China advocates for a stronger IP environment

By Guenther Marten[i]

Disclaimer: The opinion expressed in this article is exclusively the personal view of the author and binds in no way the employer entities.

On 24.11.2019, the Communist Party of China (CPC) and the State Council published common Opinions on Improving IP Protection and Strengthening the Protection of Intellectual Property (关于强化知识产权保护的意, available only in Chinese here, machine translation is at the end of the article).

President Xi has often addressed the necessity of strengthening IP rights in China. Is this just another of these intentional declarations to give directions internally, has it been published to appease foreign industry concerns, to use this in the negotiations with the US as bargain chip or is it a long term vision on IP for China? We do not know. But it mentions expressly declarations of Xi Jinping and it is the first time that such declaration or call for studies improving the IP system does not come from the government only but also from the Communist Party of China (CPC) in conjunction with the State Council. This is as such an authoritative call. In large part it reads as like taking on board demands from foreign countries. It is a comprehensive mix of call for studies, adoption of future laws and implementation of existing laws covering all areas of IP in China. Much emphasis is also given on the protection of Chinese IP rights abroad for the first time in such a document. Here are some highlights, expressed as my personal views only:

1) The document calls for accelerating the legislative process. The copyright law has been in the legislative proceedings for more than 5 years. The trademark law revision has started with an open call for comments last year. Patent amendment is expected, the deadline for call for public comments has passed already some time ago, improve legislation concerning Gis is called upon expressly. The demands for this acceleration coincide with demands from the EU, among others.

2) Some areas of concern of EU in the existing law are also addressed. Improvement of protection of trade secrets (actually through Anti-Unfair Competition Laws), "regulate" abnormal (or malicious, bad faith) trademarks (through new Trademark Law, applicable as from 1.11.2019), reducing the burden of proof of right holders, establishing and improving a system for the publication of repeated infringements, intentional infringements, and improving the mechanism of joint disciplinary actions.

3) The document does address also some long-standing concerns raised by US industry, such as development of a patent linkage system (not existent in the EU), patent term extension (EU has) and copyright protection for sports broadcasts, the latter one for which the US is lobbying long time.

4) In recent legislation punitive damages (not existent in the EU) as to five times statutasry damages have been adopted and the document calls for its implementation. Just recently a Shanghai court adopted the first judgment awarding punitive damages equal to 3 times the proven damages to a foreign sportswear company, and fully upheld the company's claim for RMB 3 million (USD 450k) in damages. It establishes the conditions for punitive damages are establishing "a malicious infringement" and "serious circumstances".  Punitive damages have been also introduced in other laws, such as Anti-Unfair Competition Law, Drug Enforcement Law, and it is in the patent amendment draft. Now, the interesting part here is that the document already points to a rise in the punitive damages, so to say higher than the actual standard of 5 times the statutary damages.

5) Reinforcing criminal enforcement is also a long standing US claim to China in order to be more deterrent to infringers (see e.g. the WTO case that the US filed against China already over 10 years ago (DS362)). The EU supports these demands namely in the light of not adopting judgments on damages which covers the losses of foreign companies. In this category also falls the three-in-one judgments (merging criminal, administrative and civil measures) which shall be promoted.

6) Different administrative enforcement agencies exist in China, such as Ministry of Public Security, State Administration of Market Regulation and their decentralized legs, Economic Crime Investigation Department (ECID, also decentralized), Procuratorate, Customs, Public Prosecution Dept etc etc. Improving coordination between agencies and between administrative and criminal enforcement is a long standing demand. It is once again highlighted in this document.

7) Case guidance and public trial systems are flagged. Case guidance can namely be expected by the newly established (1.1.2019) IP Appeal Court for highly technical cases, namely patents. On the public trial systems the EU interest is in the publication of all judgments for transparency reasons.

8) The document mentions the introduction of technical assessors into administrative enforcement. This has to be followed up whether this is a central investigator, ad-hoc investigators, decentralized investigators… This could mean a focus on patent enforcement.  

9) Continuing attention is paid to challenging markets, such as e-commerce platforms (adopting common standards for e-commerce platforms) and trade fairs, as well as establishing faster protection mechanisms. The new e-commerce law is in force since 1.1.2019 but already some initiatives are detected to improve and even reinforce the system in place. The responsibility of the e-commerce platform is one of the concerns of the EU.

