Gerald Hane, Ph.D.
August 2008
The purpose of this document is to provide an overview of key issues and resources involving intellectual property and innovation in China. Having swiftly arisen as a leading power in the global economy and in innovation, the economic institutions of China are in a process of evolving to adapt to these changes and the nation's new global role. One such institution is the regime of intellectual property protection.
In past years, as a developing economy, such regimes as intellectual property in China were designed for priority to the diffusion of innovations. Weak intellectual property rules and enforcement were a reflection of this policy goal. Even today, weak intellectual property protection is a factor in China's producing and exporting record amounts of counterfeit goods. However, as a growing number of businesses have come to be internationally competitive and as home grown innovations increasingly press forward the global frontiers, China is finding greater self-interest in protecting these new assets.
Yet institutions and practices take time to change. In some sectors, weak intellectual property protection may continue to be viewed as in the nation's interest. In others, stronger protection may be appreciated as necessary to expanding markets globally.
The purpose of this discussion is to offer a snapshot of the status of intellectual property protection in China. As the situation is likely to change as time passes, a priority here is also on identifying resources for those interested in tracking these issues. We will update this reference on the web as additional information or comments are received.
It should also be noted that this discussion of intellectual property issues focuses on current legal and business issues, but is not meant to discount the importance of the historic backdrop framing these changes. China has followed a different trajectory than many of the countries that established modern IP regimes. As a consequence, societal expectations about intellectual property and even the stability of legal regimes will be influenced by differences in the historic path.
For millennia the country had been under the rule of an emperor who was at least theoretically the sole owner of property, although there is some acknowledgement of property rights as far back as the Tang Dynasty (618-907 AD). The first patent-specific law in China was enacted in 1889 toward the end of the Qing Dynasty. Modern Chinese patent law, however, began with the issuance of the Provisional Regulations on the Protection of Invention Rights and Patent Rights in 1950, which provided rewards to inventors but left ownership of intellectual property in the hands of the State. The Cultural Revolution in the mid-1960's, however, brought an end to even this modest recognition of intellectual property.
China began to revisit intellectual property in the early 1980's, and in 1984 promulgated the Patent Law of the People's Republic of China (the "Patent Law"). China subsequently became a member of the Paris Convention for the Protection of Industrial Property (the "Paris Convention") in 1985. The Patent Law was amended in 1992 and China became a signatory to the Patent Cooperation Treaty (PCT) as of 1994. The Patent Law was amended in 2001 in an effort to bring it in line with the relevant provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
As the economy of China advances, its attention to the importance of patents has grown. Chinese statistics indicate that as of December 31, 2004, more than 2,800,000 patent applications were filed with SIPO, with a thirty‑eight percent increase in applications during 2003 alone. Nonetheless, patent and general IP infringements continue to be major challenges.
Notwithstanding the increased number of applications, many patent owners (both foreign and domestic) continue to experience problems with infringement in China. According to the U.S. Department of Commerce, Office of Foreign Commercial Service, counterfeiting and other infringing activities are widespread, and critics frequently complain of lax enforcement of intellectual property laws. As a result, any party considering introducing a patented (or patentable) technology into China – especially one that could be easily reverse engineered or duplicated – would be well advised to proceed with extreme caution, seek legal advice from the outset, and plan with extreme diligence. (ref. US Department of Commerce, Foreign Commercial Service)
This discussion is divided into the following sections:
This is followed by a brief discussion of the roles of the U.S. government with respect to U.S. companies seeking to remedy IP violations and a list of other resources on this topic.
The information provided is not intended to constitute legal advice. It is intended to provide an overview of China's IPR environment, available enforcement mechanisms, and Chinese government offices sharing jurisdiction over IPR protection and enforcement. Primary resources for the information contained here are the Foreign Commercial Service of the US Department of Commerce (http://beijing.usembassy-china.org.cn/protecting_ipr.html) and the State Intellectual Property Office of the People's Republic of China (http://www.sipo.gov.cn/sipo_English/).
