Strategies for Foreign Companies Initiating Intellectual Property Litigation in China
(Simon Fang,a partner of Grandall Law Firm (Shanghai))
Updated: 2013-12-09

III. Legal differences

China has been the member for Paris Convention on the Protection of Industrial Property, Patent Cooperation Treaty, Agreement on Trade-Related Aspects of Intellectual Property Rights and some other IP related treaties for a long time. The gap in substantive laws between China and other countries is small. However, there are still a few differences. For example, the invention, utility model and design are all called patent in Chinese Patent Law. The invention patent shall be granted after substantive examination by the State Intellectual Property Office (“SIPO”) while utility model patent or design patent may be granted as long as its application meets the requirement in form. Once they have been approved, these three kinds of applications will be called patents and the applicants will be granted sole proprietary rights on the market, namely, the rights to prohibit others to produce, sell, offer to sell, use, or import the patented products. But in litigation, the patent rights of utility model and design patents are not so stable that they can be easily invalided. Foreign companies should be aware of such facts when filing a complaint on the ground of infringement of a design patent.

There are also differences in judicial procedures between China and foreign countries. First off, let’s make a brief introduction into the judicial system of China. There are usually four levels of courts in China, namely, lowest trial court, intermediate court, higher court, and Supreme Court. The court of first instance having the jurisdiction over patent infringement cases is intermediate court. But not all intermediate courts have jurisdiction over patent infringement cases, only those which have been designated by the Supreme Court have jurisdiction. A patent infringement lawsuit shall be under the jurisdiction in the court of the place where the infringement takes place or where the defendant has domicile. Usually, a patent infringement lawsuit is tried and decided under a collegial panel of three persons. The two-tier trial system is applied in patent infringement litigation. But if one party is not satisfied with the final decision, they can bring the case to a court of a higher level for review, while the enforcement of the decision shall be continued. The court of higher level will review the case if the application follows the procedures and stipulations of civil procedure. In a word, a trial system of “2+1” is implemented in China.

Different law systems contribute to the differences in IP litigation procedures between China and foreign countries. The existing litigation system in China is similar to those of civil law system such as France, Germany, and Japan, and distinct from those of common law systems such as England and the United States. There is no jury, discovery, or the principle of stare decisis.

A full understanding of the differences in judicial systems and the overall conditions in China will attribute to a formulation of macroscopic strategies on IP litigation for foreign countries. I am of the opinion that the priority in IP litigation is to figure out whether to bring the lawsuit to the court or not.

As mentioned before, most Chinese people and companies are not favorable to lawsuits and judges in China tend to prefer mediation to litigation. One opinion is that you need to bring the lawsuit to the court in order to stop the IP infringement. On the other hand, litigation can be time and energy consuming, wherein the damages are not very high and punishment on the infringer is limited. It is really unnecessary to view litigation from these opposing viewpoints. I am of the opinion that the two above mentioned opinions are both radical and inaccurate. We need to make judgments from a real world perspective. If the infringement acts are not very serious and take place in a small area, the rightful owners may send out a warning letter or complain to related governmental authorities regarding such acts. If the counterfeits have severely affected their position in the market, the rightful owners should not hesitate to bring the lawsuit against the infringer and work hard to stop existing infringement. The ongoing litigation would scare away some potential copycats as well.

As to whether and how to start the litigation in China, I will further illustrate them in the next article.

[This article is just for academic exchange, and should not be considered as any legal advice or opinion. Should you have any questions, please contact the author at for further discussion.]

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