A lot of measures but less concrete ones were mentioned which would be applicable right now or very soon. It is rather a letter of intention as well as continuous declarations of President Xi Jinping in favour of IP strengthening. The publication of the document at this moment, being so comprehensively formulated, may have more to do with the US trade tensions than with the intention to adopt new legislation in the short term. Hopefully it could be interpreted in the sense that further legislative changes are intended and viewed as due or even overdue.

[i] Günther Marten hasmore than 25 years of IP experience and is often speaker on IP Conferences in China. He has published multiple articles on IP related matters in Europe and in China

Machine translation:

24.11.2019

General Office of the CPC Central Committee

Issue of Opinions on Strengthening the Protection of IP

Strengthening the protection of IP rights is the most important part of improving the property rights protection system, and it is also the biggest incentive to improve China's economic competitiveness. In order to implement the decision-making arrangements of the Party Central Committee and the State Council on strengthening the protection of IP rights, to further improve the system and optimize the mechanism, the following opinions are proposed.

First, the overall requirements

Guided by Xi Jinping's new era of socialism with Chinese characteristics, comprehensively implement the spirit of the 19th and 19th Central Committees of the 19th and 19th Central Committees, and closely promote the overall layout of the "five in one" and coordinate the promotion of "four." A comprehensive "strategic layout, firmly establishing the protection of IP rights is the concept of protecting innovation, adhering to strict protection, overall coordination, key breakthroughs, equal protection, continuous reform and improvement of IP protection systems, comprehensive use of law, administration, economics, technology, social governance Means to strengthen protection and promote the overall improvement of protection capacity and level. Strive to achieve effective containment of easy infringement and difficult to deter in 2022, and the situation of rights holders' rights protection is difficult to prove, long cycle, high cost and low compensation. By 2025, the social satisfaction of IP protection will reach and maintain a high level, the protection capacity will be effectively improved, the protection system will be more perfect, the business environment that respects the value of knowledge will be more optimized, and the basic guarantee function of the IP system to stimulate innovation will be more effectively played. .

Second, strengthen institutional constraints, establish strict guidelines for IP protection policy

(1) Strengthening the punishment of infringement and counterfeiting. Study the necessity and feasibility of formulating basic IP laws, and accelerate the revision and improvement of patent law, trademark law, and copyright law. Improve legislation related to the protection of geographical indications. Accelerate the introduction of infringement punitive damages in the fields of patents and copyrights. Greatly increase the maximum amount of legal compensation for infringement and increase damages. Strengthen civil judicial protection and effectively implement the punitive damages system. The study will take measures such as confiscation of illegal income, destruction of infringement and counterfeit goods, increase administrative penalties, and carry out special actions in key areas, key links, and key groups for administrative law enforcement. Regulate trademark malicious registration, abnormal patent applications, and malicious litigation. Explore and strengthen effective protection of trade secrets, confidential business information and source code. Strengthen criminal justice protection and promote the revision and improvement of criminal laws and judicial interpretations. Increase the intensity of criminal attacks, study the criteria for reducing the crime of infringement of IP rights, increase the punishment of sentencing, modify the expression of crimes, and promote the resolution of the disposal of infringing articles involved. We will strengthen the construction of a system to combat infringement and counterfeiting crimes, explore and improve the working mechanism of data-based anti-counterfeiting intelligence, and carry out normalized special crackdowns to maintain a high-pressure and severe-strike situation.

(2) Strictly standardize the standards of evidence. We will further promote the reform of the “three-in-one” trial mechanism for IP rights in civil, criminal and administrative cases, improve the appeal mechanism for IP cases, and unify trial standards. Formulate and improve the standards for trademark and patent infringement in the process of administrative law enforcement. Standardize the standards of evidence in different channels such as judicial, administrative law enforcement, arbitration, and mediation. Promote the coordination of administrative law enforcement and criminal justice filing standards, improve the requirements of case transfer and evidence standards, formulate evidence guidelines, and smooth administrative law enforcement and criminal justice. Formulate judicial interpretation of the evidence rules for IP civil litigation, and focus on solving the problem of the right holder to prove the evidence. Exploring the establishment of a notarized reward and evidence collection system for infringement, and reducing the burden of burden of proof on the right holder.

