The Beijing IP Court, the first instance court for appeals from the trade mark and patent offices, announced that pre-hearing mediation procedures will be officially accepted from August 2021 in administrative trade mark cases. The court has set up a special team to handle pre-hearing mediations and is now encouraging parties to reach a settlement or mediate through third parties. If no settlement can be reached in the pre-hearing mediation, the court will issue an official notice to accept the case and the case will proceed in a normal manner. Currently the pre-hearing mediation procedures only apply to cases where a trade mark has been refused, that is, where a trade mark applicant and the Trademark Review and Adjudication Board (TRAD) are the plaintiff and defendant.
These changes have been introduced as a result of the Supreme People’s Court of the PRC (SPC) Judicial Opinion on Promoting the Reform of Administrative Litigation Proceedings by Dividing Complicated Cases and Simple Cases on 14 May 2021. Under this Judicial Opinion, the SPC requires Chinese courts to divide administrative disputes according to the complexity of the case in order to optimize judicial resources. The reform aims to improve the quality, efficiency and credibility of administrative adjudication.
On 20 August, the Beijing IP Court provided further explanation of the incentives for setting up a pre-hearing mediation. The court stated:
“Administrative Trademark cases account for the largest proportion of cases heard by the court since its establishment. Among these cases, some are with simple facts and the rights and obligation between both parties are clear. According to Article 2 of the SPC opinion, those cases are simple cases. According to Article 5 of the Opinion, where a party involved in a case requests mediation, or the court believes the case is more suitable to be resolved through mediation, the court shall direct the parties to settle on their own or through third parties”.
The court then gave some examples of cases suitable for mediation, namely:
It is reported that more than 300 cases are being mediated.
We view the Beijing IP Court's pre-hearing mediation procedure as a positive addition. In recent years, there has been an acceleration of the examination time for trade mark applications as well as review of appeals at the TRAD and the Beijing IP Court. Due to the crowdedness of the register, most trade mark applications are refused because of prior similar marks. Given the difficulty in overcoming citations based on arguments, brand owners oftentimes resort to cancelling the citations for non-use or seeking letters of consent which take time to conclude. Given the reluctance of the TRAD and the Beijing IP Court to grant suspensions pending the outcome of the non-use cancellations or consent negotiations, brand owners had to incur the time and cost of a first and second instance court appeal process. In practice, we believe the pre-hearing mediation will grant brand owners more time to deal with citations whilst allowing the court to focus on more complex cases.
Currently, the pre-hearing mediation procedure is restricted to trade mark refusal cases. The Beijing IP Court's comments indicate that the procedure may be extended to inter parte disputes and could provide an alternative mediation forum for cases where there are invalidation and civil litigation proceedings running in parallel.