Current Issues:
Since the 1970s, China has transitioned from a closed society to a market-oriented global force. China has the world’s largest population and is considered the largest exporter. In terms of GDP, China is ranked third behind the European Union and the United States. While China has become more industrialized, the country is still firmly under the grasp of a single party rule. State-owned companies are prevalent and commonly found in the steel, auto, and energy industry sectors.
Counterfeiting is rampant and foreign investors are plagued with patent
infringements without protection standards. According to a list produced in
2005 by the Office of the United States Trade Representative, it was estimated
that the United States lost $2.5 billion from China due to rampant use of
pirated goods. However, China succeeded in joining the WTO in 2001
and revised the patent law in accordance with the TRIPS agreement. China
has made progress improving their image by becoming the world’s largest patent
filer in 2011. The State Intellectual Property Office (SIPO) and
satellite offices are primarily responsible for patent administration and
enforcement.
1.Using
administrative channels to pursue intellectual property rights (IPR)
infringement in China is faster and less expensive than judicial channels but
tends to result in softer penalties that serve as weaker deterrents for future
violations.
2.
Companies should consider several variables when deciding which channel to use,
including enforcement goals, scope, and nature of IPR infringement.
3.
Judges in major cities tend to have more experience with IPR cases and are more
likely to rule that IPR infringement has occurred.
Patentability Requirements: http://www.chinapatentoffice.cn/faq_answer.asp
In China, there are the following
three types of patents:
1. Invention
– refers to any new technical solution relating to a product, a process, or
improvement
2. Utility
– refers to any new solutions relating to the shape or structure (or
combination, thereof)of a product which is fit for practical use
3. Design
– refers to any new design of the shape, pattern, color (or any combination,
thereof) which creates an aesthetic feeling and is fit for industrial
application
Definitions
Patents must possess the following
attributes:
1. Novelty
– Public disclosure anywhere in the world destroys novelty
2. Inventiveness
– Must have “prominent substantive features and represent noticeable progress”
3. Practical
Applicability – Applicability is satisfied when the invention can be
manufactured or reduced to practice in the respective industry.
Protection Periods: http://www.ipo.org/AM/Template.cfm?Section=Patents&Template=/CM/ContentDisplay.cfm&ContentID=22873
The duration of patent right for
inventions is twenty years, and the duration of patent right for utility models
or designs is ten years, counted from the filing date.
Military Design
According to Robert Farley at the World Politics Review, China is a
well-known perpetrator of international IP laws with regards to software and
entertainment products. A larger, often underreported, issue that prevails in
China is the theft of Military Design Intellectual Property. Farley explains that two different IP management systems have emerged for
military procurement. In the first system, there are IP protections at every
echelon of production. This is the particular system the United States and
other developed countries usually employ. This type of system has evolved to be
complex because of the cross-border development of different military products.
However, the countries involved in the development of these products usually
are under the purview of the same IP regulations as the United States or
whichever country where product is being developed.
The second system of IP management for military procurement lacks any sort
of regulations or legal protection. Farley notes that in this type of system
“’anything goes’ system of IP management, states beg, borrow, and steal
whatever technology they can, often attempting to copy or reverse-engineer
systems developed in other countries”. This is the type of system that
has become pervasive in China. A recent example that Farley notes is the
acquisition and development of stealth technology from a downed U.S plane in
Yugoslavia. In this example, the Chinese bought pieces of the plane’s skin from
Yugoslavian farmers and reverse-engineered the skin to be manufactured on the
Chinese J-20. The Chinese never consulted or purchased the rights of the skin
from the United States. In addition, the Chinese used design and mechanical
specifications form a Russian MiG to build the J-20, which were not legally
acquired from the Russians either.
One
draw back to the second system is that the Chinese have had quality control
problems with the planes they have manufactured. Because reverse-engineering
does not necessarily prove a flawless result, aberrations exist in the overall
design and can cause engineering failures. For example, Russian planes
developed from the ground up typically can fly 400 hours without engine
problems, whereas reportedly reverse-engineered Chinese planes have experienced
knocking in their engines after only 30 hours.
Industrial Design
Process for Applying for Industrial Design Protection:
Each application for invention or
utility model must include the following documents:
1. Power
of Attorney, signed by the applicant (Notarization or legalization is not
required);
2. Specification
with claims and abstract;
3. Drawings,
if any (two sets of formal drawings);
4. Certified
copy of the prior application, if a priority is claimed;
5. Assignment
of priority right, if the applicant in China differs from that of the prior
application.