Outline of National Intellectual Property Rights - on June 10, 2008, China announced a new outline regarding National Intellectual Property Rights. Information in English can be found at the following site - http://www.sipo.gov.cn/sipo_English/news/iprspecial/200806/t20080612_406418.htm
Action Plan for IPR Enforcement – on March 18, 2008, the National Working Group for IPR Protection issued an Action Plan for IPR Protection 2008. The plan contains 280 recommended measures in 10 areas. The full list can be viewed at
http://english.ipr.gov.cn/ipr/en/info/Article.jsp?a_no=197210&col_no=925&dir=200804
The Government of China conducts its own tracking of IPR events and developments on their IPR website: http://www.chinaipr.gov.cn. Activities noted for 2007 are summarized in Appendix A.
According to the U.S. Department of Commerce, China was the number one source of counterfeit products that were seized at the United States border in 2007. Such counterfeit products manufactured in China span a wide range including auto parts, watches, sporting goods, shampoo, footwear, designer apparel, medicine and medical devices, leather goods, toys, batteries, and other non-consumer products.
According to one copyright industry association, the piracy rate remains one of the highest in the world (over 90 percent) and U.S. companies lose over one billion dollars in legitimate business each year to piracy. On average, the US Department of Commerce estimates that 20 percent of all consumer products in the Chinese market are counterfeit. Popular products are quickly copied. Pirates and counterfeiters target both foreign and domestic companies.
According to the US Department of Commerce, although some policy makers in the central government have been attempting to strengthen the enforcement of existing IP laws in China, actual enforcement is still a major challenge. Large scale IPR infringements are still commonplace.
There are several factors that undermine enforcement measures, including
The formal system for IP prosecution in China continues to improve. However the reality is that companies must prepare with the expectation that their IP will be violated. In order to delay the unauthorized use of the intellectual property as long as possible, rights holders should begin working with lawyers and security experts well in advance of market entry. Indeed, once use without authorization has begun, the available remedies may not be sufficient to stop it from continuing or offer adequate redress.
Companies considering doing business in China or with Chinese entities should consider making an inventory of their intellectual property, proprietary and other sensitive information (including that owned by affiliated companies) and developing scenarios for the protection of each type. In addition to applying for patents, assigning any patent rights, and licensing technology as appropriate, companies should evaluate the risks posed by contractual relationships.
A significant number of intellectual property disputes in China arise between companies doing business together. As a result, companies should utilize non-disclosure agreements in negotiations and contracts, identify and restrict disclosure of all technical data only to those who have a "need to know" and compartmentalize knowledge. Simply keeping in a secure location or leaving only with the most reliable employees may also safeguard some forms of proprietary information such as tools, dies, or formulae. Confidentiality obligations may also need to be extended to board members, employees, agents, and the like who have actual or potential access to marketing plans.
U.S. companies should also conduct intellectual property "due diligence", scouring the Chinese market for extant infringements of their rights and studying the experiences of similar companies in China. Moreover, companies should ensure that they are familiar with the relevant Chinese rules and regulations, especially those that may contrast with their U.S. analogues. For example, licenses to work patents in China must be recorded with the relevant authorities within three months of coming into existence. Such recordation requirements for technology transfer agreements or patent assignments may pose unique challenges. Licensors should consult qualified counsel to determine how much of a license must be recorded to ensure the licensor's rights are not compromised.
In October 2003, China launched the China Patent Protection Association. The association, controlled by China's patent authority, the State Intellectual Property Office (SIPO), will "provide legal aid services" to its members when they are involved in major patent disputes, and play a role different from that of judiciary authorities and administrative law enforcement authorities. The association will provide education, training, legal consulting, patent information searches, patent strategy studies and patent "early warning" services so as to enhance the Chinese patent protection awareness and capabilities.
Intellectual property rights will be discussed below including discussion of IP laws, IP regulations, IP violations and IP enforcement. A primary reference for much of this information is the U.S. Department of Commerce, Office of Foreign Commercial Service.
China's Patent Law was enacted in 1984 and has been amended twice (1992 and 2000) to extend the scope of protection. To comply with TRIPS, the latest amendment extended the duration of patent protection to 20 years from the date of filing a patent application. Chemical and pharmaceutical products, as well as food, beverages, and flavorings, are all now patentable.
Under the Patent Law, patent protection is available in three forms – invention patents, design patents and utility models. An invention patent has a term of 20 years and is analogous to a utility patent in the United States. A design patent has a term of 10 years and is similar in function and scope to a design patent in the United States (and may constitute a comparatively quick and easy avenue to afford protection to eligible items). The third patent variety, a utility model, also has a term of only 10 years and is most similar to a U.S. improvement patent. Protection for all three patent varieties may be curtailed for failure to pay administrative fees or if the owner renounces the patent.
