On 19 December 2023, the Beijing Intellectual Property Court (IP Court) held a press conference to release litigation statistics for 2023 and guidelines for supporting documents in litigation cases. The official translation of the Chinese title of the guidelines “涉 外 案 件 主 体 资 格 证 明 ⽂ 件 办 理 参 考” is “Guidelines for Handling Supporting Documents Certifying the Subject Qualification in Foreign-related Cases” (Guidelines).

Total Number of IP Lawsuits Drop by 7%

Since the establishment of the IP Court in November 2014, the number of intellectual property lawsuits accepted has increased every year, from 9,191 cases in 2015 to 27,697 cases in 2022. This represents an average annual growth rate of nearly 20%.

However, from January to November 2023, the number of lawsuits decreased for the first time, to 24,324 cases, which is a drop of 7% from the same period last year.

In terms of case types, 5,449 civil lawsuits were accepted, including 1,369 cases of first instance and 4,080 cases of second instance and other procedures. 18,875 administrative lawsuits were accepted, including 18,867 cases of first instance and 8 cases of second instance and other procedures.

The majority of the cases accepted by the IP Court, namely 78%, were administrative lawsuits of firstinstance. In terms of filing channels, 16,436 cases of firstinstance were filed online, accounting for about 81% of the total cases, which is an increase of 32% from the same period last year.

The unprecedented decrease in the number of lawsuits is testament to the success of the IP Court’s efforts in resolving disputes pre-litigation, including the introduction of a mechanism in June 2023 to suspend administrative lawsuits which relate to appeals against the China National Intellectual Property Administration (CNIPA)’s refusal of trade mark applications.

New Mechanism to Suspend Administrative Lawsuits

Due to the large number of trade marks on the China Trade Marks Register, trade mark applicants frequently receive provisional refusals based on conflicting prior registrations. To pursue an application further, a trade mark applicant would have to file a response to the provisional refusal (called an “application for review”) to keep its application alive, and also file a non-use cancellation against the cited mark.

In some other jurisdictions, this means that the primary proceedings are suspended until the non-use cancellation proceedings are concluded and the status of the cited mark has been determined. In China, to avoid creating backlogs at the CNIPA, both proceedings run in parallel and, since review cases progress faster than cancellation cases, many trade mark applicants are forced to escalate the matter by filing an appeal (in the form of an administrative lawsuit to the IP Court) against an unfavourable review decision to continue to keep their applications alive while the cancellation proceedings plodded along. This results in the IP Court having to hear a great number of placeholder administrative lawsuits.

Under the new mechanism, although a trade mark applicant would still have to file an administrative lawsuit to the IP Court to keep its application alive, it can apply to suspend the administrative lawsuit at the pre-litigation stage for 12 months. If the Court is satisfied that the status of the cited mark will have a substantive impact on the outcome of the lawsuit, it will approve the suspension.

If the cited mark is successfully cancelled within the 12-month period, the trade mark applicant may elect to participate in a form of “mediation” conducted by the IP Court, under which it will withdraw the administrative lawsuit and the CNIPA will re-issue a fresh decision on the review of refusal. If the cited mark is not cancelled within the 12- month period, or if the trade mark applicant does not elect for “mediation”, the lawsuit will then proceed to the formal litigation stage, including evidence exchange, an oral hearing and a written judgment.

Guidelines for Formal Documents

Of the first instance cases accepted by the IP Court from January to November 2023, 4,292 cases, namely 21%, involved a foreign entity, or an entity from Hong Kong, Macao or Taiwan.

Given the high proportion of “foreign-related cases”, and the stringent formality requirements for lawsuits to be accepted by the IP Court, the Guidelines were published by the IP Court to address problems commonly encountered by foreign entities when preparing the necessary notarized and apostilled / legalized supporting documents.

As more than half of these “foreign-related cases” involve an entity from the United States (Delaware or California), France, Germany, Japan or South Korea, the Guidelines focus on these 6 territories plus Belgium. Each chapter includes sections such as a list of required supporting documents, the form (nature) of the documents, notarization and authentication procedures, additional information and samples of documents acceptable to the IP Court.

The Guidelines are non-exhaustive and only aim to ease the difficulties faced by foreign entities in proving their qualification / standing to file lawsuits.

Apostille Convention

The Convention Abolishing the Requirement of Legalization for Foreign Public Documents (Apostille Convention) entered into force in China on 7 November 2023. Prior to that, a plaintiff was required to submit notarized and legalized documents certifying its qualification / standing in order for the lawsuit to be formally accepted by the IP Court. In some territories, the legalization process can take months, leading to some foreign entities failing to have their lawsuits accepted.

During the press conference, the IP Court explicitly confirmed that after the entry into force of the Apostille Convention, the supporting documents certifying the plaintiff’s qualification / standing submitted by entities of a contracting state no longer need to be first notarized by a local notary public and then legalized before the Chinese embassy or consulate in the relevant foreign country. They only need to be first notarized by a local notary public, and then submitted to the local authentication authority to process an apostille certificate. However, documents submitted by entities of a non-contracting state should still be processed in accordance with the original procedures.

Conclusion

With the new suspension mechanism, the detailed Guidelines and the simplified procedure for supporting documents, we expect that it will be much more straightforward and less expensive for foreign entities to file lawsuits before the IP Court.

Click here to download the bilingual version of the Guidelines issued by the IP Court.

Coral Toh and Kristen Fu
08 February 2024