China: China´s National IP Strategy 2008

Feasible Commitments Or Road To Nowhere Paved With Good Intentions?
Last Updated: 15 September 2008
Article by Danny Friedmann

China's State Council promulgated a national intellectual property strategy [1]. In the policy document there is a lot of talk about doing everything more efficient and more effective. Great, but how to achieve these laudable goals?

Over the last two decades, and especially around the time China ascended to the World Trade Organisation (WTO) in 2001, China impressively improved its system of IP protection and enforcement. However, it's aspirations to make the enforcement "hard as steel and definitely not soft as bean curd" as China's premier Wen Jiaobao aspired for in 2006 [2], have not yet materialised. In the so called Compendium of China's National Intellectual Property Strategy [3], an extensive list of aspirations and measures, China is vowing to develop itself into a country with a relatively higher level of intellectual property right creation, utilisation, protection and administration by 2020.

So what exactly is a national IP strategy? Are all desired goals and commitments in there? What is missing? And how to achieve the goals set out in the strategy?

What is a national IP strategy?

National IP strategies are en vogue. The World Intellectual Property Organisation (WIPO) has gathered the summary of the national IP strategies of 21 countries, plus the African Union and the European Union [4]. WIPO's definition of a national IP strategy is: "a set of measures formulated and implemented by a government to encourage and facilitate effective creation, development and management of intellectual property." Professor Daniel Gervais [5] points out to the fact that to make a proper policy analysis is impossible or inherently unreliable, because theoretical models are inadequate or valid empirical data unavailable. Despite this correct observation the promulgation of a national IP strategy can clarify common goals. In this case the national IP strategy is a product of the National Working Group for IPR, made up of 13 officials from 12 IP-related agencies and ministries, including the Ministry of Commerce (MOFCOM), the State Intellectual Property Office (SIPO), Customs, the Supreme People's Court and the State Administration for Industry and Commerce (SAIC) [6]. So the commitments set in the national IP strategy will be broadly embraced, which increases its chances to be realised.

What stands out in the national IP strategy?

Paragraph 13, 14 and 15 give the contours of strengthening IPRs protection, preventing abuses of IPRs and fostering a culture of IPRs. After that is becomes more interesting, because the more specific tasks are announced. The key industry sectors where China wants to obtain strategic patents are given in paragraph 16. They include: biology, medicine, information, new materials, advanced manufacturing, new energy, oceanography, resources, environmental protection, modern agriculture, modern transportation, aeronautics and astronautics. It is safe to predict that one can expect a lot of patent activities in China in these industry sectors.

Paragraph 17 is about setting technology standards. Chinese national standards, such as AVS in the audio-visual industry [7], the Chinese version of the RFID standard [8] or the TD-SCMDA in the telecoms industry [9] have a chance of developing into de facto international standards, because of China's growing economical significance in the world.

Paragraph 19 deals with patent examination. It is clear that patent quality in China has enough room for improvement [10]. In the document one cannot find surprising new strategies for trademarks or copyright protection and enforcement. "Stealing trade secrets it to be severely punished according with law", paragraph 29 stipulates. But as we will see below, sometimes this bland language is a prelude to concrete change, although it is unclear when this will happen. Until now trade secrets are dealt with in China's Labour Contract Law [11].

China wants to establish or improve upon a protection system for geographical indications (paragraph 32), genetic resources (paragraph 33), traditional knowledge (paragraph 34), folklores (paragraph 35) and layout-designs of integrated circuits (paragraph 36). The wording of these goals and commitments is vague, because how do you measure whether a system is strengthened or sound, and when can you say that the utilisation of rights is more effective?

