Court Jurisdiction over Patent Disputes

---Guideline for foreigners to commence action In China

Unlike America, China doesn’t have state-federal court system. Instead, China only has four-level people’s court system. Under such system, different cases mainly depend on its impacts, foreign elements involved, amounts in dispute, complexity. Those cases are allocated to the corresponding level court for its first instance. Jurisdiction is always the first concern when an action is going to be commenced in every nation, and appropriate arrangement regarding Jurisdiction could probably lead to a favorable decision. In this paper, we summarize all the regulations, regarding jurisdictions over patent dispute, which are applicable at present.

General Rule of Civil Procedures on Jurisdiction

Pursuant to the civil procedures law of China, when we talk about the jurisdiction, the first theory that occurs in our mind is the principle of plaintiff for defendant convenience. This principle is regarded as the major principle with respect to the jurisdiction for most kinds of civil cases in China. Under this principle, a lawsuit brought on a tortious act shall be under the jurisdiction of the people's court where the tort is committed or the defendant has his/her domicile, which is also applicable to patent infringement case.

Court by Forum level over Patent Dispute

In accordance with article 5 of The Explanations on Applying law Regarding Hearing Patent Infringement Cases, coming into force on 1^st February 2015 (Judicial Explanation in 2015), the jurisdiction of the patent disputes for the first instance shall fall within: 1) the Intermediate People’s Court where the government body of Province, autonomous region or municipality directly under the Central People's Government is located, or 2) the other Intermediate People’s Court appointed by the Supreme People’s Court; or 3) the Basic Level People's Court appointed by the Supreme People’s Court in accordance with the concrete case merits.

In a word, patent dispute is subject to the jurisdiction of some Intermediate People’s Courts or Basic Level People's Court appointed for its first instance due to its professionals and technology complications involvement.

With respect to the jurisdiction of Basic Level People's Court, to date, the Basic Level People's Court in both Yiwu city of Zhejiang province and Kunshan city of Jiangsu province has the jurisdiction over the patent disputes only regarding utility model and design excluding the invention patent disputes.

Territorial Jurisdiction over Patent Dispute

Generally speaking, with respect to the jurisdiction over patent disputes under the article 5 of “Judicial Explanation in 2015, the people’s court, 1) where the defendant has his domicile or 2) where infringing activity takes place, has the jurisdiction over the patent disputes.

More specifically, the infringing act places include the following places:

1) where the product using utility model/Invention is manufactured, used, sold, offered for sale, imported;

2) where patented method is implemented or where the product directly using the patented method is manufactured, sold, offered for sale, imported;

in the case of the patented method,

3) where the product using design patent is manufactured, sold, offered for sale, imported;

4) where the fake action takes place in case of fake over patent;

5) where the consequence arises from the aforesaid infringing activities.

Furthermore, under the article 6 of the Judicial Explanation in 2015, it further says: in case plaintiff sues the manufacturer other than the seller and the manufacturer’s domicile is different from the seller’s, the People’s Court, where the manufacturer has his domicile, has the jurisdiction over the case however, in this situation, if plaintiff lists the manufacturer and seller as co-defendant in the same action, the People’s Court where the seller has his domicile has the jurisdiction over the case. In case seller is an affiliated agency (without legal person status) of manufacturer and plaintiff sues the manufacturer for manufacturing and selling infringing product, the People’s Court where the sales takes place has the jurisdiction.

In practice, considering the avoidance of the litigation cost-consumption, local protection by local government, As a patent attorney, we usually try to design a transaction structure to have the case subject to jurisdiction of the court which is favorable to our client, meanwhile avoiding jurisdiction transfer by counterparty.

Special Provisions in Beijing, Shanghai, Guangdong and Shenzhen

It is great news to patent attorney that China has set up three independent IP courts respectively in Beijing, Shanghai and Guangzhou at the end of 2014. Almost concurrently, the Supreme People’s Court promulgated judicial explanation, namely Regulations on the jurisdiction over IP cases of the IP Court in Beijing, Shanghai, Guangzhou (hereinafter referred to as “IP Court Jurisdiction Explanation”), with the effective date, the 3^rd November 2014.

This IP Court Jurisdiction Explanation says that the IP court has the jurisdiction over the cases civil or administrative case in terms of patents, animals and plant varieties, integrated circuit designs, software, technological secrets.

As we can see, the highlight of this IP Court Jurisdiction Explanation is that the jurisdictions over patent disputes are centerlized and vested to the three IP courts respectively.

Comparing with the IP court in Beijing and Shanghai, the IP court in Guangzhou has a broader jurisdiction and it has across-region jurisdiction over the cases in the whole province of Guangdong except the patent cases in Shenzhen.

From now on, if your patent is infringed in Beijing, Shanghai or Guangdong, you just go to the correspondent IP court without elaborate design (may be preparation) on jurisdiction issue.

However, we need to remind you that IP Court Jurisdiction Explanation is not applied for patent cases that take place in Shenzhen and these cases are still subject to the jurisdiction of the Intermediate People’s Court in Shenzhen.