with IP-related criminal cases filings up by 129.6 percent, many of which related to crimes involving counterfeiting. In 2012 more than 60,000 people were arrested for crimes of IP infringement, including the manufacturing and sale of fake and inferior goods worth 11.3 billion yuan ($1.8 billion).

Jason Rawkins, a partner at Taylor Wessing LLP in London, said that while the paper suggests an improvement in IP enforcement in China, there is still a lot of work to be done.

“The Chinese authorities are motivated to try and improve things, but they have not yet dealt with all of the issues. It goes halfway down the road but not the whole way,” he said, describing trademark squatting as a “major issue” in the country.

It is very difficult legally to protect your trademark if it was applied for in bad faith in China, he said.

International businesses and governments have been lobbying the Chinese authorities to take IP enforcement more seriously, which may have been a factor in the reported improvement, he said.

He added that Chinese businesses creating their own IP may have been a motivator to change the system, as a way of protecting local companies, as well as the international companies bringing business into the country.

“China is definitely improving its IP system, and that can only be good for investors,” said Luke Minford, chief executive at Rouse in London, who added that the Chinese government reports similar results year to year.

He said that while Chinese courts are increasingly competent and that the judges are better equipped because of the increase in sophisticated IP disputes, there remains a gap between what investors would experience in Chinese courts and in the courts of other developed countries, mostly in relation to the level of damages awarded in IP cases.

“The average level of damages awarded in China is still microscopic compared to what you would experience in the UK or US, and certainly doesn’t reflect the damage businesses are experiencing,” he said.

“Giving evidence in China to prove what losses [the plaintiff has] sustained or what profits the infringer has gained is a real challenge.

“Most foreign plaintiffs find that their only practical option is to claim statutory damages,” which he said has a low ceiling depending on what IP right is concerned – about $153,000 for patents and $76,000 for trademarks.

“Most infringed parties don’t get the relief they’re looking for.”

He said that the Chinese courts are also extremely cautious about awarding damages to both foreign and domestic parties, and that they may have to wait 12 to 14 months for a case to go to trial – time in which the plaintiff is experiencing a loss.

He said that while the Chinese laws, speed to trial, quality of many judges are at a similar level to the best countries in the world, the level of damages awarded and enforcement of awards is lagging behind.

“It’s a lot better for foreign investors, but there are still major challenges that China has to overcome before it can hold itself up alongside countries in Europe or the US,” he said.

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