Intellectual property rights

A few months ago, co-blogger Steve Dickinson and I went on an extended  legal/business trip to Ho Chi Minh City and Hanoi, during which we met with around a dozen Vietnamese lawyers. One of the questions we asked nearly all of these lawyers (mostly because we kept getting different answers) was “what should we be putting in our contracts with Vietnamese companies, by way of a venue provision?” In other words, which of the below options would be best for our mostly American (with a smattering of European and Australian) clients:

  1. Litigation in the courts of the home country of our client.
  2. Litigation in the courts of Vietnam.
  3. Arbitration in Vietnam.
  4. Arbitration outside Vietnam.
In typical lawyer fashion, we decided that it depends.
Which is why we are writing this post as the facts and our analysis and our conclusion hold equally true for China.
Each of the above options has its pluses and its minuses and picking the right venue truly does depend on the specific situation, both for Vietnam and for China.
We will go through each of the options, highlighting each of their major plusses and minuses.
  • Litigation in the home country (within America or Europe or Australia) has the big plus of providing to the home company its greatest chance of prevailing. Litigation in America, Europe and Australia also tends not to require a large upfront filing fee/arbitration fee. But the downsides almost always outweigh the plusses, with the biggest downside being that neither Vietnam nor China will enforce the court judgments of most foreign countries. So if you are suing a Chinese or a Vietnamese company overseas and you prevail, you likely will have no means for collecting on your judgment/enforcing your judgment in either China or Vietnam. If the Chinese or Vietnamese company has assets in a country that will enforce such a judgment, then it is a different story, but that is rare. We only rarely write contracts with Chinese or Vietnamese companies that call for litigation outside of China or Vietnam, respectively. It also bears mentioning that litigation is public and has the potential to be the most expensive option of all.
  • Litigation in the courts of Vietnam or China. The biggest plus for litigating in a China or a Vietnam court is that the courts in both countries are best equipped to enforce a judgment, be the judgment a monetary one or one requiring the Vietnamese or Chinese company to do something, such as stop violating intellectual property rights. The biggest downside of the courts of both Vietnam and China is that they tend not to be well equipped for handling complex commercial matters and they are sometimes biased against foreign companies.  These negatives are much greater in Vietnam than in China and for that reason our China contracts far more often call for litigation in China than our Vietnam contracts call for litigation in Vietnam.
  • Arbitration in Vietnam or China. The biggest plusses for arbitrating in Vietnam and China are that it is quite possible to have good arbitrators, have an arbitration in English, and have good chances of enforcement. The minuses are that it is also quite possible not to have good arbitrators and to have an arbitration in Chinese or Vietnamese. The costs can also be high and enforcement (particularly of a non-monetary award) can be slow. The other day a China lawyer proudly told me that he never lets his clients agree to arbitration within China. The reality though is that Chinese companies (especially SOEs) are increasingly mandating in-country arbitration (this is also true of Vietnam). If you are going to do an arbitration in either China or Vietnam, it is absolutely essential that your arbitration provision be written so as to avoid the numerous pitfalls possible with this.
  • Arbitration outside Vietnam and China. The biggest plus with this is that you can choose wherever you want (Hong Kong, Singapore, Geneva, New York, Toronto, Sydney, Stockholm, wherever) and you can fairly easily get great arbitrators. The biggest minus (truer of Vietnam than of China, but true of both) is that enforcement of a foreign arbitration award can be slow and, even worse, can also be spotty. Be very careful here in that both Vietnam and China prohibit foreign arbitrations of certain disputes.
My law firm has written contracts providing for all of the above, depending on the confluence of the facts. There are no hard and fast rules covering every situation when dealing with either China or Vietnam.

It is common to read articles with statements like this: “Contrary to popular belief that enforcement of arbitration awards in China is very difficult, statistics show that less than 10% of arbitration awards are set aside by Chinese courts”.

This is very misleading. Talk to those who actually work on arbitration enforcement and the picture is reversed: most awards are settled rather than enforced, and although courts hardly ever set aside awards, they do nothing at all – which of course favors the Chinese party.