More promising is paragraph 45 which stipulates that the trial system for intellectual property should be improved upon, the allocation of judicial resources optimised and remedy procedures simplified. In this paragraph the need for studies to establish special tribunals for civil, administrative and criminal cases involving intellectual property rights is articulated. Also the centralisation of jurisdiction involving patents or other highly technical cases will be studied. This makes a lot of sense, since it will build expertise and bring experience together. Although, this concept is not really new: since 1993, Chinese courts have made efforts to establish special trial chambers of IP. In 2000, China set up special and independent divisions to exclusively deal with all IP related civil cases. These so called No. 3 (or No. 5) Civil Divisions, can be found at the Supreme People's Court, all High People's Courts, Intermediate People's Courts in all provincial cities and many big cities, and even a few Basic People's Courts. Judges on the panels have science or engineering backgrounds and experience in dealing with IP cases. Such courts include the Intermediate People's Courts in Beijing, Shanghai, Guangzhou and Shenzhen [12].

Another good development mentioned in paragraph 45 is that China explores to set up courts of appeal for IP cases. This will improve the uniform and consistent application of laws, which will increase the certainty for all stakeholders in the legal process. Paragraph 52 states the commitment to get high quality databases for patents, trademarks, copyrights, layout-designs of integrated circuits, new varieties of plants and geographical indications. This could dramatically add to the transparency of intellectual property rights in China.

What is lacking in the national IP strategy?

To achieve any goal, one has first to know exactly where one stands. Therefore one needs to be able to measure in an objective way the enforcement and infringement levels in China. For this purpose one could use the Enforcement/Infringement Ratio this author has proposed in his thesis [13]. When the position is known one can set goals, which are well defined and attainable. The vague language in the national IP strategy is not very conducive for this purpose and it remains silent about what the level of IP enforcement compared to the level of infringement should be. The following concepts; effective enforcement and deterrent remedy should be precisely defined.

There is a paragraph about an interdepartmental coordination mechanism to make overall plans for the development of IP human resources (paragraph 59), but there is no plan for a better coordination between the different administrative authorities with overlapping capabilities, such as the State Administration for Industry and Commerce (SAIC) and the Administration of Quality and Security Inspection and Quarantine (AQSIQ) concerning the enforcement of infringed trademarks. In addition to this, there is no plan for a better coordination between the administrative authorities and the Public Security Bureau (PSB) so that criminal cases will be transferred to the PBS, which hardly happens at this moment in time.

One of the most fundamental challenges IP enforcement in China faces is that there is state by law instead of state of law. The law is used to achieve government policies, instead that government policies are used to apply the law. Therefore the administrative route of enforcement is preferred by the Chinese government, so that the judicial enforcement route has still to be developed more fully.

How to implement the national IP strategy?

Annually China comes up with action plans on the enforcement of IPR which have to implement the national IP strategy. March of this year China launched the Action plan on IPR protection 2008 [14]. It deploys 280 detailed measures and announced 16 massive campaigns to fight IP piracy and infringement. Every year these campaigns get names such as 'Fight Piracy Every Day', 'Zero Counterfeiting in Ten Thousand Shops of One Hundred Cities' and 'Special Operation Thunderstorm' on patent protection.

Action Plan 2007 [15] also launched this kind of campaigns with imaginative names and so did Action Plan 2006 [16, 17] Are these massive, temporal, top-down initiated campaigns effective? They might draw attention to the case of IPR protection and enforcement and educate the public at large. However, temporal campaigns that crackdown on piracy and infringement fight the symptoms, but do not seem to solve the fundamental extra-judicial problems of IPR enforcement in China [18].

On a positive note Action Plan 2008 [19] shows that it takes the coordination of criminal cases between administrative authorities and the PBS very serious. Another good omen is that it states that "the People's courts in central and western parts of China where IPR cases have serious quality problems and the legal team relatively weak" need targeted supervision, inspection and training [20]. This is a probably a good way to fight the prevalent legal protectionism [21]. Other good news in Action Plan 2008 is that China wants to do special research to build a trade secret system and come up with a judicial interpretation about trade secrets [22].

Well who knows, maybe we can "greet the spring of IP cause" soon, as Tian Lipu, SIPO's commissioner, put it so optimistically and poetically at the beginning of this year [23].

Notes and links:

[1] - National Intellectual Property Strategy issued by the State Council of the People's Republic of China on June 5, 2008, available at http://www.law-now.com/law-now/sys/getpdf.htm?pdf=outlineofthenationalintellectualpropertystrategy1.pdf.

