Amendment to Civil Procedure Law: impact for brand owners

On August 31 2012 China’s National People’s Congress passed an amendment to the Civil Procedure Law. The amendment, which covers more than 100 provisions in the existing law, seeks to alleviate the caseload burden on the judicial system and ensure the effective execution of judgments. The new law implements a number of notable reforms, such as:

• allowing preliminary injunctions for all types of civil claims;
• increasing the transparency and standards of the courts through the prosecutorial supervision of the enforcement of court judgments; and
• tightening up practices with regard to evidence submission.

Most of the changes will have an impact on trademark litigation in China and, arguably, may benefit brand owners.

One of the most significant changes is that the law now allows for preliminary injunction-type remedies for all types of civil disputes. For IP counsel, this means that companies can consider implementing totally new tactics to protect their trade secrets and trade dress through the Anti-unfair Competition Law. More fundamentally, the expanded use of preliminary injunctions may indicate an upcoming shift in the conservative attitude of IP judges, who might be more inclined to use such remedies.    

In addition, some of the changes are intended to reinforce the enforcement of court judgments. For example, another key change will allow prosecutors to 'supervise' the entire civil proceeding, and in particular, the execution of judgments. In the past, prosecutors could review only the legality of the judgments made by the courts. However, a decision that cannot be enforced is useless in practice, and the courts are not always wiling to move swiftly to enforce decisions. This change will allow parties to appeal to prosecutors, who will have increased powers and the ability to help in such cases. As such, prosecutors may become a viable pathway to obtain the enforcement of decisions - or, at least, they may help brand owners to put pressure on the courts.

The amended law also grants more power to the courts by allowing them to compel entities that manage stocks, mutual funds and bonds to cooperate fully in enforcing judgments. Courts can now oblige such entities to comply with, and carry out, court orders. If this change is implemented in practice, it will bolster the confidence of brand owners seeking to obtain damages from infringers. 

Another change of interest concerns the submission of evidence. Chinese judges usually give a lot of flexibility to litigants when it comes to submitting evidence, but this can cause a great deal of uncertainty. The amended law has tightened standards, so that a party that does not submit evidence in a timely manner could be prejudiced immediately in the proceeding. 

The amended law also recognises the increasing sophistication of court actions. It officially recognises the validity of electronic evidence and allows courts to appoint outside experts to authenticate such evidence. Parties may even use external consultants during this authentication process to cross-examine or assess the authenticator’s opinion.  

Interestingly, the amended law encourages the greater use of witness testimony by stipulating that the losing party must pay the costs incurred by witnesses. Brand owners might thus bring in more witnesses to prove infringement, damages or other relevant issues. 

The amended law demonstrates that the Chinese courts are wiling to improve the adjudication process and the enforcement of judicial decisions. While there are still improvements to be made (eg, decreasing the burden placed on parties using evidence originating from overseas, and ensuring that courts make prompt decisions with regard to discovery applications), the amended law should be seriously considered when formulating litigation strategies in China.

He Jing and Lynn Chang, ZY Partners, Beijing