It really does just depend….

 For more on litigation versus arbitration, check out the following:

Not easy issues.  What do you think?

On December 17, CLB co-blogger Steve Dickinson will be presenting at an IPR Helpdesk/EU SME Centre webinar on China Computer Gaming and Software Development.  The Helpdesk describes this event as follows:

Very few economic sectors have revealed as much economic potential in China as the cultural and creative industries (CCIs). Currently the gaming industry in China is worth 6 billion dollars and it’s still growing what creates great business opportunities. With the increasing ownership of smartphones and developing industry chain, mobile games have become the fastest growing and most competitive segment of the entire Chinese games market. Yet, the complicated landscape of app stores and persistent piracy culture exacerbates challenges for overseas developers. The China IPR SME Helpdesk and the EU SME Centre invite you to this joint webinar to discuss how SMEs can make the most of China’s huge mobile gaming market, and the steps you must take to protect your Intellectual Property.

This webinar will focus on the computer gaming and software industries and offer practical advice on establishing and operating your business in China as well as protecting its ideas and innovations through intellectual property rights, including:

  • China’s mobile gaming market — overview and latest developments
  • Market access for foreign providers
  • Adjusting to the Chinese market: popular formats and localization
  • Magnetization and distribution platforms in China
  • Copyright registration for software, games and using the unique Chinese software copyright registration regime
  • Importance of registering trade marks.
  • Potential of registering the patent to protect software’s IP.
  • Pursuing IP infringement

This free, 45-minute webinar presentation and 30 minute Q&A session on Tuesday, 17 December 2013 at 10:00am Brussels time (9:00am London, 5:00pm China, 1:00 am Los Angeles, 4:00 am New York) will take you through a range of simple, cost-effective measures to develop your business in China and protect its intellectual property. Get valuable insights from our experts, and ask questions live throughout the webinar.

Steve (and our firm) have a lot of experience representing foreign gaming companies and foreign software companies doing business in China and I am confident Steve will put on a stellar presentation.  For information on how to sign up, go here.

Don’t miss it.

By:  Steve Dickinson

One of China’s primary challenges is fostering technology innovation. The Chinese authorities want China to transform its industrial model from a low value added/low level technology model to the opposite. To combat stagnating economic growth and the threat of energy and resource restraints, government policy is to try to effect this change as quickly as possible.

This transformation will require access to cutting edge technologies. If China relies on foreign technology to make the leap, there will be two significant negative consequences. The first is that the cost of acquiring foreign technology may simply be too high. The second is that by relying on foreign technology China will become progressively more dependent on foreigners, which conflicts with China’s current drive to become an independent, “stand alone” world power.

As part of its 12th Five Year Plan, China has therefore embarked on a domestic innovation program. The fundamental concept is that Chinese companies will independently develop the technologies required to drive China to its new, high tech future. There are many limitations on the ability of companies in any country to become innovators in the technology realm. The factors can be broken into two basic components: capacity for innovation (intangible) and corporate spending on research and development (tangible).

The position of Chinese companies as compared with the rest of the world is illustrated by Booz & Company’s recently issued 2012 Global Innovation 1000 study. The Study shows that China has a long way to go in all areas of innovation. First, consider the intangible side. The Study lists the 10 most innovative companies in the world. Headed by Apple, eight of the top ten come from the United States, with Samsung from Korea (at number  four) and Toyota from Japan (at number seven) rounding out the list. No European company nor any BRIC company made the list.  The list shows that when it comes to the intangible side of innovation, the United States remains the overwhelming leader in the area of technical innovation.

The Study shows that not only are Chinese companies nowhere to be seen in the intangible side of innovation, they also are nowhere to be seen on the investment side.  Simply stated, Chinese companies do not spend a significant amount on innovation. The Study lists the top twenty spenders on innovation and none are Chinese. Toyota of Japan heads up the list on spending in 2011 at 9.9 billion dollars. The top six on the list all spent at least nine billion dollars on R&D in 2011. The top twenty spent $153.6 billion as a group on R&D, a 9.9% increase over the previous year. In terms of geographic distribution, eight companies are European, eight are from North America, three are from Japan and one is from Korea.

