In today's article, we delve into the question of why it is important to protect inventions and technologies, despite the fact that Chinese will copy them anyway. Some argue that this issue arises from a lack of effort in protecting ideas, leading to frustration when public knowledge is utilized. Let's explore whether these claims hold true.
Recently, a conference was held with the main goal of providing detailed information about the Chinese patent system. Lectures were given by officials from the CNIPO. We will review the Chinese IP system by using their presentations.
I. THE RAISE OF THE IP SYSTEM IN CHINA
Until the seventies, the introduction of a patent system was highly unlikely. The planned economy at that time did not allow for any form of monopoly, as inventions were automatically utilized by the commune and the state.
Under Deng Xiaoping’s leadership, significant changes occurred in both the political and economic environment. Confronted with international hostility, he prioritized the development of the nation's economy.
In order to attract more foreign investments, reforms were implemented, which necessitated the presence of an effective intellectual property system. Without such a system in place, achieving this goal would have been impossible.
Over time, various legislations were formulated to safeguard intellectual property rights.
Trademark Act: 1983
Patent Act: 1985
Copyright Act: 1991
Competition Act: 1993
Software Act: 2001
The People’s Republic of China became a member of WIPO in 1980, the PCT Agreement in 1994, and the TRIPS agreement in 2001.
The CNIPO, established in 1980, is the primary institution responsible for intellectual property matters. It plays a crucial role in examining patent and design applications, managing international aspects of intellectual property, overseeing other government institutions related to IP, and developing reports and long-term strategies.
In terms of intellectual property rights, the following figures can be used to measure the scale: The office received a total of 2.36 million applications, out of which 928,000 were for classic patent inventions. Additionally, there are 2.28 million registered trademarks, and the mortgage burden on intellectual property rights amounts to 10 billion US dollars.
II. FILING A PATENT APPLICATION IN CHINA
The patent system in China is similar to the European patent system. The CNIPO conducts a preliminary examination, and the application is published after 18 months. The requirements for patentability are the same, and it is not possible to extend the scope of protection after filing the application. Foreign applicants need to authorize a Chinese representative.
There is a significant difference in the duration and novelty requirement for design patents in China compared to European jurisdictions. Design patents in China are granted for a period of ten years, which is not renewable. Moreover, the novelty requirement for design patents in China is stricter compared to European jurisdictions.
It is worth noting that prior to the famous Chint v. Schneider case in 2007, the novelty requirement for patents in China was evaluated based on disclosures within China only. This means that inventions made public outside of China could still be patented in the country. However, this led to situations where individuals like Schneider, who registered their own products in China through Chint, committed patent infringement. As a result, the patent act was amended, and since then the novelty requirement is assessed based on a global level in accordance with international standards. It is important to mention that this new requirement does not apply to granted patents, so the situation described above can theoretically occur until 2027.
III. Exploiting and Enforcing Patent Rights in China
The return on investment for a patent is mainly determined by two factors: the anticipated income and the enforcement of patent-related rights. Considering the population size of China, particularly for mass-produced products, the expected income should not be a problem if the invention is feasible. On the other hand, enforcing patent rights should not be seen as a separate investment but rather as the final part of a larger investment involving research and development (R&D) and marketing expenses, ensuring that these investments do not go to waste.
Similar to European solutions, the Chinese law recognizes compulsory licensing. However, in China, a license can be granted if the patent holder is found to be acting in bad faith, such as by demanding unreasonably high fees.
A significant step forward was taken with the establishment of the Beijing IP Court, followed by courts in Guangzhou and Shanghai.
Cases in China are typically resolved within one and a half years. If an infringement case is initiated and the defendant files for invalidity action, the earlier case is suspended. Guidelines issued by higher courts ensure consistency in judicial decisions.
In terms of compensations, the patent owner in China is in a favorable position compared to Europe. In Europe, if the patent owner cannot accurately prove their damages, the likelihood of receiving restitution is not significantly high. However, in China, the court can determine a sum between ¥100,000 and ¥5,000,000 based on an examination of the circumstances of the claim.
While there are areas where China's legal system could be improved, and the perception of mass manufacturing Adidas shoes with four stripes lingers to some extent, enforcing your intellectual property rights in China requires no more effort than doing so in your own country.