IP in China has been one of the hottest issues about doing business in China. Too long has China been branded as a nation where IP protection has no effects. This is a wrong presentation of the real situation. In this article, I have put together the Chinese IP laws, 'compulsory technology transfer', IP matters for foreign brands, and some cases, in the hope that it could give you a clearer picture of the Chinese IP protection reality.
Chinese Government’s IP Protection Laws
China's intellectual property law is composed of copyright law, trademark law and patent law.
Copyright Law of the People's Republic of China
(Adopted at the Fifteenth Session of the Standing Committee of the Seventh National People's Congress on 7 September 1990, and revised in accordance with the Decision on the Amendment of the Copyright Law of the People's Republic of China adopted at the 24th Session of the Standing Committee of the Ninth National People's Congress on 27 October 2001.)
Chapter I General Provisions
Chapter II Copyright
Chapter III Copyright Licensing and Assignment Contracts
Chapter IV Publication, Performance, Sound Recording, Video Recording and Broadcasting
Chapter V Legal Liabilities and Enforcement Measures
Chapter Vl Supplementary Provisions
Trademark Law of the People's Republic of China
(Adopted at the 24th Session of the Standing Committee of the Fifth National People's Congress on 23 August 1982, revised for the first time according to the Decision on the Amendment of the Trademark Law of the People's Republic of China adopted at the 30th Session of the Standing Committee of the Seventh National People's Congress, on 22 February 1993, and revised for the second time according to the Decision on the Amendment of the Trademark Law of the People's Republic of China adopted at the 24th Session of the Standing Committee of the Ninth National People's Congress on 27 October 2001.)
Chapter l General Provisions
Chapter II AppIication for Trademark Registration
Chapter lII Examination for and ApprovaI of Trademark Registration
Chapter IV Renewal, Assignment and Licensing of Registered Trademarks
Chapter V Adjudication of Disputes Concerning Registered Trademarks
Chapter Vl Administration of the Use of Trademarks
Chapter VII Protection of the Exclusive Rights to Use Registered Trademarks
Chapter VIII Supplementary Provisions
Patent Law of the People's Republic of China
(Adopted at the 4th Meeting of the Standing Committee of the Sixth National People's Congress on March 12,1984, amended for the first time in accordance with the Decision of the Standing Committee of the Seventh National People's Congress on Amending the Patent Law of the People's Republic of China at its 27th Meeting on September 4,1992, amended for the second time in accordance with the Decision of the Standing Committee of the Ninth National People's Congress on Amending the Patent Law of the People's Republic of China adopted at its 17th Meeting on August 25, 2000, and amended for the third time in accordance with the Decision of the Standing Committee of the Eleventh National People's Congress on Amending the Patent Law of the People's Republic of China at its 6th Meeting on December 27, 2008)
Chapter I General Provisions
Chapter II Conditions for Granting Patent Rights
Chapter III Patent Application
Chapter IV Examination and Approval of Patent Applications
Chapter V Duration, Termination and Invalidation of Patent Rights
Chapter VI Compulsory License for Exploitation of a Patent
Chapter VII Protection of Patent Rights
Chapter VIII Supplementary Provisions
Law Against Unfair Competition of the People's Republic of China
(Adopted at the Third Session of the Standing Committee of the Eighth National People's Congress on September 2, 1993. Promulgated by Order No.10 of the President of the People's Republic of China on September 2, 1993. and Effectives of December 1, 1993)
Chapter I General Provisions
Chapter II Acts of Unfair Competition
Chapter III Supervision and Inspection
Chapter IV Legal Responsibility
Chapter V Supplementary Provision
The issue on compulsory technology transfer
Chinese government officially denied the existence of forced tech transfers. On a press conference wrapping up the National People’s Congress in Beijing, Premier Li Keqiang vowed that China “strictly protects” IP rights and ensures that no foreign firms will be forced to transfer technology to their Chinese partners as China opens its markets wider to foreign investors. Li Keqiang also pledges to open up some service sectors, remove equity caps on foreign firms in some areas and ease restrictions on foreign investment. “China’s aim is to ensure that both domestic and foreign firms, and companies under all kinds of ownership structure, are able to compete fairly in its large market of 1.3 billion people,” he added.
IP matters a foreign company needs to consider
Protecting IP in China IP rights are typically territorial. Registered IP rights in the UK, EU, Hong Kong or elsewhere will not provide effective protection in Mainland China. As in the UK, the main types of IP in China are trade marks, copyright, patent and trade secrets.
1. Copyright protection
Copyright refers to the rights of creators in the fields of literature, art and science to the works created by them. According to "Copyright Law" of China, the work can be divided into 9 categories: writing work; oral work; music, drama, folk art forms, dance, acrobatic work; artistic and architectural work; photographic work; films and work created in a similar way to film making; graphic work and model work such as engineering design drawing, product design drawing, map and schematic diagram; computer software and other work stipulated by laws and regulations.
2. Trademark protection
A trademark is a mark used by a provider of a good or service to distinguish one's own goods or services from the same or similar goods or services offered by others. The trademark right is the exclusive right of the trademark owner to the registered trademark which is approved by the state trademark office. According to “Trademark Law” of China, the trademark registrant has the right of exclusive use of the trademark, which can provide more effective legal protection for the registered trademark. In addition, the trademark right can not obstruct the prior acquired rights of others. In this sense, applying for copyright and copyright protection for some graphs can also prevent others from applying for trademarks.
3. Patent protection
Patents are seen as the most protected among all intellectual property and the sharpest weapon in competition. According to “Patent Law” of China, the objects that can be regarded as patents are invention, utility model and exterior design. Patent right is the most exclusive and monopolistic one of the intellectual property rights. Once authorised by law, it has the greatest protection. Enterprises can apply for patents of different categories according to the content and categories of their creative achievements. For example, products such as toys, stationery and clothing can apply for patents for appearance design and utility model patents. A computer program, process, algorithm, etc. may apply for invention patents. A method for obtaining creative results may apply for a method invention patent. In this process, the product structure or device products involved may be considered for applying for utility model patents.
4. Protection of trade secrets
Trade secrets refer to the technical information and operational information which is not known to the public, can bring economic benefits to the obligee, has practical applicability and is subject to confidentiality measures by the obligee. In the development of the creative industry, intellectual property can be converted into works protected by “Copyright Law” or invention, utility model or design patents protected by the patent right. However there are a number of intellectual properties, such as unique analytical technologies, planning solutions, marketing plannings and business models, belonging to the category of intellectual property rights, but not applicable to the protection of “Copyright Law”, “Patent Law” or “Trademark Law”. At this point, enterprises can consider protecting them in the form of trade secrets.
Case studies of foreign companies win legal cases in China
Foreign companies that actively safeguard intellectual property rights are protected in China. For example, from 2008 to 2009, foreign companies won 90% of foreign intellectual property cases in Zhejiang province. This shows that foreign companies can protect their intellectual property rights in China through legal channels.
In 2006, Starbucks won a high-profile trade mark infringement case against Xingbake, a Chinese chain of coffee shops and a literal translation of 'Starbucks' in Chinese. It is a major success for international companies looking for protection of their brands in China, even if the damages awarded by the court were less than foreign standards (£35,000). This case also emphasises the significance of trade marks registrations in both English and Chinese.
Furthermore, in June 2007, Yamaha won an award of £580,000for trade mark infringement, the highest sum ever awarded to a foreign company for such a claim. In November 2008, Diageo won damages of £125,000 in an unfair competition and passing off action against Blueblood (Shanghai) Wine Co for the copying of its Johnnie Walker Black Label bottle and packaging design.