Each application for design must
include the following documents:
1. Power
of Attorney, signed by the applicant (Notarization or legalization is not
required);
2. Drawings
or photographs of the design, in triplicate;
3. Certified
copy of the prior application, if a priority is claimed;
4. Assignment
of priority right, if the applicant in China differs from that of the prior
application.
Legal Actions:
1.
Administrative Procedure – Commonly used for asserting intellectual
property rights and adjudicating disputes. Results in a “cease and
desist” order, but no financial compensation.
2.
Judicial Procedure – Generally brought up in the municipal and
provincial people’s court. Financial compensation is awarded if merited
calculated by patent owner’s lost sales multiplied by a profit factor
(generally one to three times a reasonable warranty).
Arts & Entertainment
Protection Strategies:
1.
Don’t rely on automatic copyright protection just from creating the work. You should voluntarily register your
copyright in China, especially if you intend to license the work.
2.
Make sure the original work displays the author’s name along with the date that
it was created, or its first publication.
3.
If infringement has occurred, the copyright holder can enforce their protection
through investigations, a cease and desist, judicial actions, administrative
actions, and border protection.
Things You Should Know Before
Fighting Counterfeiters:
1.
In depth knowledge of the SME’s product and the counterfeiting product.
2.
In depth knowledge of IPR-legislation in China, and which legislation to be
considered in a given case.
3.
An analysis of what effect the counterfeit product has on your business, both
in the short term as well as the long term.
Steps To Register A Copyright In
China
1.
Complete copyright registration application form and mail to the Copyright
Protection Centre of China (CPCC).
2.
Pay the determined application fee, and receive the Copyright Registration
Certificate after approximately 30 days, during which examination of the
application takes place.
3.
An applicant can also choose to create an online account, but application must
still be physically mailed.
4.
Applicants can also entrust an agent to apply for a certificate on their
behalf.
Agriculture
Taken from
Proceeding from the actual conditions of China
and on the basis of earnestly summing up and borrowing from
international experience, the Chinese government has set up and carried
out a series of systems and measures for the protection of new varieties
of plants, thus fully guaranteeing the legitimate rights and interests
of the investment bodies involved. On October 1, 1997, the government
began implementing the "Regulations on the Protection of New Varieties
of Plants," greatly expanding the scope of IPR protection in China.
To supplement the implementation of the
"Regulations on the Protection of New Varieties of Plants," the Chinese
government has in succession promulgated and implemented such
regulations as the "Rules for the Implementation of the Regulations on
the Protection of New Varieties of Plants (Agriculture)," "Rules for the
Implementation of the Regulations on the Protection of New Varieties of
Plants (Forestry)," "Regulations on Agency of New Agricultural Plant
Variety Rights," "Regulations on Handling Cases of Infringement of New
Agricultural Plant Variety Rights," and "Regulations of the Ministry of
Agriculture on the Work of the Reexamination Board for New Varieties of
Plants," providing legal guarantees for the rapid development of new
varieties of plants.
As in other areas of law in China, the biggest issue is lax enforcement in many areas. Companies should take steps to protect themselves from counterfeiters until the enforcement of the laws actually happens.
Pharmaceutical
Since China joined the World Trade Organization, the patent
system has strengthened and there are tighter regulations for pharmaceuticals.
As of China, as of 2002, all patents are protected for 20 years and data exclusivity
is protected for six years. However, there is little incentive for firms to
create new medicines. There, China is finding it difficult to gain access to
drugs for certain conditions. such as HIV/AIDS.
While numerous patents have been applied for in China by
Western companies, many Western pharmaceutical companies have applied, many
people say that there is a lack of administrative protection for patents. Many
pharmaceutical companies in the United States assert that patent infringement
and counterfeiting run rampant in China, so it’s difficult for patents to be
protected. Therefore, pharmaceutical companies from the U.S. make up a small
numbers of China’s pharmaceutical imports.
According to articles 18 and 19 of China’s patent law, “any foreigner, foreign enterprise or other foreign organization
having no habitual residence or business office in China files an application
for a patent in China, the application is treated in accordance with any
agreement between the organization's host country and China, or any
international treaty to which both countries are party, or on the basis of the
principle of reciprocity.” Additionally, when applying for a patent or dealing
with other patent-related issues, the company must choose an agent from an agency
that is designated by the patent agency to handle the matter.
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