China: IP Protection In China: New Policies And Changes

Last Updated: 29 January 2019
Article by Weiwei Han and Xiaojun Guo

The extraordinary progress in China's intellectual property protection in recent years has been witnessed worldwide. "A comprehensive IP protection system has come into shape in China since the 40 years' of reform and opening up, making outstanding achievements to the great undertakings," said Director General of the World Intellectual Property Organization (WIPO), Mr. Francis Gurry, who attended 2018 High-Level Conference on IP for Countries along the Belt and Road and the 9th China Patent Annual Conference recently. Mr. Francis concluded that, "China has made outstanding contributions to patent system" and "at present, Chinese government has formulated a host of policies to support IP work. Under such circumstance, the outcomes in China's IP work can be shared by other countries in the world."

Innovation and IP protection have been encouraged by the Chinese government. President Xi Jinping and Premier Li Keqiang have highlighted the importance of IP under many scenarios. In his message to the "One Belt, One Road" High-Level Meeting Conference of August 28, 2018, President Xi Jinping, pointed out that, China will unswervingly strengthen the protection of intellectual property right by establishing a sound environment for business and innovation to protect the IP right of all enterprises. China is ready to strengthen dialogue and expand cooperation with all participants to achieve a win-win result in advancing the protection and application of intellectual property right for the benefit of all the people.

Resources have been put into innovation and IP protection, and investments have been attracted into Chinese market. Based on Global Innovation Index 2018 issued by WIPO, China ranked 17th, and China Hongkong ranked 14th, which are the highest ranking for China historically. As reported in the "Index", "China's rise in the GII rankings over the last few years has been spectacular. Since 2016 China has featured in the top 25 group and has consistently moved upward in the rankings to 17th this year." It was also highlighted that, "China's innovation prowess becomes evident in various areas. It shows some of its greatest improvements in global R&D companies, high-tech imports, the quality of its publications, and tertiary enrolment." The number of PCT filings in 2017 ranked the second in the world, and the rapid growth trend has been maintained.

In this article, we will share some recent update on IP protection in China, particularly patent protection, which backs the above messages.

Applicant-Friendly IP filing and examination system

The pilot reform in the comprehensive management of intellectual property and the restructuring of the State Intellectual Property Office have been going on. China has realized the integrated management of patent, design, trademark, geographical indication of origin and the layout designs of integrated circuit, which, in turn, has greatly improved the management efficiency of intellectual property.

In accordance with the restructuring plan approved by the 13th National People's Congress, the State Intellectual Property Office of China (SIPO) was renamed China National Intellectual Property Administration (CNIPA) on August 29, 2018. CNIPA will not subordinate to the State Council, but under the supervision of the newly established State Administration of Market Supervision and Administration. Regarding one of the most important IP rights, a series of measures or policies have been adopted to advance patent examination.

Fee reduction

As of August 1, 2018, the charging of some types of official fees has been suspended or adjusted for Chinese patent applications. Firstly, patent registration fee, publication printing fee, and fee for change of bibliographical data (change of patent agency or patent attorney) are ceased to charge. Secondly, for patent applicants or patent holders who meet the relevant conditions of the "Measures for the Reduction of Patent Fees" (Ministry of Finance [2016] No. 78, the period for the reduction of the annual patent fees shall be extended to ten years if the patent has been existing for six years from the date of grant. Thirdly, for invention patent applications already in substantive examination stage, if the response to the first office action were not filed and the applications were withdrawn before the expiration of the reply period of the first office action, 50% of substantive examination fees for patent application may be refunded. Besides the favorable fee policies for Chinese patent applications, advantageous policy is also available for a PCT application. Namely, the transmission fee for a PCT application filed at CNIPA (i.e., 500 RMB) is also suspended. These policies will lower the cost for patent filing and maintenance in China.

Shortening examination period

Prioritized patent examination, often called a "green path", is an effective way in shortening examination cycle, benefits patent applicants, and may contribute to economic development. Since the issuing of "Administrative Regulations of Prioritized Patent Examination" (hereafter referred to as "Regulations") by CNIPA, which took effect as of August 1, 2017, more and more domestic and foreign patent applicants are taking advantage of this prioritized patent examination system.

It is worth noting that, Premier Li Keqiang suggested this year that, the duration for trademark registration and examination be shortened from 8 month to less than 4 month, the examination period for patent applications be reduced by one third, and particularly, for high-value patent applications, the examination period be reduced by half.

In addition, to realize rapid grant of patent rights and efficient enforcement measures, up to now, around 20 intellectual property protection centers have been established nationwide.

These new measures will collaboratively provide applicants with more opportunities to obtain a trademark or patent right within a much shorter period, which may in turn benefit patent enforcement and commercialization.

Enhanced protection of IP rights via judicial system

China is drawing a new roadmap for reform of IP judicial protection.