China follows a first-to-file system for patents, which means patents are granted to those that file first even if the filers are not the original inventors. This system is unlike the United States, which recognizes the “first to invent” rule, but is consistent with the practice in other parts of the world, including the European Union.
As a signatory to the Patent Cooperation Treaty in 1994, China will perform international patent searches and preliminary examinations of patent applications.
Under China's Patent Law, a foreign patent application filed by a person or firm without a business office in China must be made through an authorized patent agent, while initial preparation may be done by anyone. Patents are filed with China's State Intellectual Property Office (SIPO) in Beijing, while SIPO offices at the provincial and municipal level are responsible for administrative enforcement.
The system for patent infringement has also improved substantially in recent years, although there are still few cases of foreign companies successfully pursuing patent litigation in China. The guidance below is provided by the US Commercial Office of the US Department of Commerce.
The Patent Law provides that parties should first attempt to resolve infringement allegations through negotiation and then, failing an agreement, legal or administrative processes. Some lawyers profess tactical advantages in the use of the administrative route to establish infringement noting its speed and usefulness in gathering evidence for later use in a legal proceeding. (The Chinese legal system does not provide for a formal "discovery" process as in the United States, which includes the pre-trial exchange of information and increases the likelihood of settlement prior to adjudication). The administrative enforcement system, however, suffers from its own shortcomings including a lack of compensatory damages for the rights holder and generally low fines for the infringer. Patent disputes remain the most likely of intellectual property right disputes to be adjudicated, due in large part to their relative complexity.
Three Types of Actions against Infringers:
Article 57 of the Patent Law allows a patent holder to seek redress for patent infringement through the People's Court or administrative processes. Egregious cases may be referred for criminal prosecution.
The majority of all patent actions are brought under administrative enforcement. Instances of civil and criminal litigation have been growing, however, and may eventually be better able to deter infringement.
The State Intellectual Property Office (SIPO) handles administrative enforcement in addition to its role in patent registration and administrative recognition of patent rights.
Advantages
Administrative adjudication of patent infringement is preferred by many rights holders because the investigations may occur soon after filing the complaint, the rights holder may be able to participate in the investigation, and the time required for determining whether infringement has occurred can be shorter than in a court of law.
Disadvantages
According to many foreign companies, the disadvantages of the administrative process include the lack of compensation to the rights holder, fines too small to deter future infringement or put the offender out of business, and the possibility that an investigation may not be instigated as a result of local protectionism, corruption, or a lack of resources. A lack of coordination between administrative offices may also make uniform protection of patent rights difficult. If an administrative enforcement case is initiated, the validity of the patent may be appealed to the local court having jurisdiction over that administrative agency.
Initiation of Investigation
Requests for an administrative investigation of potentially infringing behavior start at the local SIPO office where the infringing activity is believed to be taking place. SIPO has an office in each of China's administrative regions and was established with the intention that it would coordinate China's IP enforcement efforts by merging the patent, trademark, and copyright offices into one authority. Today, SIPO is responsible for granting and enforcing patents and semiconductor layout designs, and also retains a coordinating role for certain crosscutting intellectual property policy issues. Possible administrative remedies include:
In serious cases, SIPO may also refer a matter for criminal prosecution. Fines and other administrative actions imposed by SIPO may be appealed to the People's Intermediate Courts. Commentators frequently lament SIPO's lack of written or published decisions, the corresponding unavailability of information for non-parties, and the fact that decisions or findings of fact made by one SIPO office may not carry any weight in others.
In addition to SIPO, the Regulation of the People's Republic of China on the Customs Protection of Intellectual Property Rights and the Implementing Measures of Customs for the Protection of Intellectual Property Rights (Customs Measures) may also provide relief for companies that are victims of patent infringement. The Customs Measures contain general rules and guidelines for Customs' role in IPR enforcement. Customs will provide protection for all categories of IPR, including prohibiting the import and export of suspected goods. China Customs has indicated in discussions with U.S. government officials that it is reticent to invoke these powers with regard to invention patents because of the inherent difficulty of determining whether the goods at issue actually infringe on a patent. However, a complainant is more likely to get customs protection on design patents.