How does China measure up? The number of Chinese companies in the Global 1000 has grown from 15 in 2008 to 47 in 2011. China has two companies in the top 100: Huawei and Petro China. China is thus far ahead of the other BRIC countries (Brazil, India and Russia). India is Chinese closest competitor among the BRICs and China dwarfs India.  China has 47 companies in the top 1000 while India has only 9. China’s total expenditure is $14.8 billion while India’s total expenditure is only $1.5 billion.  Thus, compared to the rest of the BRIC countries, China is far ahead in innovation spending.

However, a closer look at the data shows that China remains far behind the developed world. Consider first the total amount of investment. China’s 47 companies in the top 1000 spent a total of $14.8 billion on R&D in 2011. This is substantially less than the amount spent by the top two individual companies in the top 1000 and it is less than 10% of that spent by the top twenty as a group. Equally important, China’s commitment to spending is decreasing rather than increasing. China increased its spending by over 27% in 2011. However, this was a decline from the 38% increase in 2010. [ Statistics from Booz & Co data summary. ]

The numbers therefore show what anyone who works in China would expect. China’s capacity for innovation remains far behind the developed world and there is little prospect for substantial improvement in the future. The reasons are simple. On the intangible side, Chinese companies have little capacity for internally generated innovation. On the tangible side, Chinese companies do not invest substantial amounts on innovation. The trend in both these areas suggests that this pattern will not change in the near future.

It is therefore clear that establishing a sound technology base for China’s future industrial and service economy remains a daunting challenge. The numbers show that if the Chinese regulators and businesses are serious about moving to a high technology economy, most of the technology necessary to make that move will need to come from sources outside of China.

All of this means that the opportunities in China for foreign owners of technology are considerable. However, success for these foreign technology owners will depend in large part to the answers to two questions about China. First, will China’s legal system protect the ownership rights of the foreign owners of the technology? Second, will the Chinese players be willing to pay the price to acquire the first tier technology required. An honest assessment of the performance of the Chinese government and business over the last thirty years would say that it is not at all clear that the answer to these two questions has been in the affirmative.

However, the past is past and looking to the next decade, we are seeing some sprouts indicating that China realizes it must improve.  Protection of intellectual property is very slowly, yet very surely improving. China’s courts are more likely today to enforce intellectual property rights than they were five years ago.  Perhaps even more importantly, we are far more often finding ourselves on the opposite side of the table dealing with Chinese companies that realize that it is in their own best interests to pay for top tier technologies from foreign companies and then abide by their agreements with those companies regarding technology and intellectual property assets.

We have written technology licensing agreements with Chinese companies where we were surprised that the Chinese companies chose to pay for the technology, rather than just steal it. In most of these instances, the Chinese company chose to go the legal route because it valued the relationship with the foreign technology company that would go along with their doing so.  Many times, the foreign company was able to “sell” the Chinese company on the value proposition, convincing the Chinese company that it would learn more faster by paying full freight, rather than just trying to go it alone.

There is no question about China’s demand for technology. The question is whether there is a commercially reasonable market to meet that demand. The challenge for all interested parties — foreign companies with technology, Chinese companies seeking technology, Chinese courts and governments, and even the lawyers doing the technology deals — is to do our part to make the answer a yes rather than a no. We cannot wait for the Chinese side to do it all on their own.

Innovation in China over the next decade?  It’s a strong maybe.

What do you think.

I recently received the book, Anti-Monopoly Law and Practice in China, written by H. Stephen Harris, Jr. (no relation), Peter J. Wang, Yizhe Zhang, Mark A. Cohen, and Sebastian J. Evrard. All of the authors are practicing lawyers, one with Microsoft, one with Baker & McKenzie, and the others with Jones Day.

