Report Q174

in the name of the Chinese Group

Jurisdiction and applicable law in the case of cross-border infringement (infringing acts) of intellectual property rights Intellectual property (short as "IP") rights are marked by distinctive feature in different regions, and various countries may take different judicial attitudes and introduce different legislation to protect them, and thus international disputes over IP rights have arisen. To solve the dispute caused by cross-border infringements of IP rights, a sovereign state has to balance its rights and obligations, and make a correct appraisal of its abilities and responsibilities. On the basis of this point, this report will discuss the state of applicable law on cross-border infringements of IP rights in China, and make possible proposals for future actions.

I. The state of applicable law:

China applies the situation of statutory law rather than case law. The Supreme People's Court has the power to interpret those unclear statutory parts. IP actions, in China, as a part of Civil cases, shall be bound by "General Principles of the Civil Law of the People's Republic of China" (short as "Civil law"), such as the third part concerning IP in the fifth charter and the part concerning the law application of foreign civil relations in the eighth charter, and IP laws, such as "Copyright Law of the People's Republic of China" (short as "Copyright Law"). Accordingly, "Civil Procedure Law of the People's Republic of China" (short as "Civil Procedure Law"), shall be applicable. As supplementary provisions, "Opinions of the Supreme People's Court on the Issues Regarding the Implementation of the General Principles of Civil Law of the PRC (Provisional)", "Opinions of the Supreme People's Court on Issues Regarding the Implementation of Civil Procedure Law of the PRC", as well as "Several Rules of the Supreme People's Court on Strict Implementation of the Civil Procedure Law in the Course of Trial of Economic Cases" shall be further applied.

In addition, for the purpose of settling conflict and strengthening coordination between legal systems in various countries, China has joined international conventions related to IP and promulgated special provisions as following:

1. Paris Convention for the Protection of Industrial Property

2. Berne Convention for the Protection of Literary and Artistic Works

3. A notice on Deep Implementation of "Copyright Law"

4. Notice of the Supreme People's Court, Department of Foreign Affairs and Department
of Justice on "Reciprocal assistance in serving documents through diplomatic channels" (Aug.14th, 1986)

5. Notice of the Supreme People's Court on the Implementation of "Convention on the Recognition and Enforcement of Foreign Arbitral Awards"(Apr.10th, 1987)

6. Notice of the Supreme People's Court on the Implementation of "Agreement on Chinese-foreign Judicial Assistance"

7. Notice on the Implementation procedure of "Convention on the Service Abroad of
Judicial and Extra Judicial Documents in Civil or Commercial Matters",issued by the Supreme People's Court, Department of Foreign Affairs and Department of Justice

8. Notice of Department of Justice, the Supreme People's Court and Department of
Foreign Affairs on Issuing "Regulation on the Implementation of Hague Service Convention"

9. Notice of the Supreme People's Court on Handling Awards Involving Foreign Interest
and Foreign-Related Arbitral Awards (Aug.28th, 1995)

10. Supreme People's Court, Reply to Questions Concerning confirmation of Validity
of Arbitral Award. (Oct. 21st, 1998)

11. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Jan.22nd, 1987)

12. Convention on Serving Civil or Commercial Litigant Documents and Litigant Document
in Foreign Language Abroad (Nov. 15th, 1965)

13. Convention on the Collection Evidences Abroad in Civil and Commercial Matter
(Mar. 18th, 1970)

I.1.1 Do the domestic Courts assume jurisdiction to decide on infringements of intellectual property rights which are committed abroad?

The court in China applies the principle of "no trial without complaint" to civil cases. For an infringement of IP rights outside the territory of China, if the party brings a suit to a court in China, the court will first examine whether a court in China possesses jurisdictions to the case. After confirmation of that, a court in China possesses jurisdictions to the case, the court will apply related civil procedure to handle the case.