Regardless, rights holders must first record their intellectual property with the Customs Service and file an allegation that somebody is going to import or export a product in violation of those rights in order for China Customs to begin investigating and possibly to detain suspected goods. A recordation certificate issued by Customs is valid for ten years and renewable. When a rights holder suspects infringing goods are about to enter or exit China, that person may submit a written application to the Chinese Customs service at the affected port in order to stop the import or export of the goods at issue.
Section 337 is applicable when pirated goods are entering the U.S. market.
While many in the Chinese public and foreign business community express relatively low confidence in the ability and integrity of China's courts in general, intellectual property is at the forefront of Chinese jurisprudence and there have been substantial efforts to train judges in the intricacies of intellectual property disputes. In patent infringement cases, the trial court is the Intermediate People's Court in the relevant municipality, province, or special economic zone, which together with the appellate Higher People's Courts, have maintained special Intellectual Property Tribunals since 1993.
Patent right holders have two years from the date they become aware of infringing activity (or should have become aware) in which to bring suit. The Patent Law also provides that a preliminary injunction may be obtained upon "reasonable evidence" of infringement or imminent infringement, and that a delay in stopping such infringement is likely to cause irreparable harm. Damages are determined "according to the losses suffered by the patentee or the profits gained by the infringer out of the infringement". When damages are difficult to quantify using either of these methods, an acceptable alternative measure can be an appropriate multiple of a (reasonable) royalty for the said patent.
Initiating Civil Litigation
To commence a civil suit, a written complaint must be submitted to a People's Court specifying the following:
Evidentiary Requirements and Burden of Proof
There is no Chinese counterpart to the U.S. concept of discovery. In China, each party is responsible for presenting evidence to support its claims. In the event that a party is unable to obtain evidence due to "objective circumstances" or if the People's Court considers certain evidence to be relevant to a case, the court can, on its own initiative, collect the evidence itself. All evidence must be presented in court and is subject to cross-examination. The right to determine the authenticity and validity of evidence rests solely with the court.
Available Remedies Possible civil remedies include the following:
Civil litigation in China is gradually moving towards playing a larger role in preventing patent and IPR infringement. As Chinese legal personnel become more educated in the importance of patent regulations, litigation may offer a strong alternative to adjudication. However, at the present, civil litigation is quite costly and damage awards are low.
China's laws and regulations stipulate that administrative authorities and the Customs Service may transfer egregious intellectual property infringement cases for criminal investigation. Criminal investigations start with the Public Security Bureau, which then may refer the matter to the Supreme People's Procuratorate for prosecution.
Many foreign rights holders complain that the criteria for referral of criminal cases are too vague, permit too much discretion, and that the minimum evidentiary threshold for prosecution is too high. Criminal liability for patent infringement can include up to seven years' imprisonment, fines, and damages. Despite the existence of these criminal provisions, most infringement cases continue to be handled through the administrative system.
Before China's World Trade Organization (WTO) entry in 2001, the PRC government required foreign companies in many sectors to partner with domestic counterparts before granting the foreign company permission to operate in China. This requirement often left the foreign company's trade secrets (generally customer lists, supplier information, manufacturing processes and product formulations that cannot be determined from the product itself) at risk of theft by its own business partner.
Since China's WTO entry, many foreign firms have been able to operate as wholly foreign-owned enterprises (WFOEs) in China; thus more foreign companies have been better able to protect their trade secrets. However, as many foreign companies choose to work with a local partner, protecting trade secrets continues to be a major issue.
Formally,
China provides for protection of trade secrets belonging to both Chinese
citizens and citizens of WTO member countries including the United
States. A trade secret is business information that is private and brings
economic benefits to the owner, for which the owner has adopted measures to
maintain its confidentiality.
China's Anti-unfair Competition Law which entered into effect on December 1, 1993, provides some protection for unregistered trademarks, packaging, trade dress and trade secrets. The Fair Trade Bureau under the State Administration for Industry and Commerce (SAIC) is responsible for the interpretation and implementation of the Anti-unfair Competition Law. SAIC also provides protection of company names. According to the TRIPS Agreement, China is required to protect undisclosed information submitted to Chinese agencies in obtaining regulatory approval for pharmaceutical and chemical entities from disclosure or unfair commercial use. China's State Drug Administration and Ministry of Agriculture oversee the marketing approval of pharmaceuticals and agricultural chemicals, respectively.
The Unfair Competition Law has been updated by various
regulations.
