China’s National Intellectual Property Administration Releases Detailed Explanation of Intellectual Property Administrative Law Enforcement Guiding Case VIII re Judicial Confirmation of Mediation Agreements

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On March 29, 2022, the China National Intellectual Property Administration (CNIPA) released the second batch of intellectual property administrative law enforcement law enforcement Guiding Cases (Guiding Cases No. 6-8) (第二批知识产权行政执法指导案例). This batch of cases has general guiding significance for the identification and punishment of repeated patent infringement, how to reuse recycled beer bottles in compliance with intellectual property laws and regulations, and the judicial confirmation of the administrative mediation agreement for patent infringement disputes. In order to facilitate the correct understanding and application of local intellectual property administrative protection law enforcement agencies, and to better refer to and implement them when handling similar cases, CNIPA, on July 4, 2022, has interpreted and explained the selection process, guiding significance, and key points of the cases in detail. Discussion of Guiding Case VIII re Judicial Confirmation of Mediation Agreements (指导案例8号:上海市知识产权局处理外观设计专利侵权纠纷达成调解协议并经司法确认案理解与适用) follows:

Per CNIPA:

BASIC CASE

Markor International Household Products Co., Ltd. found that a number of products that a company in Shanghai promised to sell were suspected of infringing on multiple design patents owned by it, and filed an administrative mediation request on patent infringement disputes with the Shanghai Intellectual Property Office on May 25, 2020. ask. On June 1, the Shanghai Intellectual Property Office accepted the above-mentioned series of cases and presided over the mediation according to the mediation wishes of both parties. On September 29, both parties signed an administrative mediation agreement for patent infringement disputes.

On October 20, both parties applied to the Shanghai Intellectual Property Court for judicial confirmation of the mediation agreement. The Shanghai Intellectual Property Court reviewed the application materials submitted by the parties, the form and content of the mediation agreement, and issued a civil ruling on the same day. It is confirmed that the mediation agreement reached by both parties is valid, and if one party refuses to perform or fails to perform in full, the other party may directly apply to the people’s court for compulsory execution.

Understanding and Application

I. Selection Process and Guiding Significance

The case was submitted by the Shanghai Intellectual Property Office to the CNIPA. According to the “Regulations of the State Intellectual Property Office on the Guidance of Intellectual Property Administrative Enforcement Cases (Trial)”, after review and selection, expert review, and deliberation by the Working Committee on Case Guidance, this case involves judicial confirmation of an administrative mediation agreement for intellectual property disputes, and it is of significance in guiding other cases. In March 2022, the case was reviewed and approved at an executive meeting of the CNIPA and released as the second batch of guiding cases.

The Guiding Case clarifies that in the process of handling intellectual property infringement disputes, administrative organs may conduct mediation according to the mediation wishes of both parties on the basis of ascertaining the facts, and both parties may apply to the people’s court for confirmation of the validity of the mediation agreement reached. The department that manages patent work has government credibility and a high level of professionalism, and it acts as a third party to preside over administrative mediation work, which is conducive to facilitating both parties to reach a settlement and sign a mediation agreement. However, the mediation agreement is a civil contract in nature and is not enforceable. If one of the parties fails to keep its promise and refuses to implement the agreement, the agreement will lose its validity, which not only greatly wastes administrative resources and damages the credibility of administrative organs, but also increases the cost of rights protection for rights holders, which is not conducive to maintaining an honest and trustworthy market and operating environment. Through judicial confirmation procedures, the mediation agreement is endowed with enforceability, which is helpful to solve the problem of difficult enforcement of the mediation agreement. In addition, the judicial confirmation of a mediation agreement is final after the first instance, which has improved the protection efficiency and strengthened the organic connection between administrative protection and judicial protection.

General Secretary Xi Jinping delivered an important speech when presiding over the 25th collective study of the 19th Political Bureau of the CPC Central Committee, emphasizing the need to improve the connection mechanism between administrative enforcement of intellectual property rights and the judiciary, and to promote the unification of administrative law enforcement standards and judicial adjudication standards. At present, Beijing, Shanghai, Fujian, Hunan, Sichuan, Shaanxi and other places have clearly established a judicial confirmation system for infringement dispute mediation agreements through local regulations; the Supreme People’s Court has encouraged judicial confirmation in a number of documents, such as the “On The Opinions of the People’s Courts on Further Deepening the Reform of the Diversified Dispute Resolution Mechanism,” which clearly stipulates that the parties may apply to the basic people’s court or the people’s court where the mediation organization is located to confirm the validity of an agreement of a civil contract nature reached through mediation by an administrative organ.

2. Understanding and explaining the main points of the case

The main points of this Guiding Case are as follows: in the process of handling patent infringement disputes, the department in charge of patent work presides over mediation and facilitates both parties to reach a mediation agreement, and obtains enforceability through judicial confirmation, which strengthens the organic connection between administrative protection and judicial protection. 

(1) The connection between administrative mediation and judicial confirmation

Administrative mediation refers to a process that under the auspices of the administrative organs, on the basis of free will of the parties concerned and in accordance with laws, regulations and policies, persuades the parties concerned to reach mutual understanding, equal negotiation and agreement so as to solve the relevant dispute through persuasion. Mediation shall take the autonomy of the parties as the first principle, and a mediation agreement reached shall be of the nature of a civil contract, be legally binding on both parties, but shall not have the force of a court injunction.