(3) Strengthen the enforcement measures of the case. Establish and improve the judicial confirmation mechanism for IP dispute mediation agreements. Establish and improve the "blacklist" system for the integrity of market participants, implement the credit classification supervision of market entities, establish a system for the publication of repeated infringements, intentional infringements, and improve the mechanism of joint disciplinary actions. Gradually establish a case guidance mechanism for IP protection in all areas and a public trial mechanism for major cases. Strengthen supervision and inspection of the implementation of cases in different places, and promote the formation of a unified and fair legal environment.

(4) Improve the protection system for new forms of new business. In view of the development status of new business areas, research and strengthen the protection of patents, trademarks, copyrights, new plant varieties and layout designs of integrated circuits. Explore the establishment of a drug patent link system and a patent patent period compensation system. Study and strengthen the protection of IP rights in sports events. Strengthen the promotion and application of notarized electronic deposit certificate technology. Study and establish rules for cross-border e-commerce IP protection, and establish protection standards for e-commerce platforms. We will formulate guidelines for the protection of IP rights of enterprises, formulate operational guidelines such as contract models and rights protection procedures, encourage enterprises to strengthen the construction of risk prevention mechanisms, and continuously optimize the public entrepreneurship to protect and protect the environment. Study and formulate protection methods in areas such as traditional culture and traditional knowledge, and strengthen the protection of IP rights of Chinese medicine.

Third, strengthen social supervision and governance, and build a work pattern of IP protection

(5) Strengthen law enforcement supervision. Strengthen the supervision of the people's congress and carry out IP law enforcement inspections. Give play to the democratic supervision role of the CPPCC and conduct regular research on IP protection. Establish and improve the system of reward and punishment, and improve the effectiveness of law enforcement supervision. Strengthen supervision and accountability, promote the implementation of relevant provisions on the disclosure of administrative law enforcement information, and more extensively open up information on law enforcement and handling cases, and accept social and public opinion supervision.

(6) Establish and improve the mode of social co-governance. Improve the mechanism of IP arbitration, mediation, and notarization, and cultivate and develop arbitration institutions, mediation organizations, and notary agencies. Encourage industry associations and chambers of commerce to establish self-discipline and information communication mechanisms for IP protection. Guide the agency industry to strengthen self-discipline and autonomy, and comprehensively improve the supervision level of agencies. Strengthen the construction of the credit system, and the information on the registration of IP rights, administrative penalties, random inspection results, etc., shall be uniformly collected and publicized by the national enterprise credit information publicity system. Establish and improve the volunteer system, and mobilize social forces to actively participate in the protection of IP rights.

(7) Strengthen professional and technical support. Strengthen scientific and technological research and development, and strengthen IP protection through technical means such as source traceability, real-time monitoring, and online identification. Construct an intelligent detection system for infringement and counterfeiting clues, and improve the efficiency and accuracy of cracking down on infringement and counterfeiting. Introduce a technical investigator system in the handling of IP administrative law enforcement cases and judicial activities to assist administrative law enforcement departments and judicial departments to accurately and efficiently identify technical facts. Explore ways to strengthen the capacity building of IP infringement identification, study and establish an infringement damage assessment system, and further strengthen the professionalization and standardization of judicial appraisal institutions.

Fourth, optimize the coordination mechanism to break through the key links of IP protection

(8) Optimize the procedures for the authorization and authorization of rights and rights. Strengthen the review of patents, trademarks, and new varieties of plants, and further reduce the review cycle. Focus on improving the quality of patent examinations for utility models and designs, and strengthening source protection. Further play the role of patent litigation administrative confirmation remote trial and off-site trial system in the handling of major infringement administrative law enforcement cases. We will improve the linkage mechanism between administrative confirmation, notarization, arbitration, mediation, administrative law enforcement, and judicial protection, strengthen information communication and sharing, and form an operational mechanism that integrates organic channels and complement each other's advantages, and effectively improves the efficiency of rights protection.