These include the Several Regulations on the Prohibition of Acts of Unfair
Competition Involving the Passing-off of a Name, Packaging or Trade Dress
Peculiar to Well-known Merchandise, effective July 6, 1995, and the Several
Regulations on the Prohibition of Acts of Infringement of Trade Secrets,
effective November 23, 1995.
Under the SAIC, the Fair Trade Bureau is the entity that is responsible for the implementation of the Unfair Competition Law. Locally, AICs are entrusted with carrying out the administrative enforcement of the law.
Businesses Must Exert Caution
Despite improved laws, US companies should take a series of steps to protect trade secrets in the workplace.
Many trade secret disputes occur after an employee "in the know" leaves the company. It is extremely difficult to prosecute these cases because multiple laws address non-compete clauses in China. As a result, it is especially important for companies to implement strong prevention and safeguard measures.
Furthermore, when resolving a trade-secret-related dispute, courts in China use a quasi-official body of experts to certify whether the information in dispute qualifies as a trade secret and whether the accused firm or product has copied the secret. The opinion or conclusion of this panel of experts is officially nonbinding on the courts, but is highly persuasive, if not determinative.
(Reference: “Protecting Your Trade Secrets in China,” China Business Review, May/June 2005.)
What Constitutes Infringement?
Acts of infringement of trade secrets include:
An operator may not adopt the following means to infringe business secrets:
The Unfair Competition Law also refers back to the Trademark Law and the Product Quality Law in its provisions dealing with punishment for acts of passing off registered trademarks and falsifying the place of origin.
How to Address Infringement
Administrative enforcement
The Unfair Competition Law states that AICs have the power to investigate acts of unfair competition.
Penalties that can be imposed for the passing off of names, packaging or trade dress of well-known merchandise include:
It should be noted that AICs do not have the ability to award compensation in unfair competition cases. If damages are sought, parties must turn to proceedings in the People's Courts. According to the Unfair Competition, damages are calculated according to the profit gained from the infringing goods.
AICs also have additional authority under the Trade Secret Regulations to:
Criminal penalties
In December 2004, the Supreme People's Court and Supreme People's Procuratorate issued a judicial interpretation on intellectual property crimes. Under the interpretation, prison sentences of up to three years can be imposed for the infringement of trade secrets if the loss caused is “serious”, which for an individual, is defined as a loss of more than RMB 500,000 (US$60,000). If the defendant is an enterprise, a “serious” loss is defined as more than RMB 1,500,000 (US$180,000).
In cases deemed “exceptionally serious,” (RMB 2,500,000 for individuals and RMB 7,500,000 for enterprises), the defendant can be imprisoned for three to seven years in addition to being fined.
China's Trademark Law was first adopted in 1982 and subsequently revised in 1993 and 2001. The current Trademark Law went into effect in October 2001, with implementing regulations taking effect on September 15, 2002. The new Trademark Law extended registration to collective marks, certification marks and three-dimensional symbols, as required by TRIPS. China joined the Madrid Protocol in 1989, which requires reciprocal trademark registration for member countries, which now include the United States.
China has a ‘first-to-file' system that requires no evidence of prior use or ownership, leaving registration of popular foreign marks open to third parties. However, the China Trademark Office has cancelled Chinese trademarks that were unfairly registered by local Chinese agents or customers of foreign companies.
Foreign companies seeking to distribute their products in China should register their marks and/or logos with the China Trademark Office. Further, foreign companies should register appropriate Internet domain names and Chinese language versions of their trademarks. As with patent registration, foreign parties must use the services of approved Chinese agents when submitting the trademark application. However, foreign attorneys or the Chinese agents may prepare the application. Recent amendments to the Implementing Regulations of the Trademark Law allow local branches or subsidiaries of foreign companies to register trademarks directly without use of a Chinese agent.
China's Copyright Law was established in 1990 and amended in October 2001. The new implementing rules came into force on September 15, 2002. Unlike patent and trademark protection, copyrighted works do not require registration for protection. China grants protection to persons from countries belonging to copyright international conventions or bilateral agreements of which China is a member. However, copyright owners may wish to register voluntarily with China's National Copyright Administration (NCA) to establish evidence of ownership, should enforcement actions become necessary.
Recent litigation in the copyright arena is showing slow signs of improvement. Copyright lawyers often cite the court case that the International Federation of the Phonographic Industry (IFPI) won against Yahoo China as an example that has encouraged music companies to take legal action against piracy.
