Intellectual Property Law in China

by Sheldon Zhao

Overview

Intellectual property (IP) 知识产权 protection in People’s Republic of China (PRC) first emerged in the 1980s, as part of the Reform and Open Up movement 改革开放. The newly budding market economy required the country to implement IP protection for both domestic business and trade.

From the 1980s to early 2000s,  Chinese IP regulations were very loosely defined and poorly implemented. Such a copyleft environment gave rise to large industries of piracy in China. In 2004, 90% of all music CDs, movie DVDs, and computer programs in China were pirated. Also, fake brands and pirated DVD could be found at almost every store and every street corner. In 1999, a famous case between Microsoft and Yadu Technology, a company that provided pirated Microsoft Operating System for its employees, was ruled against Microsoft by a court in Beijing. In another key case, Microsoft v. Shenzhen reflective materials institute, the defendant copied 650,000 Microsoft Holograms. Although they were found guilty, the court only imposed a fine of just over 250USD - far from Microsoft's estimated loss of 30 million USD. These examples demonstrate how early Chinese IP laws fail to provide enough IP protection, fails to enforce specific legislation, and fails to punish the infringing party. 

This environment came at a time when the cost of Microsoft OS was 2000RMB - which would be a decent monthly salary for an office worker. In another famous case, Microsoft v. Gongruan Software Inc., the largest distributor of pirated Microsoft Operating System in China, the responsible parties were fined over 8.7 million RMB (over 1 million USD) and sentenced to jail under administrative regulations. This case incited huge repercussions among Chinese internet users, as a survey showed that 88% of the population supported the defendant and their action. This was a key reason why IP protection in China came about very slowly.

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Since the 21st century, however, the landscape has been changing. As the Chinese economy joined the global market and boomed at an impressive rate, the government faced more pressure to provide more comprehensive IPR. After joining the World Trade Organization (WTO) in 2001, China became a signature of TRIPS and other international IP agreements, starting to expand and enforce IP protection drastically. The government revised the existing laws and announced many administrative regulations - all of which aimed to provide a better environment for economic growth. Under such a growth-driven methodology, the knockoff/pirate market slowly dwindled; music streaming services are taking over illegal downloading; technology companies are filing patents at a historic rate. According to a report by the World Bank in 2017, Chinese IP laws are currently in line with international standards.

Related Legal and Government Terms

IP Protection in China constitutes of laws, administrative regulations and department rules.

The laws are drafted and passed by the National People's Congress 人民代表大会. The framework laws of IPR in PRC include Copyright Law of the People's Republic of China 中华人民共和国著作权法, Patent Law of the People's Republic of China 中华人民共和国专利法, and Trademark Law of the People's Republic of China 中华人民共和国商标法. These three laws construct a solid frame work that covers most IP-related issues.

The administrative regulations are proposed and announced by the State Council 国务院. These regulations usually respond to the new frontiers of IP discussion. Past administrative regulations have dealt with issues such as computer programs, genome, and more.

Department regulations embody specific regulations put forward by different related government agencies. They are more detailed laws that provide more specified information on IP regulations such as punishment, exemptions, and more. Important related government agencies that issue department regulations include:

State Intellectual Property Office

国家知识产权局

SIPO

Domestically, SIPO deals primarily with Patent Protection and handles patent applications. Internationally, SIPO coordinating domestic foreign-related IPR issues involving copyrights, trademarks, and patents.

State Administration on Industry and Commerce

国家工商行政管理总局 

SAIC

SAIC deals with all commercial issues in China. The Trade Office under SAIC is in charge of trademark registration and enforcement for domestic and international companies.

National Copyright Administration of China

国家版权局

NCAC

The NCAC manages all domestic copyright issues such as copyright enforcement, copyright infringement investigations, and copyright regulations adjustments.

This website provides a brief overview of Intellectual Property Law in China, both past and present. It dives into the three major pillars of IP Law, and provides some foundational information regarding each category.

Copyright.

Copyright Law of the People's Republic of China is the most important copyright documentation in PRC. Since it's introduction in 1991, the law has gone through two revisions, most recently in 2010. Over the years, Chinese copyright laws have undergone extensive expansions. These revisions mostly reflect the administrative regulations announced by the State Council, particularly ones that enhance IP protection of television (1997), film (2001), audiovisual publication (2001), computer software (2002), and communicate works to the public over information networks (2006). As a signatory of the Berne Convention, Chinese copyright laws provide extensive moral rights protection for the rights holder, as well as a series of "fair use" equivalents. 