(9) Strengthen cross-departmental and cross-regional case-handling cooperation. Formulate procedures for handling cross-sectoral cases and improve the joint investigation and transfer mechanism for major cases between departments. Improve the linkage mechanism between the administrative law enforcement department and the public security department for the investigation and handling of IP cases suspected of crimes. Explore the establishment of arbitration and mediation priority recommendation mechanisms in multiple cases. Establish and improve the diversion system for IP cases, and promote the reform of the case-sharing and diversion mechanism. Promote the establishment of a cross-regional review mechanism for IP cases in provincial administrative regions, give full play to the role of designated jurisdictional mechanisms in court cases, and effectively break local protection.

(10) Promote the rapid handling of simple cases and disputes. Establish a focus on the market directory, and build rapid processing channels for administrative law enforcement, arbitration, mediation, etc. in key areas and links such as e-commerce platforms, exhibitions, professional markets, and import and export. Promote the e-commerce platform to establish effective use of patent evaluation reports to quickly dispose of utility model and design patent infringement complaint system. Guide all types of websites to regulate management, remove infringing content, block or disconnect pirated website links, stop the dissemination of infringing information, and crack down on the use of copyright litigation for speculative profit.

(11) Strengthen the construction of fast-protection institutions for IP rights. A number of IP protection centers will be set up in the advantageous industrial clusters to establish a rapid acceptance and scientific diversion mechanism, and provide a one-stop dispute resolution solution for rapid review, rapid confirmation, and rapid rights protection. Accelerate the examination, authorization, confirmation and rights protection procedures for patents, trademarks and new varieties of plants in key technical fields. Promote the use of mediation methods to quickly resolve disputes, and effectively link protection channels and links such as administrative law enforcement, judicial protection, and arbitration.

V. Improve foreign-related communication mechanisms, shape IP rights and protect superior environment

(12) Make greater efforts to strengthen international cooperation. Actively carry out overseas patrol activities, hold round-table meetings, and strengthen cooperation and exchanges on IP protection with relevant countries and organizations. Explore the establishment of special exhibition areas at important international exhibitions and carry out overseas tour exhibitions on China's IP protection achievements. Give full play to the important role of the IP system in promoting the joint construction of the “Belt and Road”, support the joint efforts of the state to strengthen capacity building, and promote the sharing of patents and new plant variety review results. Make full use of various multi-bilateral dialogue cooperation mechanisms to strengthen exchange protection, cooperation and consultation on IP protection. Comprehensively utilize various international exchange and cooperation platforms to actively promote the development achievements of China's IP protection.

(13) Improve communication channels with rights holders at home and abroad. Information exchanges with domestic and foreign industry associations, chambers of commerce, and social organizations will be strengthened through the holding of information communication meetings and corporate forums of embassies and consulates in China. Organize the briefing on the protection of IP rights, timely inform the news media and the public about major issues and progress, increase trust and dispel doubts, and actively respond to the concerns of rights holders at home and abroad.

(14) Strengthening overseas rights assistance services. We will improve the early warning and prevention mechanism for overseas IP disputes, strengthen the tracking of major cases, establish a dynamic tracking mechanism for changes in foreign IP laws, and issue risk warning reports in a timely manner. Strengthen the construction of overseas information service platforms, conduct guidance on overseas IP disputes, and establish a coordination mechanism for overseas disputes. Support various social organizations to carry out the construction of IPR foreign-related risk prevention and control systems. Encourage insurance institutions to carry out insurance business such as IP rights overseas infringement liability insurance, patent enforcement insurance, and patent infringement loss insurance. Establish an overseas human rights expert advisory mechanism to effectively promote the equal protection of the legitimate rights and interests of rights holders in China.

(15) Improve coordination and information acquisition mechanisms. We will improve the foreign-related law enforcement cooperation mechanism, increase work coordination, and further strengthen the IP rights of Chinese embassies and consulates abroad. Select overseas IP observation enterprises and social organizations to establish an information communication mechanism. Improve information disclosure and emergency response mechanisms for major foreign-related IP disputes. Organize the investigation of the status of overseas IP protection of Chinese enterprises, study the establishment of a national protection status assessment mechanism, and promote the improvement of the overseas IP protection environment of Chinese enterprises.

