Procedures of Second Instance Related to Civil Disputes over Patent Infringement 86
Procedures of Second Instance Related to Civil Disputes over Patent Infringement I. Trial System in China China practices a two-instance system in the trial of civil cases. This means that, for a civil case which has been heard by two levels of courts, judgment of the second-instance court is final and legally effective. II. Jurisdiction of Courts in Adjudication of Patent Infringement Disputes Jurisdiction by Forum Level First-instance patent-related dispute cases are under the jurisdiction of the intermediate people s courts located in various provinces, autonomous regions and municipalities, and the intermediate people s courts as designated by the Supreme People s Court. Basic people s courts: people s courts of Yiwu City and Kunshan City have jurisdiction over first-instance patent cases which pertain to utility model and design. By the end of 2010, there were 78 courts having jurisdiction over patent dispute cases of first instance nationwide, in which 76 are intermediate people s courts and 2 basic people s courts. Territorial Jurisdiction A lawsuit brought against a patent infringing act shall be under the jurisdiction of the people s court located in the place of infringement or the place of the defendant s domicile. The place of infringement refers to the place where the infringing act took place as well as the place affected by the consequences of the infringing act. The place of infringement includes: the place where the product alleged of infringing an invention or utility model patent is manufactured, used, offered for sale, sold, imported; the place where the patented method is used; the place where the product directly derived from the patented method is used, offered for sale, sold, imported; the place where the patented design product 87
is manufactured, sold, imported.; the place where passing off of the patent took place, and the place affected by the consequences of the above-mentioned infringing acts. Practical Connection Jurisdiction in Foreign-related Civil Litigation In a dispute over contractual or property rights, where a defendant has no domicile within the territory of the People s Republic of China (PRC), the jurisdiction can be exercised by the court located in a place having practical connection with the case, provided that the provisions governing jurisdiction by forum level and exclusive jurisdiction are observed. Jurisdiction Court of Second Instance Jurisdiction court of second instance is a people s court at a next higher level than the court which made a first-instance judgment and a second-instance judgment is final and legally binding. As an absolute majority of the first-instance courts with jurisdiction over patent dispute cases are the intermediate people s courts, the second-instance courts are naturally venued in the corresponding High People s Courts. III. lnitialization of Procedures of Second Instance The procedures of a second instance start with the filing of an appeal by a party concerned. The right of appeal is a right of litigation a party entitled to by law. The decision of whether to file an appeal after the issue of judgment by a first-instance court should lie on the party concerned himself, not to be restricted or taken away by any entity or individual. A party dissatisfied with a judgment rendered by a local people s court of first instance may file an appeal with the people s court at the next higher level within 15 days from the date on which the written judgment is served; in case of dissatisfaction with a written order, the time limit for filing an appeal is 10 days from the date on which the written judgment is served. Where a party dissatisfied with a judgment or a written order issued by a local people s court of first instance has no domicile within the territory of the PRC, he may file the appeal within 30 days from the date on which the written judgment is served, according to Special Provisions for Civil Procedure of Foreign-related Cases. IV. Contents and Submission of Appeal Petition An Appeal Petition is a legal means for an appellant to initiate an appeal. It also forms the basis for a second-instance court to accept the appeal. The core contents of an 88
appeal petition comprise the request itself and the grounds for the appeal. As a general practice, an appeal petition should be submitted through a people s court which originally tried the case, the number of copies filed depending on the number of persons in the opposing party or the representatives thereof. The law also allows an appellant to file an appeal petition directly with a second-instance court for the benefit of eliminating the appellant s doubt and safeguarding the proper exercise of his right of appeal. The second-instance court shall within 5 days from the receipt of the petition transmit the appeal petition to the people s court which originally tried the case. V. Time Limits in Second-instance Procedure (rectification and rejection of an appeal not included) The people s court which originally tried the case shall, within 5 days from the receipt of the appeal petition, serve a copy of it on the appellee, and notify the appellee of filing a defence within 15 days from the receipt of such copy. The people s court shall, within 5 days from the receipt of the defence, serve a copy of it on the appellant. After receiving the appeal petition and the defence, the people s court which originally tried the case shall, within 5 days, deliver them together with the entire case files, litigation evidence, and proof of payment for the litigation costs incurred by the second instance to the court of the second instance. The second-instance court shall docket a case within 5 days after receiving the appeal materials and case files from the first-instance court. The docketing organ under the second-instance court shall serve a notification of acceptance and a notification of response to appeal on the parties concerned, and transmit the case files and appeal materials to the relevant court of trial on the second day after docketing the case. The people s court trying a case on appeal against a judgment shall conclude the case within 3 months from docketing of the case for second-instance trial, subject to the approval of the president of the court for an extension of 3 months if necessitated by special circumstances. For an appeal against a written order, the time limit for concluding a second-instance trial is within 30 days after docketing of the case. Trials of foreign-related civil cases are not subject to the time limits of domestic civil litigation cases. That is, a foreign-related civil case concluded with a judgment in the second instance is free from the observance of the 3-month time limit for conclusion of trial, and that involved a written order is free from the observance of the 30 days limit for conclusion of trial. VI. Scope of Examination by Second-instance Court (principle of limited review, 89