I know this is going to make me sound like a complete geek, but I was hugely excited to receive this book.  I know or know of most of the authors and they are among the leading China antitrust experts. China’s antitrust laws are relatively new and to a large extent untested so I was excited (yes, I know I already used that word) to see how this book would handle that. It handled that and everything else with aplomb. 

This is an absolutely amazing book.

Amazing because it is clearly written, comprehensive and highly relevant and that is a rare beast among law books. 

I actually started my career as an antitrust lawyer and so I am not unfamiliar with the topic. The book not only does an exceptional job covering China’s anti-monopoly laws, it does an exceptional job putting them in their context. As a small firm that represents mostly SMEs, my firm is not going to be doing much big-time antitrust work in China. But, we constantly handle intellectual property rights issues and the book contains an excellent chapter on “Intellectual Property Rights Under the AML.”  We also surprisingly often deal with Chinese unfair competition matters and the book covers that with its superb chapter on “Competition-Related Laws Other than the AML [Anti-Monopoly Law]” which is highly relevant for just about any business in or involved with China. 

To quote some of those who received an advance copy:

This is an extraordinary treatise on the Chinese Anti-Monopoly Law, and should be on the desk or nearby shelf of every antitrust practitioner, academic and policymaker whose work or interest involves modern-day China, the relationship of the state to the market, and its transition to a socialist market economy. The book is an invaluable resource. It is clear, straightforward, and comprehensive in its presentation of the fundamental details, its identification of the ambiguities, and its overview and perspective.”
Eleanor Fox

Anti-Monopoly Law and Practice in China is an insightful and comprehensive account of an increasingly important area of Chinese law. The authors provide detailed coverage of a number of important issues that are central not only to the development of China’s Anti-Monopoly Law, but also are at the heart of China’s rise as an economic power. It will be helpful reading for practitioners, scholars, and policy-makers.”
Benjamin L. Liebman 

“Chinese Anti-Monopoly Law (AML) is now one of the most important antitrust regimes in the world, and this book provides the first comprehensive analysis of the AML. It describes not only the substantive and procedural provisions of the law, but also compares the AML with other antitrust regimes, and describes relevant cases since its implementation. This book will be useful to any corporation doing business in China as well as anyone interested in China’s economic and legal systems.”
Xiaoye Wang

I wholeheartedly agree with all three.

If you are an English speaking lawyer involved with China, you need to read this book and keep it on your shelf.  Now.

With the recent U.S. filing in the WTO accusing China of failing to provide adequate protection of foreign Intellectual Property Rights, we are headed for another China/U.S. disinformation campaign on an important issue. Many foreign companies doing business in China get caught up in the confusion of the political rhetoric and conclude there is no hope for protection of their IP rights in China.

This is a mistake because China actually provides effective intellectual property protection in the patent, trademark and trade secrecy areas. These are the areas that are relevant to the vast majority of foreign businesses in China. The problem addressed by the U.S. WTO filing concerns pirated DVDs and media downloads. This is still a major problem in China, but it is not relevant to the IP issues that confront most foreign businesses in the country.

Many foreign businesses mistakenly conclude IP protection is hopeless in China. As a result, many do not come to China, and others who do fail to take any measures to protect themselves because they feel the process is futile and a waste of time and money.

I have been arguing for years that the IPR protection situation in China has substantially improved. However, when I make these statements, I am often challenged. In addition to the negative press and government reports, my clients often point to the situation on the ground. Take Shanghai for example. Within five minutes of the door to my apartment there are five pushcarts doing a brisk business in pirated DVDs and software. When I get off the subway on Nan Jing Road to walk to my office, I am immediately accosted by vendors selling pirated watches, bags and pens. My clients say: Isn’t this proof that China is ‘flooded with pirated products’ as the U.S. reports state? If giant foreign companies cannot protect their product from such pirating, what hope is there for a small or medium size foreign firm? Isn’t despair at a solution the only reasonable conclusion?

These surface impressions are completely irrelevant and misleading to the vast majority of foreign businesses operating in China. China has done an excellent job in establishing laws and creating an enforcement system for IPR protection. Largely for reasons of market structure and the technology of distribution, in the areas of patent, trademark and trade secret protection, the protection system has made substantial progress. Though there is substantial infringement in these areas in China, much progress is being made in combating such infringement and the registration, court and enforcement system has been reasonably effective.