I.1.2 If the Courts assume jurisdiction to decide on intellectual property infringements committed abroad, what are the criteria which allow jurisdiction to be attributed to the Courts of the country (e.g.: nationality of one of the parties, concomitant existence of IP infringements in the country of the Court, domicile of the defendant, etc.)?

(1) Generally, according to Article 22 of "Law of Civil procedure In P.R.C", a foreign civil suit against a citizen, an institution, etc. comes under the jurisdiction of the people's court at the place where the defendant is domiciled.

(2) Civil action against a defendant who does not reside within the territory of the P.R.C is under the jurisdiction of the court at the place where the object of the litigation is located, or the place where the defendant has property that can be detained, or the place where the representative organization of the defendant is located, if the object of litigation is within the territory of the P.R.C, or the defendant has property within the territory of the P.R.C that can be detained, or the defendant has a representative organization within the territory of the P.R.C.

(3) Litigants of both parties in a case concerning contract disputes or disputes
over property rights involving foreigners may agree in writing to place the case under the jurisdiction of the court at the place that has an actual connection with the dispute.

(4) Where the defendant of a civil action involving foreigners does not raise objections over the jurisdiction of the people's court or make a reply, he is
considered to have recognized the jurisdiction of the said people's court.

(5) Where both the people's court in PRC and the court in other countries have jurisdictions, if one party commences it in a court of P.R.C, and another party commences it in a court of another county, the people's court of P.R.C may accept and hear the lawsuit.

I.1.3 Is this assumption of international jurisdiction specific to the civil law courts, or does it also apply to the criminal law cour The International jurisdiction also applies to the criminal law courts. Within the scope of its responsibility, China has jurisdiction over criminal actions regulated by international treaties between China and other countries.

I.2.1 If the domestic Courts may assume jurisdiction to judge IP infringements committed in another country (cross-border infringements), what are the sanctions imposed by the domestic Courts?

The main methods of bearing civil liability shall be cessation of infringements, elimination of ill effects, extension of apology in public, compensation for losses and so on. When hearing civil cases, a people's court, in addition to applying the above stipulations, may confiscate the property used in carrying out illegal activities and the illegal income obtained therefore and may also impose fines in addition or only as stipulated by law.

Where the infringement constitutes a crime, he shall be prosecuted for his criminal liability.

I.2.2 Can the domestic Courts only award compensation for loss (damages) or do they also assume jurisdiction to impose injunction with effects abroad?

The Article 61 of "Patent Law of People's Republic of China" provides, "Where a patentee or any interested party who can provide any reasonable evidence that his right is being infringed or that such infringement is imminent, and any delay to stop the acts is likely to cause irreparable harm to his or its legitimate rights, he or it may, before instituting legal proceedings, request the people's court to order the suspension of related acts and to provide property preservation". The similar provisions are also regulated in the Article 57 of "Trademark Law of People's Republic of China" and the Article 49 of "Copyright Law". If a people's court will impose injunction with effects abroad, the support of international judicial assistance is necessary. And the item 1 in Article 262 of "Civil Procedure Law" also provides that when no international treaty was signed or joined by the P.R.C, in according with the principle of reciprocity, a people's court and its foreign counterpart may request each other to assist in.

I.2.3 Is there a difference between final sanctions and provisional sanctions from the point of view of international territorial jurisdiction?

From the point of view of international territorial jurisdiction, final sanctions and provisional sanctions are different and play distinctive roles.

I.3.1 Which law is applied by a court, which assumes jurisdiction to judge IP infringements committed in another country?

Please see the next question

I.3.2 Is it the law of the forum, or is it the law of the country in which the infringement has been committed?

The application of law consists of the applications of procedure law and substantive law.

Regarding the procedure part in an action, "Civil Procedure Law", that is provisions within the territory of the P.R.C, is applied to IP actions involving foreigners.
As to the substantial part of an action, only laws of P.R.C are applicable to IP actions involving foreigners, and foreign laws are not applicable. If any international treaty concluded or acceded to by the P.R.C contains provisions differing from those in the civil laws of the P.R.C, the provisions of the international treaty shall apply, unless the provisions are ones on which the P.R.C has announced reservations.