combined deliberation of facts and laws) In trying a case on appeal, a second-instance court reviews the facts and application of laws related to the appeal. Facts related to an appeal comprise facts and evidence presented by an appellant during the first instance as well as those newly submitted for the trial of appeal. Application of laws related to an appeal pertains to ascertaining whether the Civil Procedure Law of the PRC is correctly applied in trial by the court which originally tried the case and whether the substantive law applied to the original judgment is correct. In a second-instance trial, only those facts and application of laws raised by the appellant are heard by the court, while the facts, and the rights and obligation ascertained by the original judgment are outside the scope of the trial if they are not challenged by an appellant, as a sign of respect for the right of disposal by the party concerned. However, if any clearly errorness is found in the original judgment outside the scope of the appeal petition, the second-instance court shall have the error corrected, in particular where the original judgment violates prohibitive provisions, or damages the interests of the public or that of an individual or entity. With respect to a request in the defence filed by the appellee for modifying or adding contents which form the basis of the first-instance judgment, the second-instance court may decline such request. VII. Collegial Panel for Patent Dispute Cases and Trial in Court A people s court in trying a civil case of first instance forms a collegial panel, which may be composed of both judges and judicial assessors. When performing their duties, the judicial assessors shall have equal rights and obligations as the judges. The judicial assessors, however, may not serve as the presiding judge of the collegial panel. In trying a patent-related case of first instance, technical experts relevant to the technical field of the case may be engaged to serve as judicial assessors. The collegial panel for a civil case of second instance comprises merely of judicial officers. The focus of the trial is to determine whether the facts relevant to the appeal petition were clearly ascertained,the evidence thereof was sufficient and reliable, and the law was correctly applied in the original judgment. 90
In general, appeal cases adjudicated by a second-instance court are held in public session, and may in exceptional cases not heard in public. After verification of the facts of the case through consulting the files, making investigations and questioning the parties, the collegial panel may make a judgment or a written order directly if it finds it unnecessary to conduct a trial. VIII. Evidence for Second Instance Generally speaking, evidence for the second-instance procedure should be the same as that used in the first-instance proceeding. In another word, the time limit for submitting evidence by a party for the second-instance procedure ends upon the closing of the court debate in the first-instance trial. New evidence for a second-instance trial includes: evidence newly found after the closing of the first-instance trial; and evidence, the investigation and verification of which a party had filed an application with a people s court prior to the expiration of the time limit for producing evidence in the first-instance trial but approval therefor had not been granted, yet the second-instance court after examination found that said approval should be granted and accordingly investigation and verification of which should be carried out as requested by the party. Where any evidence fails to be provided by a party during the extended time period granted by a people's court due to some objective reason and the failure to hear such evidence may result in obvious injustice, such evidence may be deemed as new evidence. A party submitting new evidence during the second-instance procedure should produce the evidence prior to or during the court session of the second instance. In case no trial is conducted, the evidence shall be submitted during the time period as specified by the people's court. After the submission of new evidence by a party, the people's court should inform the other party to respond or produce evidence within a reasonable period of time. IX. Conciliation in Second Instance In dealing with a case on appeal, a second-instance court may conduct conciliation between the parties on voluntary basis. If an agreement is reached through conciliation, a conciliation statement should be made. The conciliation statement shall be signed by the judicial officers and the court clerk, with the seal of the people s court affixed to it. After the conciliation statement has been served, the original judgment of the first-instance court shall be deemed as being 91
