IP rights push in China benefits business

By Liu Jianying Source:Global Times Published: 2016/12/23 0:23:39

Illustration: Peter C. Espina/GT

Illustration: Peter C. Espina/GT

China's Supreme People's Court (SPC)  recently overturned a lower-court decision that ruled against former basketball star Michael Jordan in a trademark dispute accusing a Chinese firm of building its brand by using the translation of Jordan's name in Chinese characters without his permission.

The SPC ruling sends a warning to Chinese firms that have long been insensitive to intellectual property rights (IPR) and have run their business by exploiting a legal gray area. The SPC verdict also has significant implications for foreign firms that see IPR as a major challenge as they enter the Chinese market.

There is an urgent need for China to address its IPR issue and tighten enforcement as concerns on the matter remain a major hurdle as China seeks to further establish or upgrade free trade agreements (FTAs) with other nations. Currently, China is committed to the minimum standards of the Agreement on Trade Related Aspects of Intellectual Property Rights under the WTO, commonly known as TRIPS, in terms of IPR protection with countries it has FTAs with. In the future, China needs to establish a clear set of IPR protection guidelines and strategic plans specifically designed for FTAs, and increase the consistency of its IPR policies under FTAs. This will not only help China gain more ground in international negotiations and allow the country a greater say in making international rules but will also allow China to shape an IPR regime that is fair, just and in line with the international standard.

There are a number of issues regarding foreign-related IPR in China, and concerns about IPR protection and enforcement impact foreign firms' strategic decisions in operating in China. The patent application procedure in China is complicated, which increases the costs for firms looking to secure protection and lengthens the patent authorization cycle. Moreover, the standard for IPR protection in the digital environment needs to be clarified. China needs to work out ways to address new problems that emerge in the digital era, such as IPR protection of temporary reproduction of digital works. Enforcement also remains lax and the issues of geographical indication protection as well as extended protection of well-known trademarks deserve more attention. 

Given these challenges, the country needs to develop a new IPR regime and improve its capability in applying and enforcing IPR laws as well as protecting and managing intellectual property rights. Companies should be encouraged to form alliances to jointly push ahead with the application and promotion of patented and certified technologies and products. In addition, a public information service platform as well as an intellectual property database that tracks patents, trademarks and copyrights should be created to promote integration of the IPR system, resources and information sharing. Above all, a national pilot zone that aims to promote an industrial standardization of high technologies should be set up. Detailed rules on IPR protection that align with the international standard must be issued and practiced in the zone.  

An international talent pool should also be created. Additionally, a national talent management pilot zone should be set up along with a policy for attracting talent to facilitate mobility and offer preferential policies, such as easing visa restrictions and offering individual income tax exemptions, for high-end foreign talent.

Despite persisting challenges in IPR protection and law enforcement, the IPR landscape in the country is changing. More Chinese firms are working to lay out their own strategies to protect themselves against IPR infringement. China's State Intellectual Property Office received 1,101,864 patent filings in 2015, including filings from Chinese residents and overseas innovators. Huawei filed 3,898 patent applications in 2015, making it the world's top patent filer for a second straight year.

As IPR awareness in Chinese firms grows, the companies have a vested interest in respecting and asserting IPR. Such a tendency will likely reinforce IPR protection and enforcement in China, and will benefit both domestic and international firms. 

The author is an associate research fellow with the Chinese Academy of International Trade and Economic Cooperation, the Ministry of Commerce. bizopinion@globaltimes.com.cn


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