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Strengthening intellectual property rights in China

Over the last couple of decades the Chinese government has pursued a policy of encouraging local businesses to partner up with high technology offshore firms, to enable the offshore companies to access the vast Chinese market. These joint ventures have typically required a high level of technology transfer to the local Chinese businesses.

In addition, the Chinese government has been bolstering their education system, with a focus on maths and science. The sheer size of the Chinese population also means that in absolute terms, since at least 2005, China has produced more engineers with a bachelors degree and above per year than the USA. An exhaustive study by researchers at Duke University found that the number of engineers with at least a bachelors degree produced by China in 2005 outstripped that of the USA by 351,537 to 137,437.

These policies are now paying off, as many Chinese businesses have developed their own capacity and technological ability in innovation. These businesses are now producing home-grown high technology and value-added goods that can compete, in at least some of the high-tech industries, with the best the West has to offer.

The net result is that China’s technical capacity has moved from that of copier and reverse-engineering specialist, to that of domestic innovator.

Why is intellectual property important?

The Chinese government has indicated in its 12th Five-Year Plan that it intends to shift from manufacturing to a more balanced economy, with a stronger service sector and a focus on scientific innovation. It has emphasised the role of intellectual property, and has even gone as far as subsidising the cost of obtaining patents for Chinese nationals.

In 2011, China filed more patents than any other country, surpassing even the USA. Clearly, it is no longer in the best interests of China to have a weak intellectual property system, as the increasing number of patent-holders expect to have their rights recognised.

This message is obviously clearly understood by the Chinese government, since they have been passing amendments to their intellectual property legislation on a regular basis, tweaking them for maximum effect.

Intellectual property enforcement

As a result of this, the absolute number of intellectual property related litigation matters per year in China has increased steadily. (As an example, the number of civil ‘first instance’ IP cases has increased steadily from 24,406 in 2008, to 88,583 in 2013. Of these, patent cases in particular have increased from 4422 in 2009 to 9195 in 2013.)

The nature of the parties to this litigation has also been changing, with the representation by local businesses as plaintiffs steadily increasing in proportion.

In order to deal with the increased amount of intellectual property litigation, specialised IP courts were established in Beijing, Shanghai and Guangzhou in 2014. In the past decade, China has had specialised IP judges hearing and deciding IP cases in 560 IP tribunals, using 3000 IP judges at four levels of court. However, appeals from these tribunals can now be heard by the cream of the IP judges in the new specialised IP courts. This will allow for more clarity in law, and consistency in IP judgements.

While the current setup is by no means a perfect system – with issues around matters including the independence of the judiciary and a lack of recognition of the effect of judicial precedent – clearly intellectual property rights are being taken a lot more seriously in China today than they have been in the past.

This understanding, together with the enormous market for consumer goods presented by the growing Chinese middle-class, should make China a target market for many, if not most, patent owners.

If you have any questions about getting patent protection in China, feel free to give us a call and speak to one of our expert patent attorneys.