I.3.3 What is the scope of the foreign law: defining infringing acts, proof of infringement or sanctions for infringement?

Please see Question I.3.5

I.3.4 What is the role of the parties in determining the content of the foreign law: does the burden of proof of the content of this law lie with the parties or is it for the Court, ex officio, to seek the content of the foreign law?

Please see Question I.3.5

I.3.5 Does the international public order exception, which allows some countries to exclude the application of foreign law, apply for the infringement of intellectual property rights?

Foreign laws are not applicable to case of foreign-related infringement of ntellectual
property rights, thus no answer to above three questions.

I.4.1 What are the conditions for the enforcement of a foreign judgement against an infringing party for IP infringement committed in another country?

Based on the feature of region of IP, the people's court in China shall not acknowledge the validity of a legally effective judgment made by a foreign court and enforce it.

I.4.2 Are there specific procedures?

There is no specific procedure in China.

I.4.3 What are the practical difficulties, which complicate the enforcement of foreign court decisions in intellectual property infringement matters?

The practical difficulties come from the conflicts of sovereign interests and the regional feature of IP. Firstly, there are a large amount of disputes over IP rights. Secondly, there are conflicts between substantial laws in various countries, such as, the scope of objectives of copyrights protection being not identical, difference in contents between spirit rights and economic rights, different criteria to grant a patent, different scope of patent protection, different criteria to register trademark and protection duration, etc. thirdly, thes jurisdiction in various countries is independent. There is close relationship between intellectual property and the sovereign of a state, and to punish the infringement of foreign IP rights in many instances means loss of sovereign interests. Furthermore, because of uneven
economic level in various countries, the extents of acknowledging and protecting IP
rights are different. It is not practicable for a country to provide more assistance to protect IP beyond its capability and responsibility.

I.5.1 Are there rules governing lis pendens and related actions for cases where infringement proceedings are pending in parallel before the courts of different countries?

Please see the next question.

I.5.2 Do the rules on lis pendens and related actions require the court to decline jurisdiction in favour of another court, or do they merely allow it to stay proceedings while awaiting the result of the pending dispute in another country?

People's court will accept and hear the suit brought by the party, regardless of whether or not another party has bring the suit to the courts in other countries, or the courts in other countries have made final decision on the case. After a court in China passed judgment in this case, if a court in other countries or the party of this case requests the court in China to acknowledge or enforce the judgment or decision by a court in other countries, the request will be rejected. However, there are different solutions in bilateral treaties on legal cooperation between China and other ountries.

II. Proposals for the future:

II.1.1 Do the Groups think that it is possible and desirable to seek a harmonised system for cross-border litigation, while intellectual property rights are currently, in the majority of cases, solely of national scope?

It is the needs of the times to seek cross-border protections for IP rights. To achieve this purpose, one of the essential measures against infringements upon the rights of the owner is to establish a harmonized system for cross-border litigation.
It is possible to seek a harmonized system for cross-border litigation.

II.1.2 Do the Groups think that such a harmonised system requires the existence of intellectual property rights which have the same effect in various countries (e.g. at least a regional right)?

Such a possible harmonized system in future does not need to require the existence of
IP rights with the same effect in various countries. It should not take seeking the unification of the substantial laws of IP rights as the objectives and the contents of establishing a harmonized system in various countries. The harmonized system for cross-border litigation should be mainly aimed at the harmonization of jurisdiction rather than the application of substantial laws.

II.2.1 If the Groups consider that it is desirable to seek a harmonised system of litigation in cases of cross-border infringement, it would thus be necessary to organise such litigation.

It is desirable. Please see II.2.3 for details.

II.2.2 What should be the preferred criteria for choice of forum?