set aside. In the conciliation for a second instance, the parties could reach between them a conciliation regarding substantive issue within the scope of the petition request, as well as substantive issues ascertained by the first-instance trial but no objection for such issues has been raised by the appellant. Circumstances that may be settled through conciliation in the second instance comprise: omission in the trial or judgment of the first instance; introducing a new independent claim or filing of counterclaims; a party in the proceedings required to appear in the first-instance trial failed to do so. X. Forms of Judgment in Second Instance (appeals against an order of the first instance not included) Rejection of the appeal Where the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal will be rejected. Amendment of the original judgment 1) Where the facts were clearly ascertained but the application of law was incorrect in the original judgment, the second-instance court will confirm the facts and revert the error in the application of law in the original judgment, and make a new judgment according to law; 2) Where the facts were incorrectly or not clearly ascertained and the evidence was insufficient in the original judgment, the second-instance court may amend the original judgment after investigating and clarifying the facts. Remand of the case for retrial 1) Where the second-instance court found the facts were incorrectly or not clearly ascertained and the evidence was insufficient in the original judgment, the original judgment will generally be set aside and remanded for retrial by the people s court which originally tried the case; 2) If the second-instance court found that there was violation of legal procedure in the original judgment and that such violation may affect correctness of the judgment, the original judgment will be set aside by a written order and the case remanded for retrial by the people s court which originally tried the case. XI. Trial Standard in Second Instance There are currently no explicit provisions in China governing the criteria of a second-instance trial on issues related to facts, procedures and laws. However, 92
differences are found among the outcomes of dealing with issues related to facts, procedures and laws. Trying scopes of second instance With respect to a case on appeal, a second-instance court reviews the relevant facts and the application of law. The trying scope of an appeal case adheres to the principle of limited review, and the unified review of facts and application of law. Limited review refers to the restriction of the scope of the second-instance trial to that defined in the petition request; whereas unified review of facts and application of law means that both the facts and the application of law should be ascertained n a second-instance trial. It shows from the above that in a case on appeal, a second-instance court has the authority to review both the relevant facts and the application of law in the original judgment on the basis of the petition request. Additionally, the second-instance court also has certain authority over issues outside the scope of the petition request. Forms of judgment in second instance After trying a case on appeal, a second-instance court disposes of the case accordingly in the light of the following situations: 5) Where the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected and the original judgment shall be affirmed; 6) Where the application of law was incorrect in the original judgment, the said judgment shall be amended according to law (dealing with issues related to application of law) It can be seen from the above provisions that if the facts were found by a second-instance court in trial to have been clearly ascertained, the evidence sufficient in the original judgment, and the application of law incorrect, the second-instance court should make a judgment to amend the original judgment, that is, the second-instance court should directly amend the original judgment if the error lies in incorrect application of law only. 7) Where the facts were incorrectly or not clearly ascertained and the evidence was insufficient in the original judgment, the second-instance 93
court shall make a written order to set aside the judgment and remand the case for retrial by the people s court which originally tried the case, or the second-instance court may amend the judgment after investigating and clarifying the facts; (dealing with issues related to facts) It shows from the above provisions that if the facts were incorrectly ascertained or not clearly ascertained and the evidence was insufficient in the original judgment, the case may be remanded for retrial by the people s court which originally tried the case, or alternatively the original judgment of the case may be amended by the second-instance court directly. At present, there is no explicit stipulation in the Chinese laws about the criteria for applying the amendment of original judgment or the remand for retrial. However, the pre-condition for making direct amendment of the original judgment is for clarification of facts, whereas the premise for remand for retrial is that there is serious error in the original judgment and directly amending the original judgment is likely to jeopardize the forum level interests of the party concerned. In our opinion, although remand for retrial is a means of correcting an erroneous judgment, it is at the same time a denial of the entire process and outcome of the first instance, which inevitably leads to delays in the proceedings and waste of judicial resources. As such, to correct an erroneous judgment of the first instance, it is more desirable if a second-instance court takes to amending the original judgment as a general rule with remand for retrial as a means of exception. That is, a second-instance court should amend the original judgment directly if it is possible for the court to ascertain the facts, and should not easily resort to remand for retrial. In case the evidence is insufficient, remand for a retrial may be considered where the court of the first instance is in a better position to ascertain the facts, thereby safeguarding the forum level interests of the party concerned. 8) Where violation of legal procedure found in the original judgment may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded for retrial by the people s court which originally tried the case (dealing with issues related to procedures) It can be seen from the above provisions that if a second-instance court in trial finds that there is violation of the prescribed procedure in the original judgment and such violation may possibly affect the correctness of judgment, the original judgment should be set aside by the second-instance court and the case remanded for retrial by the people s court which originally tried the case. 94