Details

Protected items: 

1. written works;
2. oral works;
3. musical, dramatic, quyi, choreographic and acrobatic art works;
4. works of fine art and architecture
5. photographic works;
6. cinematographic works and works created in a way similar to cinematography
7. drawings of engineering designs and product designs, maps, sketches and other graphic works as well as model works;
8. computer software;
9. other works as provided in laws and administrative regulations.

Protected rights:

1. the right of publication, that is, the right to decide whether to male a work available to the public;
2. the right of authorship, that is, the right to claim authorship and to have the author's name mentioned in connection with the work;
3. the right of alteration, that is, the right to alter or authorize others to alter one's work;
4. the right of integrity, that is, the right to protect one's work against distortion and mutilation;
5. the right of reproduction, that is, the right to produce one or more copies of the work by means of printing, Xeroxing, rubbing, sound recording, video recording, duplicating, or re-shooting, etc.;
6. the right of distribution, that is, the right to provide the public with original copies or reproduced copies of works by means of selling or donating;
7. the right of lease, that is, the right to nongratuitously permit others to temporarily exploit a cinematographic work, a work created in a way similar to cinematography or computer software, unless the computer software is not the main object under the lease;
8. the right of exhibition, that is, the right to publicly display the original copies or reproduced copies of works of fine art and cinematographic works;
9. the right of performance, that is, the right to publicly perform works, and to publicly transmit the performance of works by various means;
10. the right of projection, that is, the right to make, by such technical equipment as projector, episcope, etc., the works of fine art, photographic works, cinematographic works and works created in a way similar to cinematography, etc. reappear publicly;
11. the right of broadcasting, that is, the right to publicly broadcast or disseminate works by wireless means, to disseminate broadcast works to the public by wired dissemination or rebroadcast, and to disseminate broadcast works to the public by audio amplifier or other similar instruments for transmission of signs, sounds or images;
12. the right of information network dissemination, that is, the right to provide the public with works by wired or wireless means, so as to make the public able to respectively obtain the works at the individually selected time and place;
13. the right of production, that is, the right to fix works on the carrier by cinematography or in a way similar to cinematography;
14. the right of adaptation, that is, the right to modify a work for the purpose of creating a new work of original creation;
15. the right of translation, that is, the right to transform the language of a work into another language;
16. the right of compilation, that is, the right to choose or edit some works or fragments of works so as to form a new work;
17. other rights which shall be enjoyed by the copyright owners.

Term of Protection:

Copyright protection will expire 50 years after the death of the rights holder (After December 31st in the 50th year).

The rights of authorship, alteration and integrity of an author (moral rights) do not expire.

Exemptions:

1. use of a published work for the purposes of the user's own private study, research or self-entertainment;
2. appropriate quotation from a published work in one's own work for the purposes of introduction of, or comment on, a work, or demonstration of a point;
3. inevitable reappearance or citation of a published work in newspapers, periodicals, radio stations, television stations or other media for the purpose of reporting current events;
4. reprinting by newspapers or periodicals or other media, or rebroadcasting by radio stations or television stations or other media, of the current event articles on the issues of politics, economy and religion, which have been published by other newspapers, periodicals, radio stations or television stations or other media, except where the author has declared that publication or broadcasting is not permitted;
5. publication in newspapers or periodicals or other media, or broadcasting by radio stations or television stations or other media, of a speech delivered at a public assembly, except where the author has declared that publication or broadcasting is not permitted;
6. translation or reproduction, in a small quality of copies, of a published work for use by teachers or scientific researchers in classroom teaching or scientific research, provided that the translation or reproduction is not published or distributed;
7. use of a published work by a State organ within the reasonable scope for the purpose of fulfilling its official duties;
   reproduction of a work in its collections by a library, archive, memorial hall, museum, art gallery or similar institution, for the purpose of the display or preservation of a copy of the work;
8. free of charge performance of a published work, that is, with respect to the performance, neither fees are charged from the public nor the remuneration is paid to the performers;
9. copying, drawing, photographing, or video recording of an artistic work located or on display in an outdoor public place;
10. translation of a work published by a Chinese citizen, legal entity or organization, which is created in the Han language Chinese, into a minority
11. nationality language for publication and distribution within the country;
12. translation of a published work into Braille and publication of the work so translated;

Patent.