On the other hand, in the area of protection of media distributed on DVDs and downloadable on the internet, progress in China has not been good at all. Again, largely for reasons of market structure and the technology of distribution, there has been little measurable impact on reducing infringement in this area.

Now, let’s go back to our scene on the streets of Shanghai. Why do I say that this obvious IPR piracy is not an issue for the vast majority of foreign businesses? What about all those folks who are selling pirated foreign brands (other than DVDs) on the street. First of all, these pirates have been driven from the retail outlets and are forced to sell their products on the street. They are not even permitted to operate pushcarts. Second, look carefully at to whom they are selling. They never approach a Chinese citizen. They only approach foreigners. This is because only foreigners are willing to purchase their inferior products. Chinese consumers are not that gullible. If you travel to Qingdao or Guangzhou or other cities with a low number of Western expats and tourists, you will find that street vendors selling pirated goods do not exist. This is because there are not enough foreign customers who want the product. It simply is not true that China is “awash in pirated goods.” In fact, this is a problem unique to cities with large foreign and expat populations. It therefore is simply irrelevant to foreign businesses operating in China.

Pirated DVDs, however, are available all over China and are purchased regularly by Chinese consumers who would never knowingly purchase a pirated luxury product like a coat or bag. The same stigma concerning prestige and quality simply does not apply to entertainment and software DVDs. Very little progress has been made in preventing the sales of such items over the past several years, in spite of major campaigns by the Chinese government. In this respect, the U.S. presentation of the situation on the ground is actually quite accurate. However, the vast majority of foreign companies are not selling a product in China that can be reduced to a DVD or internet download. Therefore, even though this issue is a major problem, it is simply not relevant to most companies doing business in China. It is a mistake to assume that China’s poor record in preventing infringement of media and software DVDs extends to the more common IPR areas of patent, trademark and trade secrecy.

For most foreign businesses, their important intellectual property rights (IPR) fall in the areas of patent, trademark and trade secrets. These IP rights can be quite effectively protected in China. However, the Chinese system, like the U.S. system, is a self-help program. Do not expect either the Chinese government or a foreign embassy to do the job for you.  You must do it yourself. This means making the proper filings and entering into the required agreements. It also means investing the time and money to locate infringers and then prosecute them aggressively. This process is a tough one. Unlike many other developing countries, however, aggressive protection of IP rights can succeed in China.

The greatest mistake is to do nothing.

On May 1, 2007, China’s Ministry of Commerce (MOFCOM) will be enacting new franchise regulations that will apply equally to foreign and domestic franchisors and that are expected to make foreign company franchising easier.

China’s franchise requirements are fairly basic. Franchisors must have been in business for at least one year and have owned at least two direct-operation stores. The current regulations require these two stores to have been in China so the silence on this in the new regulations probably means two stores anywhere will qualify. The new regulations are also vague as to whether the two direct operations stores have to have been operating for at least a year or merely the franchisor itself have been in business for that time.

The franchisor is required to provide accurate written information and other materials regarding the franchised operations at least 30 days before signing a Franchise contract. This information must include, among other things, the franchisor’s name, domicile, amount of registered capital, business scope, intellectual property rights, and involvement in lawsuits.

The franchise contract must be in writing and must be for a minimum of three years, unless the franchisee expressly agrees otherwise.  The regulations have an unspecified cooling off period, during which time franchisees can terminate their franchise contracts.

The new regulations do not require franchisors to secure approval to franchise before doing so; they merely require franchisors register with the provincial government or MOFCOM (for those who will engage in franchising in multiple provinces) within 15 days after selling the first franchise. The government is then required to register the franchisor within 10 days of receiving the required documents from the franchisor. The franchisor’s required documents include copies of a certificate of incorporation or business license, a form franchise agreement, an operations manual, a market plan, and evidence the franchisor owned at least two directly operated stores (For at least a year? Anywhere?) and been in business for at least a year. Franchisors are not required to provide financial disclosure documents to the government, but they are required to provide them to prospective franchisees.