Common procedure-related issues include: a judicial officer or court clerk who should withdraw failed to do so; a judgment was made in the absence of a trial; a judgment was made by default when the party in a case to which ordinary procedure is applicable has not been served with a legal subpoena. XII. Authentication Conclusions Nature of authentication conclusions: Authentication conclusions is stipulated under a specific chapter on Evidence in the Civil Procedure Law of the PRC as one of the seven classes of evidence. Procedures for authentication a) Right of application for authentication, right of decision and designation of authentication institution A party who intends to apply for authentication shall submit the application within the time limit for producing evidence (right of application for authentication by a party). Where the people s court deems it necessary to make an authentication of a problem of a technical nature, it shall refer the problem to a department authorized by the law for the authentication. In the absence of such a department, the people s court shall appoint one to make the authentication. After the application for authentication by the party is approved by the people's court, both parties shall reach agreement between themselves on an eligible authentication institution as well as the authenticators for the authentication work. In case of failure to reach an agreement, the people's court shall make the designation on their behalf. (right of designation by the people's court). 2) Re-authentication A request by a party concerned for re-authentication shall be subject to the approval of the people s court. In case a party disagrees with the authentication from the authorized department designated by the people's court and applies for re-authentication, the people's court shall approve the application provided that there is proof of any of the following circumstances: a) The authentication institution or the authenticator do not possess 95
relevant qualifications; b) The process of authentication violates the law to a serious extent; c) The authentication conclusions are made on obviously inadequate grounds; d) Other circumstance in which the authentication conclusions prove to be incapable of serving as evidence upon cross-examinations. Instead of a re-authentication, authentication conclusions not yet capable of serving as evidence may be rectified by supplementary authentication, renewed cross-examinations or supplementary cross-examinations. 3) Time period for application for authentication and re-authentication A party who intends to apply for authentication shall submit said application within the time limit for producing evidence, unless an application for re-authentication was filed by a party concerned and that the application meets the requirements for re-authentication. It is not explicitly stipulated in the Chinese laws as to the time for applying for re-authentication and the number of applications for re-authentication a party concerned may make. It shall depend on the cause(s) for re-authentication (statutory cause). 4) Authentication entrusted by a party on his own For authentication conclusions from an institution entrusted by a party on his own, where the other party applies for a re-authentication with adequate evidence to rebut the conclusions, such application shall be granted by the people s court. It can be seen from the above provisions that a party may entrust an institution to carry out the authentication without going through the process of official application and approval. Authentication conclusions obtained in such manner may serve as effective evidence to a certain extent, that is to say, where the other party does not raise an objection or have no adequate evidence to rebut, such authentication conclusions shall be recognized by the people's court. 5) Cross-examination of authentication conclusions Authenticators in court for cross-examination: Authenticators shall appear in court to allow cross-examination by the parties concerned. After the authentication conclusions are read by the authenticators, 96
both parties may state their opinions. With the permission of the court, the parties and their agents ad litem may put questions to the authenticators. Where an authenticator is unable to appear in court for special reason, he may, with the permission of the people's court, respond to the questions raised by the parties in writing. 6) Requirements and examination of authentication conclusions The authentication department and the authenticators shall present a written conclusion of the authentication duly sealed or signed by both of them. If the authentication is made by an authenticator alone, the unit to which the authenticator belongs shall certify his status by affixing its seal to the authentication conclusion. The judges shall examine the authentication report made by the authenticators to confirm whether the following contents are included: a) The name or title of the client, and the content of the entrusted authentication; b) The materials for the entrusted authentication; c) The basis of authentication and the scientific or technological means adopted; d) Specifications of the authentication process; e) A definite conclusion of the authentication; f) Specifications of the qualifications of the authenticators; g) Signatures of the authenticators and the official seal of the authentication institution. Advantages of authentication conclusions as evidence The term "judicial authentication" refers to the activities that authenticators identify, make judgments and offer authentication opinions on specialized issues involved in litigation by applying scientific and technological or other specialized knowledge. In judicial practice, authentication conclusions have greater evidential power than other kinds of evidence. The right of decision, right of entrustment and right of appointment belong to the people's court. Besides, an authentication institution is a legal or designated organization with sound authentication facilities. Furthermore, authentication conclusions are drawn from scientific and technical methods by authenticators possessing expertise. These factors make the authentication conclusions trustworthy under normal circumstances. 97