[2] - 'Full manuscript of The Times interview with Wen Jiabao' during his visit to the ASEM, in Helsinki, Finland, The Austalian, September 6, 2006.

[3] - 'Compendium of China National Intellectual Property Strategy issued', Intellectual Property Protection in China, SIPO.gov.cn, June 6, 2008, available at http://english.ipr.gov.cn/ipr/en/info/Article.jsp?a_no=214475&col_no=925&dir=200806.

[4] - 'IP Strategies and Innovation Intellectual Property and New Technologies Division', WIPO, updated until January 2007, available at http://www.wipo.int/ip-development/en/strategies/national_ip_strategies.html#what.

[5] - Daniel J. Gervais, 'The TRIPS Agreement and the changing landscape of international intellectual property', Chaper 3 of Intellectual Property and TRIPs Compliance in China, Edward Elgar, 2007, pg. 65.

[6] - Peter Ollier, 'China releases national IP strategy, Managing Intellectual Property, June 13, 2008, available at http://www.managingip.com/Article/1945806/China-releases-National-IP-Strategy.html.

[7] - 'China is developing new standard to own IP', IP Dragon, February 22, 2006, available at http://ipdragon.blogspot.com/2006/02/china-is-developing-new-standard-to.html.

[8] - 'China develops own RFID standard to own IPR', IP Dragon, March 14, 2006, available at http://ipdragon.blogspot.com/2006/02/china-is-developing-new-standard-to.html.

[9] - 'China's wish to circumvent 3G royalties has its price', IP Dragon, June 20, 2007, available at http://ipdragon.blogspot.com/2007/06/chinas-wish-to-circumvent-3g-royalties.html.

[10] - 'Patent quality in China: "You could patent a wheel", July 3, 2008, IP Dragon, available at http://ipdragon.blogspot.com/2008/07/patent-quality-in-china-you-could.html.

[11] - 'What has Labour Contract Law in China to do with IP?", November 15, 2007, IP Dragon, available at http://ipdragon.blogspot.com/2007/11/what-has-labour-contract-law-in-china.html.

[12] - Danny Friedmann, 'Paper Tiger or Roaring Dragon, China's TRIPs Implementations and Enforcement', July 10, 2007, pg. 98, available at http://www.nfprojects.nl/ipdragon/Paper_Tiger_or_Roaring_Dragon.pdf.

[13] - Data key on road to IPR transparency, IP Dragon, December 19, 2007, available at http://ipdragon.blogspot.com/2007/12/data-key-on-road-to-ipr-transparency.html.

[14] - Action Plan on IPR protection 2008, March 18, 2008, available at http://english.ipr.gov.cn/ipr/en/info/Article.jsp?a_no=197210&col_no=925&dir=200804.

[15] - Action Plan on IPR protection 2007, April 6, 2007, available at http://zgb.mofcom.gov.cn/aarticle/az/k/200704/20070404541058.html.

[16] - Action Plan 2006 on IPR Protection – I, available at http://sbj.saic.gov.cn/english/show.asp?id=460&bm=sbyw.

[17] - Action Plan 2006 on IPR Protection – II available at http://sbj.saic.gov.cn/english/show.asp?id=461&bm=sbyw.

[18] - Friedmann, see note 11, pg. 58.

[19] - Action Plan on IPR protection 2008, Chapter IV Institution Building, paragraphs I (3) and III (1), (3) and (4), see note 13.

[20] - Action Plan on IPR protection 2008, Chapter VI Training and Education (II)(13), see note 13.

[21] - Friedmann, see note 11, pg. 69.

[22] - Action Plan on IPR protection 2008, Chapter X (I)(V)(1) and Chapter VII (X)(I)(2), see note 13.

[23] - Tian Lipu, 'To Greet the Spring of IP Cause', 2008 New Year Address, SIPO, January 3, 2008, available at http://www.sipo.gov.cn/sipo_English/about/commissioner/200801/t20080103_229110.htm.

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