Under the new regulations, franchisors are no longer jointly and severally liable for products and services provided by their designated suppliers. For instance, if McDonald’s designated cup supplier provides the franchisees with defective cups, McDonalds itself will not be liable for that.

Though much will depend on how the new regulations are enforced, China does appear to be opening up on franchising and it is looking like doing business in China will soon be getting easier on the franchise front.

According to the Wall Street Journal, Beijing No. 1 Intermediate People’s Court just upheld a Chinese lower court ruling and ordered two Chinese companies to cease selling knockoffs of the impotency drug Viagra and to compensate Pfizer for trademark infringement.

The Intermediate People’s Court ordered Beijing Health New Concept Pharmacy Company and Lianhuan Pharmaceutical Company to stop making little blue pills and ordered Lianhuan to pay Pfizer 300,000 yuan ($38,000) in damages. Pfizer commenced this lawsuit in September 2005.

A Pfizer spokesman stated Pfizer sees this decision as “a strong indication that the Chinese government is moving in the right direction in protecting intellectual property rights for all innovators.”

Earlier this year, the same court ruled in favor of Pfizer by upholding Pfizer’s Viagra patent and overturning the 2004 decision by China’s patent review board that allowed local drug makers to sell generic versions of Viagra in China.

Though I have not read the intermediate court’s decision, it appears it was simply upholding Pfizer’s trademark blue pill look. I often write about how despite China’s bad rap on intellectual property rights (IPR) enforcement (most of which is justified), its courts take trademarks very seriously and those who pursue infringement of their China registered trademarks nearly uniformly do well in China’s courts. See “China’s Trademark Laws — Simple And Effective.”

This case is yet another example of a foreign company registering its trademark in China and then securing court assistance to protect it. The hope is that as companies continue to win such cases in the courts, the counterfeiting going on outside the court will decline.

Bottom Line: If you are a foreign company doing business in China, you should register your trademarks in China. Why? Because it works.

The last week or so, we did a couple of “big picture” posts on China’s future. The first, “The Rise of Great Nations/What China Wants,” discussed how China seeks to shape its future as a great power. The second, “China And Yao Ming Rising?” discussed how China sees itself among nations now and its future. Both posts highlighted China’s rising confidence.

In a post entitled, “China Steps Up,” [No Longer Online] the Diligence China Blog analyzed how China’s increasingly confident view of itself will likely impact foreign businesses in China, and I found the following two points particularly salient:

If you’re not first, you’re last. Ok, I apologize for the Will Ferrell, Ricky Bobby reference, but the Middle Kingdom has always had issues when it comes to playing nicely with others. They pay lip service to the ‘joining the community of nations’ line that we all love, but China considers parity to be a milestone on the way to its true destiny. One aspect of China’s 4000 year cultural history is the notion that China stands between Heaven and the Barbarians of the Underworld. Guess which one you are? Look for Chinese companies to get more competitive as they prepare to go head-to-head with western MNCs. The Lenovo gambit has been a limited success, but HuaWei is looking like a winner. Chinese MNCs are going to go international in the developing markets first, and try to climb the value chain.

Will it make China market entry easier or more difficult? Maybe it’s counterintuitive, but a confident China will be easier to deal with. China seems to feel that it is coming into its own, and that its policy of “learning from the foreigners” is working out just fine. WTO has been a big hit for China, and we can expect Beijing to honor the treaty obligations for as long as the WTO stands. But SOEs [state owned entities] will be protected. Anyone looking for foreign involvement in TV, telecom, education or other culturally sensitive industries is in for a long wait. Entry will get easier but exit may be trickier. Look for China to be increasingly sensitive about profit repatriation and changes in corporate ownership. If you don’t have an exit strategy, you ought to drop a line to your international lawyer and start looking at a range of scenarios.