Patent law is the most heated area of IPR in China. Historically, nations such as the US have accused China of safe-harboring patent infringement to benefit domestic economic growth. Patent Law of the People's Republic of China was first introduced in China in 1985. Over decades, it has also gone through multiple revisions under pressure from the US (1992) and the WTO. (2001) Unlike America, there are three types of Chinese patent. The inventive patent corresponds to the US utility patent, and the design patent corresponds to the US design patent. There is also a third type called utility model patent, which requires less inventive power than a regular utility patent. Patent law in China also delineates situations where patents cannot be applied, such as for disease treatment. 

Details

Types of Patent:

Inventive patent, utility model patent (UMP), and design patent

Protected Items:

1. scientific discoveries;
2. rules and methods for intellectual activities;
3. methods for the diagnosis or treatment of diseases;
4. animal or plant varieties;
5. substances obtained by means of nuclear transformation; and
6. designs that are mainly used for marking the pattern, color or the combination of the two of prints.

Criteria of Ineligibility:

1. scientific discoveries;
2. rules and methods for intellectual activities;
3. methods for the diagnosis or treatment of diseases;
4. animal or plant varieties;
5. substances obtained by means of nuclear transformation; and
6. designs that are mainly used for marking the pattern, color or the combination of the two, of prints.

Term of Protection:

UMP and design patents: 10 years since day of registration.

Inventive patents: 20 years since day of registration.

Application Process:

All filing require an official application. For inventive patents, SIPO will to review any application and request to examine the original object within 3 years of application.

Trademark.

Trademark infringement is perhaps the most notorious of all stereotypical Chinese IP violations. The flourishing counterfeit market of "luxury handbags" and "designer clothing" became an emblem of the rampant trademark violations in China. The truth is, China has established a series of strict regulations for trademarks. Trademark Law of the People's Republic of China was the first ever IP law passed in PRC. Drafted in 1983, the law reflected the burgeoning market economy in 1980s China. The SAIC provides a fairly efficient system for dealing with trademark violations. However, the sheer scale of the country and the flourishing e-commerce community have made law enforcement extremely difficult.

Details

Protected Item:

Any visual sign capable of distinguishing the goods or service of one natural person, legal entity or any other organization from that of others, including any word, design, letters of an alphabet, numerals, three-dimensional symbol, combinations of colors, and their combination.

Criteria for a Well-Known Mark:

1. reputation of the mark to the relevant public;
2. time for continued use of the mark;
3. consecutive time, extent and geographical area of advertisement of the mark;
4. records of protection of the mark as a well-known mark; and
5. any other factors relevant to the reputation of the mark.

Criteria for Ineligibility:

1. those identical with or similar to the State name, national flag, national emblem, military flag, or decorations, of the People’s Republic of China, with names of the places where the Central and State organs are located, or with the names and designs of landmark buildings;
2. those identical with or similar to the State names, national flags, national emblems or military flags of foreign countries, except that the foreign state government agrees otherwise on the use;
3. those identical with or similar to the names, flags or emblems or names, of international intergovernmental organizations, except that the organizations agree otherwise on the use or that it is not easy for the use to mislead the public;
4. those identical with or similar to official signs and hallmarks, showing official control or warranty by them, except that the use thereof is otherwise authorized;
5. those identical with or similar to the symbols, or names, of the Red Cross or the Red Crescent;
6. those having the nature of discrimination against any nationality;
7. those having the nature of exaggeration and fraud in advertising goods;
8. those detrimental to socialist morals or customs, or having other unhealthy influences;Œ
9. those only comprising generic names, designs or models of the goods in respect of which the trademarks are used;
10. those having direct reference to the quality, main raw materials, function, use, weight, quantity or other features of the goods in respect of which the trademarks are used; and
11. those lacking distinctive features.

Infringement:

1. to use a trademark that is identical with or similar to a registered trademark in respect of the identical or similar goods without the authorization from the trademark registrant;
2. to sell goods that he knows bear a counterfeited registered trademark;
3. to counterfeit, or to make, without authorization, representations of a registered trademark of another person, or to sell such representations of a registered trademark as were counterfeited, or made without authorization;
4. to replace, without the consent of the trademark registrant, its or his registered trademark and market again the goods bearing the replaced trademark; or
5. to cause, in other respects, prejudice to the exclusive right of another person to use a registered trademark.

Damages:

1. the trademark owner’s actual loss;
2. the benefits gained by the infringer from the infringement;
3. a multiple of the royalty for the relevant trademark licence; or
4. statutory damages of less than 3 million RMB.

What Next?

