Many foreign IP owners doing business in or with China do not believe the Chinese court system works. They or their foreign lawyers therefore tend to choose foreign law and jurisdiction in their contracts. When this results in contracts that are unenforceable against a Chinese party, everyone blames the Chinese. The prophesy about the lack of IP protection when dealing with China becomes self-fulfilling.
Now, nobody would suggest that China’s court system is perfect but it’s certainly improving. It’s a lot better than nothing; and nothing’s what you get if you make the wrong choice of law and jurisdiction in your China contracts.
The improvement in China’s court system is borne out by some interesting Beijing IP Court statistics released during the UK-China IP Symposium in Beijing on November 1st. The Beijing IP Court is now hearing diverse claims from across China and it is rapidly becoming the preferred venue for foreign-related IP litigation.
Here are some key points from the Symposium’s Beijing IP Court session:
- In the first half of this year the Beijing IP Court accepted around 1,200 cases involving foreign parties and resolved around 2,500 such cases. Last year, the Court accepted more than 3,500 and resolved more than 3,250.
- Less than 4% of these foreign-related IP cases are civil. More than 95% are administrative. Patent disputes account for 48% of the civil cases, with trademark and copyright disputes each accounting for roughly 20%.
- Of the foreign-related civil cases heard by the Beijing IP Court, foreigners comprised 76% of the plaintiffs and 19% of the defendants.
- Foreigners won 68% of their civil cases.
- The average award sought in foreign-related civil cases was $400,000 (CNY 2.8 million).
- Awards were made in 49% of the cases and the average award was $194,000 (CNY 1.36 million).
The above statistics and the underlying cases on which these statistics are based tell us that foreign companies can prevail in intellectual property disputes against Chinese companies, but to do so they invariably must have either proper China IP registrations that they can allege were infringed and/or a good contract that they can allege was breached.
In other words you should be taking steps to protect your IP in China so as to minimize your chances of having to sue in China while also increasing your chances of prevailing in China if you do need to sue. In a subsequent post we will take you through those steps.