China's National Intellectual Property Strategy: a step toward a better IP environment

China's State Council released its Compendium of China National Intellectual Property Strategy in June 2008. Its significance was explained by Zhang Qin, the vice commissioner of the State Intellectual Property Office of China. He clearly spelled out that:

"China's goal [is] to become a country with a comparatively high level of intellectual property rights with regard to creation, utilization, protection and administration by 2020."

Background

The concept of intellectual property did not exist in China until its reform and opening-up in 1978. Since then, China has focused on creating a whole new system of legislation for intellectual property rights (IPR) protection. However, the country still lags behind in terms of regulating the IPR market and fighting against counterfeiting and piracy. In order to actively respond to international challenges and optimise its current Intellectual Property (IP) system, the State Council of China decided to formulate and implement the National Intellectual Property Strategy.

In early 2005, the State Council established the National Intellectual Property Strategy Formulation Leading Group and launched the strategy formulation work. Thirty-three central institutions, including the State Intellectual Property Office, the State Administration for Industry & Commerce, National Copyright Administration, the National Development and Reform Commission, the Ministry of Science & Technology, Ministry of Commerce have been engaged in promoting the National Intellectual Property Strategy formulation jointly. After two years deliberation, the Outline (draft) was completed in May 2007 and subsequently approved at a State Council standing committee conference presided over by Premier Wen Jiabao in April 2008.

Main contents of the Strategy

The outline of China's National Intellectual Property Strategy is divided into the following four sections:

1. Strategic goals. The outline puts forward periodical objectives in the five years to come and sets out the strategic goal of building China into a nation with high level of IP creation, utilization, protection and administration by 2020.
2. Guiding principles. The outline has determined the guiding principles of the plan to be "innovation encouragement, efficient utilization, lawful protection, and scientific administration". "Innovation encouragement" refers to the aim of generating large quantities of independent IPRs in China. "Efficient utilization" reflects the intention to fully exploit the market value of such IP. "Lawful protection" refers to the need to regulate IPR abuse through strict and efficient law enforcement. "Scientific administration" reflects the intention of upgrading efficiency through improving systems, integrating resources and coordinating relevant mechanisms.
3. Strategic focuses. The National Intellectual Property Strategy is centred on IP system improvement. This includes further revision of IP laws and regulations according to China's national situation, fulfilling China's international obligations, along with establishment and improvement of IP law enforcement and administration systems and mechanisms, as well as enhancement of IP's guiding role when formulating economic, social and cultural policies.
4. Specific tasks and key measures. The outline has clarified seven specific tasks for various types of intellectual property, i.e. patent, trademark, copyright, trade secret, new plant variety, intellectual property in particular areas and national defence IP. It has also put forward nine strategic measures in this regard, including elevating the capacity of IPR creation, encouraging transformation and utilization of IPRs, accelerating IP legal system construction, improving IP law enforcement level, strengthening IP administration, developing IP intermediary services, enforcing IP personnel construction, promoting construction of IP culture and expanding international exchanges and cooperation in IP sector.

IP enforcement plans in the Strategy

Paragraphs 45 to 48 of the outline relate to IP enforcement in China. This is undoubtedly the most interesting topic which is of great concern to foreign businesses in China.

Paragraph 45 states: "Improve the trial system for intellectual property, optimize the allocation of judicial resources and simplify remedy procedures. Studies need to be carried out on establishing special tribunals to handle civil, administrative or criminal cases involving intellectual property. Studies also need to be done to reasonably centralize jurisdiction over cases involving patents or other cases of a highly technical nature. Further exploration is required relating to setting up courts of appeal for cases involving intellectual property. Judicial organs for handling cases involving intellectual property need to be further strengthened and well-staffed to improve the handling of cases and enforcement of the law.

Comment on enforcement

IP holders in China often complain that many judges are poorly trained and unfamiliar with IP law. To address this problem, courts in the most cosmopolitan locations, such as Beijing, Shanghai and Guangzhou, have already formed specialised tribunals to handle civil or administrative cases involving intellectual property. This helps to improve the expertise and specialisation of judges in handling IP disputes.

IP holders are also concerned with forum shopping in China, as courts in smaller cities are more likely to favour businesses important to the local community. Centralized jurisdiction over IP cases could be a solution. Paragraph 45 raises the possibility of "reasonably centralized jurisdiction over cases involving patents or other cases of a highly technical nature, and setting up courts of appeal for cases involving intellectual property". This is clearly a welcome step forward.

Paragraph 47 of the plan specifically emphasized that "well-planned and focused actions for the protection of intellectual property should be launched in cases of repeated intellectual property infringements, organized intellectual property infringements and large-scale counterfeiting and piracies". This is because many IP holders in China lose confidence in enforcement as re-infringement is common.

At present, the IP enforcement authorities in China need strong commitments and deterrent power regarding the problem of re-infringement. IP holders in China also say that it is difficult to transfer a case from the administrative to the criminal enforcement system. Many foreign business organisations such as the Quality Brand Protection Committee (QBPC) have done a lot of lobbying in this regard. As a result, paragraph 47 of the strategy further stipulates that "Administrative law-enforcement departments need to speed up the referral of criminal cases involving intellectual property to judicial organs, and judicial organs should make greater efforts to receive criminal cases involving intellectual property".

This analysis was produced by Jian Xu (jian_xu@wragge.com), a patent attorney in the IP team.