China’s institutional reforms and what it means for resolving IP disputes

2023/07/18,Dr. Anran Zhang,Deputy Director, Arbitration & ADR, North Asia, ICC Dispute Resolution Services,[Comprehensive Reports]

Earlier this year, China upgraded the China National Intellectual Property Administration (CNIPA) from the supervision of the State Administration of Market Regulation (SAMR) to an administration under the State Council. The reform was made to accelerate the construction of the State’s IP powerhouse, improving the level of IP creation, application, protection, management and service.

This reform also signaled a new direction for China’s policy stance on IP, with a commitment to support the growing science and technology industry, an improvement of the IP management system, a deeper strengthening of supervision and administration by the State financial system, as well as a further promotion of State social governance.

Following the launch of the plan, the 14th National People’s Congress of China passed the institutional reform of the State Council. The functions of CNIPA and the SAMR are now coordinated, and the enforcement teams of SAMR maintain the duty to enforce the law for trademarks and patents, under the professional guidance of the CNIPA.

But what does this reform mean for dispute resolution, particularly arbitration, in resolving disputes around IP?

The implications for IP dispute resolution mechanisms

As mentioned above, the upgrade is one specific outcome of China’s extensive IP evolution in the past two years and as part of that, there have been plans to develop dispute resolution (ADR) mechanisms. On 22 September 2021, China’s State Council published the Outline for Building an Intellectual Property Powerhouse (2021-2035) which promised to build an IP protection ecosystem to support a world-class business environment, and enhance engagement in global IP governance. The 14th Five-Year Plan for the Protection and Use of National Intellectual Property Rights, published on 9 October 2022, proposed to develop alternative dispute resolution (ADR) mechanisms to resolve IP disputes. Here’s what the proposals cover:

CNIPA will lead on the ADR mechanisms for IP disputes

Under these proposals, and as part of the upgrade to the CNIPA, the ADR mechanisms for IP disputes will be led by CNIPA with joint engagement from the Central Propaganda Department, Supreme People’s Court, Administrations related to military and defense as well as the China Council for the Promotion of International Trade (CCPIT).  IP mediation institutions, arbitral institutions and notary institutions will be further trained and developed while industrial associations and commercial chambers will be encouraged to increase self-discipline and communication on IP.

The redefinition of mediation

Mediation is the centralized mechanism for IP dispute settlement. However, the definition of mediation in China’s proposal has a special feature compared with international practice. Mediation by definition usually refers to “a flexible settlement technique, conducted privately and confidentially, in which a mediator acts as a neutral facilitator to help the parties try to arrive at a negotiated settlement of their dispute. The parties have control over both the decision to settle and the terms of any settlement agreement.” (ICC Mediation Guidance Note 2018). In contrast, pursuant to the Opinions on Strengthening the Use of Mediation for Intellectual Property Disputes published by CNIPA and Ministry of Justice on 22 October 2021, mediation for IP disputes involves the coordinated application of people’s mediation, administration mediation, industry and profession mediation and judicial mediation. In China’s proposal, regardless of the identity of the mediator, natural person or legal entity, governmental or judicial agencies, any body or entity can be the mediator to settle the disputes, and the mediation process is not limited to maintain privacy and confidentiality but can involve public authority.

A One-Stop ADR platform for IP disputes will be created

Additionally, a One-Stop ADR platform for IP disputes will be established. The concept of a “One-Stop” Platform has been raised and practiced since 2018 for international commercial disputes with coordinated applications of litigation, especially in the China International Commercial Court, and arbitration and mediation institutions. In China’s proposal, the One-Stop platform for IP disputes will have two extra elements. Firstly, it will request joint coordination between IP mediation organizations, administrative agencies, judicial institutions and arbitral institutions for a systematic application of complaint-mediation, litigation-mediation and arbitration-mediation. Secondly, the One-Stop mediation center for IP disputes will play a rallying role, having the collected duties of IP protection, expedited right protection and protection assistance with collected resources from mediation institutions, the remote judicial confirmation office, the IP arbitration center and notarization IP service center.  

Reflections on the institutional reforms

From a practical view, the application of the IP ADR platform in different regions of China would raise a potential problem. On 28 June 2022, CNIPA announced the first batch of testing zones for expedited IP dispute settlements in major Chinese provinces and cities. However, the huge differences of development and IP protection levels among Chinese regions would raise practical inconsistency and uncertainty. In all, the clear comment has been issued from a political level, but how an IP ADR mechanism or platform should run in practice remains uncertain. We are awaiting further direction from the 14th National People’s Congress of China as to how these issues would be resolved

The upgrade of CNIPA signals China’s direction on IP and the establishment of the ADR mechanism for IP disputes has a clear national policy and mission from the top down. Driven by the national strategic policy, coordination between all kinds and levels of government agencies, IP dispute related institutions or associations may be eased but still practically different. This new style of coordination between different agencies needs explicit guidance, especially on how to manage all agencies with respective duties and roles within one platform. Lessons could be learned from international dispute service providers, such as the ICC, who has the essential internal management and smooth coordination experience between ICC International Court of Arbitration and ICC International Center for ADR responsible for mediation, expertise, and other ADR services.

Moreover, the One-Stop ADR platform is not limited to resolving domestic disputes and would be used for international dispute settlements. International experience may be gained from ICC whose intensive and standing experience on both international arbitration and international mediation has been able to meet the global needs of dispute resolution.

In the aim to create an IP powerhouse, these reforms will go a long way in improving the IP dispute resolution system, and help parties resolve their disputes more efficiently. However, further guidance is required from the government to ensure the IP ADR mechanism and platform can operate effectively in practice.

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