Other victories for plaintiffs have been rare, although the introduction of the Regulation on Protection of the Right to Network Dissemination of Information on July 1, 2006 appears to strengthen the law. In July 2005, seven major music record companies, including Universal Music, Warner Music Group, EMI Group (Hong Kong), Sony BMG, sued Baidu.com for music copyright infringement. The plaintiff made a claim of 1.67 million yuan in damages.
The trial dragged on for two years before the court ruled in favor of Baidu.com. The lawyer for the plaintiffs, said after the ruling that her clients would file another suit which she said would stand a better chance of winning because of the introduction of the Regulation on Protection of the Right to Network Dissemination of Information on July 1, 2006." (Ref. www.ipr.gov.cn)
Even with a victory, the monetary level of damages is limited as noted elsewhere in this summary. For example, there is the case of Budweiser (Wuhan) Beer International Inc. It brought suit against a company in Henan for using essentially the same product design and also used the title Budweiser Beer International Group Co. Ltd. Although the court agreed that infringement had occurred the monetary penalty was only RMB 200,000 (about US$28,500) for infringement and RMB 100,000 (US$14,250) for unfair competition. (Ref. http://english.ipr.gov.cn, April 14, 2008)
In 1998, China established the State Intellectual Property Office (SIPO), with the vision that it would coordinate China's IP enforcement efforts by merging the patent, trademark and copyright offices under one authority. Today, SIPO is responsible for granting patents (national office), registering semiconductor layout designs (national office), and enforcing patents (local SIPO offices), as well as coordinating domestic foreign-related IPR issues involving copyrights, trademarks and patents.
As discussed earlier addressing infringement of IP in China can follow several tracks: administrative, civil, and criminal. The first and most prevalent is the administrative track, whereby an IP rights holder files a complaint at the local administrative office. The second is the judicial track, whereby complaints are filed through the court system. (China has established specialized IP panels in its civil court system throughout the country.)
Determining which IP agency has jurisdiction over an act of infringement can be confusing. This section provides contact information for some of the Chinese organizations involved. Jurisdiction of IP protection is diffused throughout a number of government agencies and offices, with each typically responsible for the protection afforded by one statute or one specific area of IP-related law. There may be geographical limits or conflicts posed by one administrative agency taking a case involving piracy or counterfeiting that also occurs in another region. In recognition of these difficulties, some regional IP officials have discussed plans for creating cross-jurisdictional enforcement procedures. China's courts also have rules regarding jurisdiction over infringing or counterfeit activities, and the scope of potential orders.
A list of the major players in administration enforcement actions follows. Again, this list is not exhaustive, as other agencies, such as State Drug Administration (for fake pharmaceutical products) or the Ministry of Culture (for copyrighted materials and their markets) may also play a role in the enforcement process. Note that in most cases, administrative agencies cannot award compensation to a rights holder. They can, however, fine the infringer, seize goods or equipment used in manufacturing infringing products, and/or obtain information about the source of goods being distributed.
State Administration for Industry and Commerce (SAIC) Trademark Office, 8 Sanlihe East Road, Xicheng District, Beijing, 100820 , Tel: 86-10-6803-2233, Fax: 86-10-6801-0463, Websites: http://www.saic.gov.cn (Chinese language only) http://www.tmo.gov.cn (Chinese/English)
State Intellectual Property Office (SIPO), No 6 Xitucheng Road Haidian District, P.O. Box 8020 Beijing, China 1000088, Tel: 86-10-6209-3268, Fax: 86-10-6201-9615, Website: http://www.sipo.gov.cn (Chinese/English)
National Copyright Administration of China (NCA), 85 Dongsi Nan Dajie, Beijing, China 100703, Tel: 86-10-6512-7869 or 6527-6930, Fax: 86-10-6512-7875, Website: http://www.ncac.gov.cn (Chinese)
General Administration of Quality Supervision Inspection and Quarantine (AQSIQ), 9 East Ma Dian Road, Haidian District, Beijing, China 100088, Website: http://www.aqsiq.gov.cn (Chinese)
- Customs
General Administration of Customs, 6 Jianguomennei DaJie, Beijing, China 100730, Tel: 86-10-6519-5243 or 6519-5399, Fax: 86-10-6519-5394, Website: http://www.customs.gov.cn(Chinese)
Judicial System. Companies can pursue civil actions in the local People's Court. Since 1993, China has maintained Intellectual Property Tribunals in the Intermediate People's Courts and Higher People's Courts throughout the country. The total volume of civil IP litigation in China is considerably less than administrative litigation. Though small companies may prefer to pursue the administrative route, it is expected that the number of IP litigation cases will significantly increase with recent changes in IP laws. Appeals of administrative IPR determinations, such as fines, are generally made to Administrative Tribunals of the Supreme People's Court (SPC), while the Criminal Tribunals of the SPC are likely to hear criminal cases.
