Specialized IP Court Launched in China’s Silicon Valley

The southern Chinese city of Shenzhen has set up an intellectual property court to deal with the region’s growing number of IP cases.

The court, launched Dec. 26, replaces Shenzhen’s municipal court in overseeing IP cases. It is the fourth specialized IP court in China. Stand-alone IP courts in Beijing, Shanghai, and Guangzhou started hearing cases in 2014.

IP tribunals within traditional courts were launched in Nanjing, Suzhou, Chengdu, and Wuhan last year.

The specialized court’s more open attitude and concentrated expertise may encourage foreign companies to take IP disputes to court in China, Catherine Zheng, a partner at Deacons law firm in Hong Kong, told Bloomberg Law.

“The judges know the issues well. They keep up with the IP field and are more willing to hear what you have to say,” she said.

Shenzhen, which borders Hong Kong, is a major hub for high-tech industries, such as smart phones and drones, and is often referred to as the Silicon Valley of China. It is home to many IP-focused Chinese companies, including Huawei Technologies Co Ltd., Tencent Holdings Ltd., ZTE Corp., and Da-Jiang Innovations Science & Technology Co. Ltd. This has meant significant growth in IP cases, especially trademark and patent lawsuits.

Shenzhen courts handled 14,887 IP cases in 2016, a tenth of all such cases in China, according to a Dec. 26 report by the state-run Xinhua news agency.

Higher Damages, Technical Experts

The specialized courts have a number of selling points, Matthew Dresden, an attorney at Harris Bricken law firm, based in Seattle, told Bloomberg Law.

The IP court’s “decisions are usually more reasonable and more reliable than the regular courts. They tend to issue higher damages. They also have technical investigators to help explain the technical details of disputes to judges,” he said. “A number of the regular people’s court judges are either unable or unwilling to handle substantive IP disputes, and the unpredictability of decisions reflects that.”

The IP courts have proven successful and are taking a “leading role” in developing case law and other innovations, such as setting up case databases, Zheng said. “They have been progressing very well in the last few years and they get very good feedback from users of the courts,” she said.

The Shenzhen court will be welcomed by foreign companies, but it will not eradicate delays or bias, according to Zheng.

Foreign companies taking cases to the new Shenzhen court should still be aware that politics and economics can play a part in case outcomes, Zheng said. Because of limited manpower, and a growing caseload, proceedings also are not moving as fast as they would like, she said.

To contact the reporter on this story: John Butcher in Beijing at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bloomberglaw.com