Bringing Chinese counterfeiters before French courts
Recently, Cdiscount was criticized for not having disclosed the identity of alleged counterfeiters. However, it turned out that the information needed to identify these merchants were available on Cdiscount and that they had indicated a postal address in China (Online counterfeiting: Cdiscount cannot be held liable, iptwins.com, 24 Oct. 2019).
Like many others, this case raises the issue of the possibility of taking the Chinese counterfeiters before the courts. The first step consists of identifying counterfeiting, and counterfeiters, either through a platform such as Detective by IP Twins, or through on-site investigations.
The next step involves the implementation of a litigation strategy. On a procedural level, several issues arise: forum shopping (territorial jurisdiction, duration of proceedings, cost of proceedings and the amount of damages), territorial jurisdiction, and ultimately, where appropriate, recognition and enforcement of a foreign judgment in China.
Historically, foreign IP owners have expressed reluctance to sue counterfeiters before Chinese jurisdictions for reasons that have evolved. At the opening of China in 1978, China’s judicial system was mistrusted. Once legitimate, this feeling, at the dawn of the 2020s, is based on less solid foundations. It is important to remember that in less than forty years, the Chinese judiciary system has been considerably modernized, and judges have received remarkable training. Maintaining a discourse based on such mistrust could be received as a contemptuous objection. Moreover, the number of Chinese proceedings dealing with counterfeiting cases is continuously increasing. This momentum is the result of a determined policy that has led to the implementation of specialized IP courts, and the evolution of legislation which constantly strengthens IPRs.
There remains the question of the recognition of foreign judgments in China. Brand protection observers may have noticed that, in recent times, several trademark owners have brought suspected Chinese counterfeiters to US courts (as for examples: Juul Labs Gets an Injunction Against Thirty Chinese Counterfeiters, iptwins.com, 2018- 09-14, Louis Vuitton Combats Online Counterfeiting Before a Florida Court, iptwins.com, 2018-10-22), which necessarily raises the issue of exequatur.
Back to the recent Cdiscount case, it is worth recalling that France and China have signed a Mutual Legal Assistance Agreement on Civil and commercial matters on May 4, 1987, which was incorporated into French law by Decree No. 88-298 dated March 24, 1988. Article 19.1 provides:
“Decisions in civil and commercial matters rendered after the entry into force of this Agreement by the courts of one Contracting Party and having become res judicata shall be recognized and enforced in the territory of the other Party (…)”.
By way of example, let us recall that in 2017, Chinese judges, one from Liaoning Province, the other from Zhejiang Province, granted enforcement of the judgments delivered respectively by the Paris Commercial Court (chinajusticeobserver.com, 2019-03-17) and the Bobigny Commercial Court (chinajusticeobserver.com, 2019-03-17). Although these judgments were rendered by commercial courts -and not by courts of first instance, which have exclusive jurisdiction over infringement of IPR-, and the cases concerned had nothing to do with IPRs, these cases show that Chinese judges are sending positive signals. In the presence of a case relating to IPRs, one can argue that one should not distinguish where the law does not make a distinction. In other words, tort, including IPR infringement, falls within the scope of the Agreement. Another positive signal can be seen in the speech made on April 29, 2019 by the French Minister of Justice at the opening of the French-Chinese dialogue on law and justice. Indeed, the Minister announced a strengthening of judicial cooperation between the two states (justice.gouv.fr) and, although the IP was not expressly mentioned in this speech —which is unfortunate—, nothing indicates that IP should be excluded from the benefit of this trend. The Chinese judges could thus be favorable vis-à-vis the French IPR owners.