6. Strengthening the construction of basic conditions and supporting the protection of IP rights

(16) Strengthen the construction of the basic platform. Establish and improve the National IP Big Data Center and the Protection and Monitoring Information Network, and strengthen the statistical monitoring of information such as registration, examination and approval, dispute resolution, and major cases. Establish an integrated information coordination and information sharing mechanism for IPR enforcement information, increase information integration, and improve the level of comprehensive judgment and macro decision-making. Strengthen the construction of software and hardware for public service platforms such as rights protection assistance, report complaints, etc., enrich the platform functions, and improve the level of convenience and benefit for the people.

(17) Strengthen the construction of professional talents. Encourage local, departmental, educational institutions, industry associations, and societies to increase the training of professionals in IP protection. Strengthen the administrative enforcement of IP rights and the staffing and professionalization of the judicial team, and establish a mechanism to effectively encourage administrative law enforcement and the enthusiasm of judicial personnel to ensure a stable and orderly exchange of teams. Promote the professional construction of IP criminal cases, and improve the efficiency of investigation, review and arrest, review and prosecution, trial work efficiency and case handling. In the relevant administrative departments and enterprises, the system of public lawyers, company lawyers and legal consultants was fully implemented to promote the rule of law in the management and protection of IP rights. Give full play to the role of lawyers and other legal service teams, and do a good job in mediation of IP disputes, case agency, and publicity of law. Establish and improve the selection, management, and incentive systems for IP arbitration, mediation, notarization, and social supervision. Strengthen the training of professional personnel for IP protection, and give full play to the role of various talents in the practice of safeguarding rights.

(18) Increase investment in resources and support. All departments in various regions should increase investment in IP protection funds. Encourage mature areas to take the lead and try to build a demonstration zone for IP protection and form a number of protected highlands. Promote the administrative enforcement of IP rights and the modernization and intelligent construction of judicial equipment. Encourage enterprises to increase capital investment, and establish IP protection rights and mutual funds through market-based methods to enhance their ability and level of self-defense.

7. Strengthen the implementation of the organization to ensure the implementation of tasks

(19) Strengthen organizational leadership. Comprehensively strengthen the party's leadership over IP protection. All relevant parties should work in accordance with the division of functions, study specific policy measures, and jointly promote the construction of IP protection systems. The State IP Office shall, in conjunction with relevant departments, continuously improve the working mechanism, strengthen coordination and guidance, and supervise and inspect, ensure that all work requirements are effectively implemented, and major issues should be reported to the Party Central Committee and the State Council in a timely manner.

(20) Pay close attention to implementation. Local party committees and governments at all levels should fully implement the decision-making arrangements of the Party Central Committee and the State Council, implement the responsibility for territorial protection of IP rights, and hold regular meetings of party committees or governments to study IP protection, strengthen institutional mechanisms, formulate supporting measures, and implement personnel funds. It is necessary to incorporate the protection of IP rights into the important agenda of local party committees and governments, and conduct regular assessments to ensure that all measures are in place.

(21) Strengthen assessment and evaluation. Establish and improve the evaluation system, and incorporate the performance of IP protection into the local party committee and government performance appraisal and business environment evaluation system. Establish an annual social security protection social satisfaction survey system and a protection level assessment system. Improve the notification mechanism, and urge party committees and governments at all levels to increase the protection of IP rights.

(22) Strengthen incentives and incentives. In accordance with relevant state regulations, the collectives and individuals who have made outstanding contributions to the protection of IP rights shall be commended. Encourage governments at all levels to make full use of the existing reward system and strengthen recognition for advanced workers in IP protection and outstanding social actors. Improve the incentive mechanism for infringement and counterfeiting, increase the incentives for reporting personnel, and stimulate the enthusiasm and initiative of the public to participate in IP protection.

(23) Strengthen publicity and guidance. All localities and departments should strengthen public opinion guidance and regularly publicize typical cases with social influence, so that the concept of strengthening IP protection is deeply rooted in the hearts of the people. Strengthen public welfare publicity, carry out IP protection into enterprises, units, communities, schools, and networks, and continuously improve the awareness of IP protection in society as a whole, especially the entrepreneurs of innovation and entrepreneurship.