The valid execution of future judgments or orders is an important consideration in this case.

II.2.3 What then should be the applicable law to organise the infringement proceedings?

The civil procedure law where a court hears the case should be applicable to procedure
part of an action, and the civil substantial law as well IP laws where a court hears the case should be applicable to substantial part.

II.2.4 What extent would the power of the judge have: merely assessing the infringement, or also assessing the validity of the foreign right with the possibility of invalidating it?

First the judge should assess the validity of the foreign right in accordance with domestic intellectual property laws. What is called "the foreign right" being acknowledged and protected by domestic laws depends upon first whether or not it meets the conditions of validity regulated in domestic laws. With the satisfaction of the prerequisite of the validity of the foreign right, such foreign right will be protected by domestic laws, and then the judge will assess the infringement of such foreign right.

II.3.1 What is the applicable law for judging infringement and sanctions applicable to it?

Laws of a country where a court hears the action are applicable for judging infringement and sanctions, and if this country signed international treaties with other countries, the relevant international treaties are also applicable.

II.3.2 And what scope should the application of this law have (defining infringing acts, proof of infringement or sanctions for infringement)?

Because all foreign-related infringements of IP rights are applicable to domestic laws, there is no difference from ordinary infringement cases in the scope of the application of this law.

II.4.1 Should the rules on lis pendens and related actions apply in the event of infringement proceedings, which are pending before the courts of the various countries?

With such a harmonized system for cross-border litigation, the infringement proceedings, which are pending before the courts of the various countries would be little likely to occur.

However, if it is the case, the rules on lis pendens and related actions should apply.

II.4.2 Should it be provided that it is mandatory for courts to decline jurisdiction in favour of the court first seized of the case, or should there be a rule for a stay of proceedings?

Jurisdiction in favor of the court first seized of the case is the basic rule to solve the concurrent litigation regulated by the Brussels Convention and Locarno Convention, which are two international treaties to settle disputes over jurisdiction today.

II.5.1 Should there be provisions for the automatic enforcement of court decisions which are made in such a system or should these decisions always be the object of a procedure for exequatur as normally used to give effect to foreign judgements?

Any court decision should be enforced without any legal obstacle within the territory of the country, because the cases are accepted, heard and judged by courts in a country at the place where the defendant is domiciled or where the defendant has property.

II.6.1 What is the scope of sanctions which may be imposed by a Court deciding on infringement committed in various countries: can the Court be empowered to judge on the validity of intellectual property rights existing in each of these countries?

Concerning the scope of sanctions against infringement committed, courts in various
countries should make decision in accordance with the laws in their own nation.

The court that accepts and hears the case has to verify the validity of rights, which is the prerequisite of assessing the infringement. The validity of intellectual property rights related to the case has to be assessed in accordance with the state laws, which accepts the case.

II.6.2 Can the Court impose measures of prohibition applicable wherever this right is valid?

The court that accepts and hears the case may impose measures of prohibition within the territory of its own country, but the measure has no extraterritorial effect, and will not be acknowledged or enforced by other countries.

II.6.3 Could the Court order the infringing party to compensate for loss suffered in all countries?

By request of the plaintiff, the court can order the infringing party to compensate for loss suffered in all countries in accordance with the laws in its own country, without consideration for criteria of calculating loss in accordance with the intellectual property laws in other countries.

II.7.1 Should the search for a system, making it possible to organise the progress of proceedings against cross-border acts of infringement, pass through the conclusion of a multilateral agreement or is it necessary, according to the Groups, to favour bilateral or regional solutions.

To establish such a harmonized system, it is necessary to reach multilateral or other kind of agreements. Bilateral or regional solutions are experiences of harmonization for crossborder litigation in some regions, such as European Union, French-Speaking Africa, etc.

Though it suffers from shortcomings, the harmonized system for cross-border litigation in these regions has achieved significant results, and such bilateral or regional bilateral and multilateral solutions can be use for reference.