Much as I like the part about dropping “a line to your international lawyer,” I do not see China instituting new laws restricting profit repatriation. However, I do see China increasing enforcement of its existing laws relating to foreign business as I have already seen this happening in many areas (I received yet another call last week from a foreign consulting company in BIG trouble for doing business in China without having registered a WFOE to do so) and I see this only continuing to pick up. In China IP Protection Rising — Just As Predicted, we wrote about China’s stepped up legal enforcement of intellectual property rights and in URGENT ALERT: Register Your Company In China NOW, we wrote on how the government has mounted a crackdown on foreign businesses operating illegally.

I am skeptical China is going to toughen its corporate ownership rules beyond the M&A (mergers and acquisition), but I do agree with Diligence China in predicting Chinese companies will increasingly be developing their overseas business, particularly in emerging market countries like Vietnam.

The International Law Students Association (ILSA) at the University of Idaho School of Law is putting on a seminar on international intellectual property issues (including piracy and counterfeiting), with a China focus.  The seminar will take place in Moscow, Idaho, on October 19, from 3:45 pm to 9:00 pm.  (h/t to IP Dragon).

The seminar includes a United States Patent Office (USPTO) Roadshow on “How your Government works to protect your intellectual property rights abroad” and then a panel discussion among the following:

  • John Koeppen — USPTO Attorney – Office of International Relations
  • Mark Costello — Xerox Corporation Attorney
  • Russell Slifer — Micron Corporation Attorney
  • Keith Jones — Washington State University Research Foundation, Office of Patents, Trademarks and Copyrights

For more information, contact Keith Jones — Washington State University Research Foundation, Office of Patents”  The seminar brochure notes that 69% of Idaho’s total exports last year were high-tech, the third highest percentage in the U.S.

Interesting post on the Black China Hand, entitled “Judge and Jury,” referring to a New York Times article [free on the Amherst Times, hence the link there] on court problems.  The article highlights wretched court facilities, a lack of due process, and a lack of qualified judges:

Some of the courtrooms are not even courtrooms: tiny offices or basement rooms without a judge’s bench or jury box.  Sometimes the public is not admitted, witnesses are not sworn to tell the truth, and there is no word-for-word record of the proceedings.

Nearly three-quarters of the judges are not lawyers, and many — truck drivers, sewer workers or laborers — have scant grasp of the most basic legal principles.  Some never got through high school, and at least one went no further than grade school.

People get sent to jail “without a guilty plea or a trial, or [are] tossed from their homes without a proper proceeding.”  Defendants are refused lawyers or sentenced to weeks in jail because they cannot pay a fine.  “Frightened women have been denied protection from abuse.”


No.  New York State.  This is an article on New York State’s Justice Courts.

So, why are we talking about this at all on a blog about China?

First, because the Black China Hand, who interned at the China National Legal Aid Center working on rule of law issues back when he was in law school, sees this article as a good “primer on some of the more complex issues that are confronting China’s legal reform.”  That makes sense to me.

Second, because this New York Times article helps illustrate the unfairness of the standards we Westerners often apply to China’s court system.  I am not for a moment claiming China’s courts even approach US courts in terms of fairness or due process.  Indeed, for the most part, I think such a claim would be ridiculous.  Yet, at the same time, this article highlights how when talking about unfair decisions in Chinese courts, we must be careful to discern the court from which the decision was issued.

Fellow China Law blogger Steve Dickinson, who resides in Shanghai, told me the other day that every time someone complains to him about China’s courts not enforcing intellectual property rights, Steve asks them to tell him of a single instance in the last two years where a Beijing or a Shanghai court failed to enforce a foreign company’s validly registered trademark.

Nobody has yet met Steve’s challenge.

It is no fairer to judge China’s courts on a few decisions than it would be to judge the US courts on its municipal courts.  As always, however, I am talking strictly about commercial cases in China, not political or criminal cases.  But these are the cases that matter if you are doing business in China.

For more on the fairness of China’s courts, check out “The Ying And Yang And Apples And Oranges On Chinese Courts,” “China’s Courts Are Fair” and “China’s Courts Are Fair, Part II.”