Written by Mr. Matias Zubimendi, IP Business Advisor of the China IP SME Helpdesk.
The framework for the Chinese system of intellectual property protection was put in place from the beginning of the reform and opening up era; however, it was not until China acceded to the World Trade Organization (WTO) in 2001 that attempts were made to bring its IP system more in line with international standards. This article is the second in a series by Matias Zubimendi of the China IPR SME Helpdesk on the development of China’s IP protection system since the country became a member of the WTO.
Revision of IP laws
China’s first round of amendments to its intellectual property (IP) protection laws began in 2001 with changes to the Trademark, Copyright and Patent laws. These amendments were in line with the latest judicial interpretations, with the main purpose being to improve the efficiency of the country’s IP protection and, more particularly, to comply with China’s obligations outlined in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Since then, China has continued to periodically revise its IP laws and regulations. For instance, the Patent Law was revised in October 2009 in an attempt to more effectively protect patent rights while promoting indigenous innovation. Likewise, the Copyright Law was revised in April 2010 by broadening the scope of protection to include works not authorised for publication in China, thereby bringing the law in line with the Berne Convention on the Protection of Literary and Artistic Works.
The latest amendments of China’s main IP laws (Trademark, 2019; Copyright, 2021; Patent, 2021) were intended to modernise and strengthen IP protection while giving more powers to the judicial and administrative authorities. The amended Trademark Law, for example, explicitly addresses the long-standing problem of bad-faith trademark registrations – whereby third parties register the trademarks of IP owners without their permission or knowledge in order to sell the trademarks back to the original owners at inflated prices. The amended law explicitly orders the rejection of bad-faith registrations at the application stage. Furthermore, trademark invalidation actions based on bad-faith applications are also recognised to give trademark holders legal grounds to take down any already registered in bad faith.
The 2019 amendments of the Trademark Law increased statutory damages while introducing punitive damages (up to five times) for wilful infringements of serious circumstances. Similar provisions were also seen in the amendments on the Copyright Law and the Patent Law. The latter two also saw changes to the burden of proof, meaning that when the claimant has exhausted its efforts to provide evidence needed to calculate the damages which is held by the infringer, the court can order the infringer to provide it. Should the infringer refuse to do so, or submits fabricated evidence, the court can determine the amount of damages based on the initial evidence and calculations made by the IP right (IPR) owner.
The latest amendment to the Patent Law brought significant changes, especially for the pharmaceutical industry. A patent linkage system was introduced to give more transparency to the market approval of generic drugs by creating a preventative dispute method. Other changes—such as the introduction of the open-licence system—show regulators’ willingness to facilitate the licensing process and avoid IP infringements.
While it is still too early to properly evaluate the impacts of the newly amended Patent Law and Copyright Law, the effect of the amended Trademark Law falls short of expectations. Despite increased efforts to reduce bad-faith registrations, these remain the main challenge for foreign companies operating in China.
On 24th September 2021, the Chinese Government announced the Guidelines for Building a Powerful Intellectual Property Nation(2021–2035) (Guidelines). The main goal of the Guidelines is to transform China into a global player in IP governance within the next 15 years. The document sets goals and maps out a number of tasks related to IP protection and developing relevant IPR-intensive industries. The Chinese Government acknowledges the role that IP will play in the near future; according to the Guidelines, by 2025, the added value of patent-intensive industries is expected to account for 13 per cent of China’s gross domestic product (GDP), and the added value of the copyright industry for 7.5 per cent.
Tasks mapped out in the Guidelines include building an IPR protection system that supports a world-class business environment, establishing an IPR market operation mechanism that encourages innovation, building a public IPR service system that is convenient and beneficial to people and stepping up participation in global IPR governance.
According to the Guidelines, laws on patents, trademarks and copyright as well as regulations on protecting new varieties of plants should be amended in a timely manner. Furthermore, new legislation covering cutting-edge industries such as big data and artificial intelligence should be introduced.
However, to reach the above-mentioned goals, comprehensive reform in IPR implementation is still needed. Amendments of laws are only efficient if the judicial and administrative authorities put them into practice. The professionalisation and specialisation of the judicial system through the establishment of the IP Courts and Tribunals, or the 2019 Trademark Law amendments, mostly didn’t meet the expectations of legal experts because of the reforms’ limited impact on the type of problems companies face on a daily basis. A lot of enterprises looking to invest in China are still struggling with issues such as the unequal treatment of foreign companies, local protectionism in China’s Tier 2 or 3 cities, widespread counterfeiting and bad-faith trademark registrations, to mention just a few. The judicial system cannot yet offer an efficient solution for everyone, as it is too costly and too slow for many small or medium-sized enterprises. China’s ability to establish a world-class IP system that attracts innovative international investors will depend on how these issues are addressed.
Note: To read the first part in this series, Building a Framework: The evolution of China’s intellectual property protection system, please see the November/December 2021 issue of EURObiz.
- Publication date
- 13 January 2022