What happened

Last week in Beijing the meeting of the 14th National People's Congress (NPC) was held and IP was on stage. CNIPA used to fall under the State Administration of Market Regulation, however on 9 March 2023 the National People's Congress voted it will fall directly under the State Council.

This was decided by the acceptance of the China's State Council Institution Reform Plan. SAMR will stay busy with the enforcement of intellectual property rights. However, the guidance on the enforcement shall now come from CNIPA.

IP cases up

During the NPC, the Supreme People's Court reported that in China between 2018 and 2022 (5-year period), 2.19 million IP cases were heard by China's various courts. This is up 22.1 percent from the previous 5-year period. The compensation amount also increased by 153 percent compared to the previous 5-year period.

Regarding IP criminal cases, the Supreme People's Procuratorate reported that 13000 offenders were prosecuted by the Peoples' procuratorate.

CNIPA directly under China's State Council

IP is becoming more and more important around the world. The US, Japan and the Netherlands recently made a not-disclosed agreement regarding semiconductors, in which Dutch company ASML is not allowed to sell its most advanced and other chip making machines to China. Whereas, in China, the China National Intellectual Property Administration, is now upgraded in the rankings to fall directly under the State Council.

In China, this move symbolizes the move from 'manufactured in China' to 'created in China', i.e. building a country of innovation.

The importance of IP through decades

IP will benefit countries in the long term. Many countries have actually had to wait for national champions in an era without IP protection to come up, and then lobby for IP protection in their country. In such a way, the US, Switzerland and the Netherlands have become IP powerhouses. Companies as Philips and Shell thrived without IP protection in their early days, only to thrive even more once they developed their own IP and were in a country with good IP protection.

Same with Japan. Many counterfeits were coming from Japan before its economic rise, and when you would buy something from Japan in the 70s it would often mean bad quality. However, this has changed over time and Japan now stands for quality.

Something similar is happening in China, where China decades ago was known for cheap knock-offs, and now is known as the factory of the world, being better than nearly everyone in producing anything,

China moving up in Global Innovation Index

That IP is important for China also follows out of the Global Innovation Index (GII) 2022 report brought out by WIPO.

China moved up one place from 12 to 11. The ranking consists out of nine indicators. China scores second on the indicator for domestic industry diversification and state of cluster development and depth. China has 21 science and technology clusters out of the top 100. China's ranking for patent filings and scientific publications is also high.

What can we expect for the future

As IP is a strong driver for the economy, we can expect more focus on growing more IP in China.

At the same time, companies should know that national interest and national security can be found in China's laws, regulations and pilots. As such, companies would need a clear strategy regarding if and how they bring their IP in China or do business with China.

The ASML situation seems to be an own use of the national interest and national security by the countries involved. Make no mistake, IP and trade secrets will be very important for the next upcoming years and will partly decide how business in China will be run.

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