IP courts' launch in China raises hope

In the past three years, Chinese musician Pan Longjiang has spent 50,000 yuan (S$10,200) suing companies that used his music illegally.

While he has won two cases - out of a total of six, four of which are still in proceedings - his total compensation so far has amounted to just 1,000 yuan.

In his most recent fight, the southern Guangxi native, 49, filed a suit late last year against Internet giant Tencent, which he claimed was selling one of his songs in its QQ music store.

"Even if I win, I know that the court won't award me much," said Mr Pan, who is awaiting the Beijing court's verdict on the Tencent case. "The cost of violating copyright in China is just too low. That's why no one respects intellectual property."

Last week, in a significant push to improve the situation, the Chinese government announced the establishment of specialised intellectual property (IP) courts in Beijing, Shanghai and Guangzhou.

If successful, they will be rolled out to other cities.

They will meet the growing caseload of IP suits: In Beijing last year, local courts accepted 9,700 IP lawsuits, a 14 per cent increase over the previous year; in Shanghai, it was almost 6,700 lawsuits, up more than 25 per cent.

Experts said the establishment of the courts, which are common in developed countries, would also bring consistency to judgments and develop IP expertise among judges and judicial officers.

They also expressed hope that the establishment of specialised courts signalled that the punishment of IP infringement would now be more severe.

While China has long been known for rampant IP violation, this is not due to its lack of laws, but that its courts have historically meted out very light penalties to those found guilty, the experts said.

For example, judges can award up to 500,000 yuan in copyright cases, but the majority of cases see damages of 2,000 yuan or less awarded, said lawyers.

"This (means) infringers are happy to just continue because they can make millions infringing while the (cost) is very small," said IP lawyer Daniel Lim of Singapore-based firm Joyce A. Tan & Partners.

"In order to curtail IP infringement, the courts must at least make it such that infringing is a waste of time and resources because all the profits will be taken away."

Chinese IP lawyer Wang Guohua of Beijing Zhongwen law agency noted that China's laws actually give comparable IP protection to those in developed countries. "The difference is in the punishment, but this has to do with the economic development stage of China, which is further behind, so companies are not able to bear heavy penalties."

Recently, several cases have bucked the trend with the courts awarding large damages for patent infringement to Chinese companies against foreign companies.

In 2007, a Wenzhou court awarded Chint, a local maker of electrical power equipment, 330 million yuan against French competitor Schneider for patent infringement.

Apple has been sued by several Chinese companies for patent infringement; in 2012, it paid US$60 million (S$75 million) to a Shenzhen company that was ruled to own the iPad trademark in China.

What these cases show, said experts, is that China's economy is developing in a more advanced state where Chinese products and technology are threatened by piracy, past an initial stage where rampant infringement of foreign patents boosted Chinese companies.

The need to protect Chinese firms is the catalyst behind China's push to strengthen IP protection through the specialised courts, they said.

China is also reportedly considering revising the law to allow for awarded damages to be trebled when a patent infringement is shown to have been wilful.

These improvements "are not only for the benefit of foreign companies doing business in China but also for their domestic companies that have developed new technology and are selling their new products outside of China", noted Singapore lawyer Jonathan Kok of RHTLaw Taylor Wessing LLP.

"Some Chinese brands like (mobile phone makers) Huawei and Xiaomi are gaining international recognition; some are also being listed in foreign stock exchanges. If these Chinese companies expect their IP to be protected abroad, they would expect the same level of protection in China," said Mr Kok.

Underscoring the need, noted Mr Lim, is how China has in recent years made the most number of patent applications, eclipsing past leaders like the United States and Japan. In 2012, residents of China filed 560,681 patent applications, residents of Japan filed 486,070, and residents of the US filed 460,276.

For musician Mr Pan, who claims his music has been used in popular television series without credit, progress is still too slow and artists like him remain hapless.

On Tencent's QQ music store, the song he claimed to be his work was listed as having been downloaded 250,000 times for two yuan each - takings he believes should at least partially go to him.

In response to his legal action, he said, Tencent has removed the song from its store and its lawyers told him that the download figures were inflated to promote the song to other users.

"I am powerless against them," he said. "Setting up these courts is just the first step in a ten-thousand-step journey. A country cannot be great until it protects its artists and creators."

rchang@sph.com.sg

This article was first published on September 08, 2014.
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