In recent years, China has attempted to make it into the tier of high-income countries through developing its technology industry. The government has attempted to stimulate growth in the tech industry by providing better IP protection to stimulate innovation. The continuation of the growth-oriented approach to IP law has driven China into a new phase of IP development. According to WIPO, China is currently filing more patents than any other nation, and the trend is not stopping. Scholars have noticed a close link between this patent boom and the development of Chinese economy at large. At a moment of economic transition, Chinese tech industry is producing immense momentum for the economy.

July 2017, Chinese President Xi Jinping spoke at a Chinese Central Financial and Economic Affairs Commission meeting. In his speech, he emphasized the importance of IP protection in fostering a healthy domestic market. He stated his vision for the future of IP Laws in PRC: increasing protection for new fields, and harsh punishment for infringers. Through these measurements, China hopes to not only regulate the domestic market but also to attract foreign capital. They hope that companies who used to find themselves taken advantage of while doing business with China can now feel confident to invest in China, helping with the economic opening up 经济开放 of PRC. 

The Global opinion of Chinese IPR has bettered in the past decade. This, however, does not mean criticism has ceased. The United States, a longstanding critique of Chinese IPR, continues to attack the country for its IP regime. According to a February 2017 report released by US Chamber of Commerce, the primary issues with Chinese IP Laws are "historic and growing levels of IP infringement, as well as challenges in the ability of IP owners to secure adequate remedies for infringement." Although the ranking is expected to rise, the report still conveys a sense that Chinese IP environment has greatly disadvantaged US companies. They have keenly noticed that implementation of IP laws in China is largely uneven and local courts tend to favor local industries. Such bureaucracy has made it hard for US companies to file patents, register trademarks, and fight infringement in China.

March 2018, US and China entered a trade war. President Trump, in one of his Tweets, suggested that future trade negotiations with China will also hopefully take down some of the IP barriers that have stood between the two countries. Chinese foreign policy commentators called such notion “Washington's IP paranoia.” In response to such accusation, China has launched a nationwide initiative called "Made in China 2025". By 2025, China hopes to give the phrase "Made in China" a new meaning, one that emphasizes innovation and creativity. The government's plan is one of Chinese technological dominance in the world, which has, in turn, doubled down on the government's desire to construct a better IP regime. One way or another, China's growth-oriented approach to IP laws have served them justice in the past. We have every reason to believe that China will continue to broaden IP protection, to increase IP law enforcement, and to use IPR to stimulate innovation. These acts, if all goes according to plan, will make China the king of the information world. But our world is too volatile for our imagination.

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Sources

习近平：营造稳定公平透明的营商环境 加快建设开放型经济新体制: http://www.xinhuanet.com/politics/2017-07/17/c_1121333722.htm

微软：想反盗版不容易: http://ip.people.com.cn/GB/10303774.html

关于《中华人民共和国著作权法修正案（草案）》的说明: http://www.npc.gov.cn/wxzl/gongbao/2010-05/10/content_1580444.htm

中国知识产权法学的产生与发展综述: http://www.iolaw.org.cn/showArticle.aspx?id=2603

中国商标法的沿革——现代知识产权法律法规汇编: http://www.law-lib.com/flsz/sz_view.asp?no=2277

Outline of the Legal and Regulatory Framework for Intellectual Property in the People's Republic of China (PRC): http://www.wipo.int/wipolex/en/outline/cn.html

THE FUTURE OF MUSIC AND FILM PIRACY IN CHINA: http://btlj.org/data/articles2015/vol21/21_2/21-berkeley-tech-l-j-0795-0872.pdf

Overview of Chinese Patent Law: http://www.ipo.org/wp-content/uploads/2013/04/China_Overview_ChinesePatentLaw_Sept20040425.pdf

Trademark procedures and strategies: China: http://www.worldtrademarkreview.com/Intelligence/Yearbook/2017/Country-chapters/China

Copyright Law of the People's Republic of China (2010): https://en.wikisource.org/wiki/Copyright_Law_of_the_People%27s_Republic_of_China_(2010)

Patent Law of the People's Republic of China: http://www.wipo.int/edocs/lexdocs/laws/en/cn/cn028en.pdf

Trademark Law of the People’s Republic of China: http://english.gov.cn/archive/laws_regulations/2014/08/23/content_281474983043626.htm

Chinese President Xi Jinping says infringers should be punished and pay a heavy price: http://www.ipwatchdog.com/2017/07/23/chinese-president-xi-jinping-says-infringers-punished-pay-heavy-price/id=85953/

Made in China 2025 Initiative at Center of Growing IP Tensions Between United States and China: http://www.ipwatchdog.com/2018/04/23/made-in-china-2025-initiative-ip-tensions/id=95762/