Public Security Bureau (police)/ Procuratorate (prosecutors). Under enforcement provisions of TRIPs, China must provide IP remedies through criminal enforcement for commercial scale piracy and counterfeiting. China's laws and regulations stipulate that IP administrative authorities and Customs may transfer egregious IP infringement cases to police and prosecutors (procuratorate) for initiating criminal investigation. Despite these criminal provisions, most IP cases continued to be handled through the administrative system. Under Chinese law, individuals also have the right to prosecute criminal cases (zisu), though this procedure has rarely been used.
Ministry of Public Security, 14 Dongchang An Street, Beijing, China 100741; Tel: 86-10-6520-2114, Email: 110@mps.gov.cn; Website: http://www.mps.gov.cn (Chinese)
The Supreme People's Procuratorate (SPP). The SPP is the highest procuratorial organ in China and the legal supervisory organ of the State. It is mainly responsible for leading procuratorates at various levels to perform legal supervision according to law, and ensuring the enforcement of State laws in a unified and proper manner.
The Supreme People's Procuratorate (SPP), 147 Bei He Yan Street, Beijing, China 100726, Website: http://www.spp.gov.cn (Chinese)
Regional IPR Bureaus. In an attempt to coordinate local IP enforcement efforts, some provinces and municipalities in China have established IPR bureaus or IPR committees to coordinate public awareness campaigns and, to a more limited extent, enforcement. A local IPR bureau is generally a good source for companies seeking information on local or regional enforcement mechanisms.
According to the U.S. Department of Commerce, many companies, particularly small and medium enterprises (SMEs) that discover their products are being infringed in China contact the U.S. Mission in China or the Department of Commerce in Washington for assistance. Because intellectual property rights are private rights, the U.S. government can provide only limited direct assistance. In many cases, the U.S. government can provide companies with information in navigating China's legal system, including lists of local investigative firms and attorneys, and share experience and expertise in China. However, the U.S. Government cannot provide American companies with legal advice or advocate on a company's behalf where a matter is before a court or administrative agency.
When a company encounters blatant infringement of its IPR, the right holder should hire local counsel and pursue a preliminary investigation themselves or through a contracted professional firm, keeping in mind that U.S. companies should ensure compliance with Chinese law, which restricts the scope of private investigations. Once the initial investigation is complete, the company should determine whether it is worth pursuing further action, especially considering possible costs. Rights holders will have the option to initiate actions or seek redress through either the judicial or administrative systems. Foreign rights holders have had considerably less success in encouraging criminal prosecution of IPR violations, particularly when copyright infringements are involved.
In recent years, there is no known case of a foreign company that has successfully prosecuted an IP violation case in the court systems in China.
Once a company decides to pursue a remedy, the U.S. government will monitor the case, if requested to do so by the company. The Department of Commerce maintains a database of IPR disputes. The U.S. government cannot intervene in these cases. However, the U.S. Government can inquire about their status or contact government officials about concerns related to the effective administration of legal remedies available to IP holders as a general matter. As with other types of commercial disputes, the U.S. government's efforts in assisting with IPR disputes are aimed at achieving a fair and timely resolution in accordance with international commitments and Chinese laws, and in advancing adequate legal and judicial protection for all parties.
To report an IPR-related trade complaint or get more information, call 1-866-999-4258. In addition, the Department of Commerce's Trade Compliance Center (TCC) actively monitors and tracks trade barrier complaints filed by U.S. businesses. As well, the TCC maintains a trade barrier toolkit on its website, which provides advice on dealing with trade problems. Companies seeking to file a trade barrier complaint with the TCC may do so on-line at the following website: http://www.tcc.mac.doc.gov/cgi-bin/doit.cgi?204:72:887556019:34.
Other References
IPR Progress in 2007 as Noted by Government of China's IPO
Website
http://www.chinaipr.gov.cn