Judicial confirmation is a special procedure stipulated in the Civil Procedure Law. It is a non-litigation procedure in which the people’s court examines the mediation agreement reached outside the litigation procedure based on the application of both parties and gives it enforcement force. The first instance trial of a judicial confirmation shall be final, and the examination shall be completed within 30 days after the case is put on record.

Administrative organs are more professional in their functions and can play a key role in resolving disputes in various professional fields. Resolving disputes through administrative procedures has the advantages of high efficiency, convenience and low cost. The connection between administrative mediation and judicial confirmation can not only give full play to the advantages of administrative procedures, but also save judicial resources and improve judicial efficiency. Moreover, since both parties voluntarily reach a mediation agreement and jointly apply to the court for confirmation, the probability of performance is high and the rate of repentance is low, which can improve the quality and efficiency of dispute resolution and ease the pressure on case enforcement.

(2) Legal basis for the connection between administrative mediation and judicial confirmation

According to the provisions of the Civil Procedure Law of the People’s Republic of China amended in 2017, when applying for judicial confirmation of a mediation agreement, both parties shall, in accordance with the People’s Mediation Law of the People’s Republic of China and other laws, jointly submit the application to the basic people’s court at the locality of the mediation organization within 30 days after the mediation agreement comes into force. Therefore, according to the above provisions, the people’s mediation agreements can be governed by the judicial confirmation system. As for the mediation agreements reached upon mediation by other mediation organizations, whether they can apply to a court for judicial confirmation remains controversial. In accordance with Article 20 of the Several Opinions on Establishing a Sound Conflict and Dispute Resolution Mechanism that Connects Litigation and Non-litigation (法发〔2009〕45号) and Article 31 of the Opinions of the Supreme People’s Court on Further Deepening the Reform of the Diversified Dispute Resolution Mechanism by the People’s Courts (法发〔2016〕14号), where an agreement of a civil contractual nature is reached upon mediation by an administrative authority, a people’s mediation organization, a commercial mediation organization, a mediation organization, a commercial mediation organization, an industry mediation organization,, etc., the parties may apply to the people’s court for confirmation of their effectiveness of their jurisdiction. The people’s courts at all localities may accept cases of judicial confirmation of administrative mediation agreements according to the aforesaid documents.

(3) The connection between administrative mediation and judicial confirmation of intellectual property disputes

When presiding over the 25th collective study of the 19th Political Bureau of the CPC Central Committee, General Secretary Xi Jinping put forward a clear request to comprehensively strengthen the protection of intellectual property rights: to improve the mechanism for the connection between administrative law enforcement and the judiciary. The Outline for Building a Powerful Intellectual Property Country (2021-2035) proposes to “explore the judicial confirmation system for administrative mediation agreements for intellectual property disputes applied by the parties.” At present, some localities in China have clearly established a judicial confirmation system for administrative mediation agreements for intellectual property disputes in local regulations, strengthened the coordination between the administration and the judiciary, integrated conflict and dispute resolution resources, and provide efficient and low-cost dispute resolution channels.

The issuance of this Guiding Case provides a practical example for the judicial confirmation system of administrative mediation agreements on intellectual property disputes: “When a party files a complaint with the relevant department, the relevant department will organize both parties to conduct mediation on the basis of finding the facts, and after mediation is successful, prepare mediation transcripts, organize both parties to enter into a mediation agreement, and the parties shall apply for judicial confirmation to the court having jurisdiction, the court shall conduct examination in accordance with the law, issue a civil ruling, and serve the civil ruling on the parties, and the judicial confirmation ruling is enforceable.” This Guiding Case is of important practical significance in improving the mechanism for connecting administrative law enforcement and justice, and promoting the mediation of intellectual property disputes.

3. Other issues requiring clarification

Administrative mediation of intellectual property disputes and people’s mediation of intellectual property disputes, as different forms of intellectual property dispute mediation, the core difference lies in the different mediators. The people’s mediation of intellectual property disputes shall be presided over by a legally established intellectual property people’s mediation organization. The establishment of an intellectual property people’s mediation organization shall be subject to an application to the judicial administrative department by the relevant social group or other organization. If the conditions for establishment are met, the judicial administrative organ shall be included in the people’s mediation organization within the jurisdiction; if the establishment conditions are not met, it may be included in the work scope of the existing people’s mediation committee within the jurisdiction. Administrative mediation of intellectual property disputes shall be presided over by intellectual property administrative organs or organizations authorized by laws and regulations with intellectual property management functions. According to the application of the parties, the activities of resolving intellectual property civil disputes related to the performance of duties by the department are more authoritative and effective and more professional. According to the “Opinions on Strengthening Intellectual Property Dispute Mediation” issued by the CNIPA and the Ministry of Justice on October 22, 2021, by 2025, people’s mediation, administrative mediation, industry-based professional mediation, and judicial mediation will complement each other’s advantages, …, the basic role of mediation in the diversified settlement of intellectual property disputes will be fully manifested, and the influence and credibility will be further enhanced.

Author: Aaron Wininger

Aaron Wininger is a Senior Attorney and Director of China Intellectual Property at Schwegman Lundberg & Woessner.

Author: Aaron Wininger

Aaron Wininger is a Senior Attorney and Director of China Intellectual Property at Schwegman Lundberg & Woessner.