Written by Mr. Paolo Beconcini, IP Expert and collaborator of the China IP SME Helpdesk
I confess to be skeptical that trademark or patent infringement disputes in China stand a chance to be solved by mediation. If that was possible, foreign right holders would be the one to benefit the most, as mediation could be the best alternative to uncertain, lengthy and costly civil litigation. It is not that a chance at mediation is missing. Chinese courts must offer a mediation option at the beginning of a civil dispute. If both parties agreed to the procedure, the court could call them up, call all other relevant stakeholders and close the case in a day. Wouldn't that be great? In practice, both litigants undermine from the beginning the viability of such an option, and Chinese judges do nothing to give mediation a chance.
1. Court Mediation in China: My Experience
I file about thirty trademark infringement lawsuits every year in China, on average. After a couple of months or so from the lawsuit filing and the service of process, we are called up by the judge and asked if we want to mediate the case in court. What I normally do, I respond to the court by handing the judge my client's BATNA (Best Alternative to a Non Agreement). As a plaintiff with a registered trademark right and evidence of infringement, I can take a very strong position and make just soft symbolic concessions. The defendant, knowing that he may still play some cards during the lawsuit, responds with a categoric no to our requests with the goal of maybe bargaining his position later on, after the trial. The court, before this display of rigid positional bargaining, simply gives up and closes the mediation session. The case will then roll on until the court judgment.
2. Mediation is not given a fair chance
While it is understandable that at the beginning of a dispute the parties may resolve to hard positional bargaining, it is not understandable why the judge is not harnessed with some basic skills to help the parties loosen their hard positions and start a meaningful negotiation based more on issues and interests. The role of a mediator, neutral and color-blind as tradition wants him/her to be, can still take pro-active role and try to pro-actively facilitate a serious attempt at mediation. He would be the first one to benefit from it. He could close the case very quickly, actually he could close many cases very quickly, have an amazing track record, while saving public money. The way Chinese judges react to their mediator's function prevent the parties from building trust in the mediator and confidence in the mediation process.
3. Whose fault?
We cannot solely and fully blame the Chinese judges for this. Trademark infringement litigation is an intense type of conflict that may have less chances to be successfully mediated. Plaintiff are angry. they want justice and they have spent time and resources in building their case. They want retribution! This makes them, and me as their attorney, more inclined to battling than settling. Also, the lack of a procedural culture that nurtures early fact finding and discovery, strongly affects the early availability of facts and information that are crucial for the uncovering and understanding the real issues and interests at play that could quickly settle the dispute. This hampers any chance of an early mediation effort. A corroboration of this fact is that settlements are more common after a court trial. At that time, facts and evidence have been proved and cross examined, positional bargaining weaknesses now lay bare and the parties' real issues and interests, even common or differing interests, have finally emerged. All this can indeed support a more successful mediation.
4. Conclusion
The fact that a post-trial mediation seems to stand better chances of success than one at the beginning of the lawsuit, shows that mediation can work. However, when it successfully happens at the end of a case, its economic advantage is lost.
Therefore, there is a genuine case to try to make mediation by the court work in the initial stage of the proceedings. To do that, judges should be better trained as mediators. Based on my experience, they do not seem normally prepared to mediate, especially in more intense conflict scenarios like those regarding the infringement of trademark rights. However, there are many trademark infringement cases, especially those involving Small and Middle Enterprises (SMEs), companies with limited resources but in need of IP protection, that could really benefit from an early mediation by a Chinese court in trademark infringement proceedings. They could save a lot of time and money and claim a successful closing of a case. The alternative is that most SMEs renounce enforcing their IP rights for fear of cost and the uncertainties of a civil lawsuit. Opening the court mediation possibility as a concrete and viable alternative to full fledge proceedings, could really serve all the parties and the Chinese administrative resources more effectively.
Until improvements take place, the only current alternative is for SMEs to resort to mediation or arbitration of trademark disputes in China outside the court system. We will discuss these other options in a separate post.
Details
- Publication date
- 8 August 2024
- Author
- European Innovation Council and SMEs Executive Agency