1. Issuing of Opinions on Several Issues in Enhancing Reform and Innovation in Hearing Intellectual Property Cases

The Opinions on Several Issues in Enhancing Reform and Innovation in Hearing Intellectual Property Cases issued by the "Two Offices" (the General Office of the CPC Central Committee and the General Office of the State Council) on Feb. 6, 2018 is the first programmatic document of milestone significance issued by the "Two Offices" exclusively designated for IP judicial protection, establishes the guiding ideology, basic principles, reform objectives and key measures in judicial protection of intellectual property rights (IPRs), according to Tao Kaiyuan, vice president of the Supreme People's Court of China.

In particular, Tao explained that, first, the Opinions serves an objective need of safeguarding the interests of innovation in science and technology; second, the Opinions is a major move to strengthen the protection of IPRs and aims at solving such challenges as "hard proof, low compensation and long cycle" in IP enforcement; third, the Opinions is a necessary requirement for bring in play a leading role of IP judicial protection; fourth, the Opinions is an important guarantee for the modernization of the judicial protection system and judicial capability in hearing IP cases.

Regarding how to ensure that the judgment scales of courts in various places are unified? Tao pointed out that the Supreme Court guarantees that through several approaches including, trying IP cases by the Supreme Court itself, formulating judicial interpretations, making realtime judicial policies, releasing IP guiding cases and continuously enhancing the training and education of IP judges. The latter two points are also raised in the Opinions.

The Opinions, which holds onto the modernization of the IP judicial system and the modernization of the judicial power, endeavors to make Chinese courts preferred venues for international IP disputes. This relies on the high-level trial quality and efficiency of Chinese courts as well as the expertise of the IP judges, Tao said.

The Opinions definitely responds to the demands of some IP right holders.

For example, the Opinions restates the intention of enhancing IP infringement compensation to reflect the value of IP, and increasing efforts to crack down on IP infringement by increasing penalties for infringement and reducing the costs for safeguarding rights.

The Opinions also calls for exploring ways to rationally allocate the burden of proof in order to solve the problems of "hard proof" for the holders of intellectual property rights.

Further, the Opinions sets forth the establishment of a IP appeals court with centralized jurisdiction for better unifying the trials of IP cases.

The Opinions points out that the number of IP judges should be adjusted dynamically, which implies that the number of judges may be increased in the near future, since the year of 2017 marks for the first time the first instance IP cases in China exceeded 200,000, with a growth of 40.36% compared with the same period of the year 2016.

The Opinions clearly shows that China does have placed the reform of IP judicial protection on its priority, since "Intellectual property protection is a basic means to stimulate innovation, a basic guarantee for the motive force of innovation, and a core element of international competitiveness" and is of great significance to the country.

2. Issuing of Provisions on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Affirmation of Patent Right (I) (Draft)

The Supreme People's Court (SPC) of China published "Provisions on Several Issues Concerning the Trial of Administrative Cases Involving the Granting and Affirmation of Patent Right (I) (Draft)" on June 1, 2018 to ask for public opinions.

The "Provisions" gives further guidance on: the interpretation of the claims; substantial grounds for invalidation of inventions and utility models such as insufficient disclosure, clarity, support by description, amendment, inventiveness; design space of the product protected by the design patent, design features determined by technical function, identical invention-creation, design teaching given by prior designs, unique visual effects and legal rights; and procedural issues, including violation of legal procedure, exceeding authority, submitting evidence, legal effect of administrative judgement.

3. Establishment of internet courts

The first internet court was established in Hangzhou in August 2017. Recently, two new internet courts have been established in Beijing and Guangdong. Internet courts are convenient routes for a plaintiff to lodge a lawsuit. And the judicial examination is also conducted online. As of September 9, 2018, the internet court in Beijing began to accept cases. Among the cases which can be examined by internet courts, one kind in connection with IP is internet copyright ownership and infringement disputes.

The newly established internet courts may ease the protection of copyrights of music, movie, audiovisual performance, gaming and publication, among others, and better meet the challenges brought by expanding of global digital market.

Enhancing international cooperation

In recent years, CNIPA has been strengthening the cooperation with more and more countries in IP issues. Over the last five years, foreign applicants filed 650,000 patent applications s and 840,000 trademark applications in China. The number of PCT filings also grew 12.5 percent year-on-year to reach 51,000 in 2017, ranked second in the world. Further, CNIPA is enhancing the cooperation with countries along the Belt and Road. The amount of patent filing in these countries increased by around 16% annually in the past 3 years. And from January to June, 2018, the filing in these countries grew by 27% compared to last year.

Besides the cooperation at the level of country, the investment and resources put by foreign companies are also growing. More companies are established their R&D centers and IP department in China, and there are more inventions and IP filings generated in China.

In summary, China is creating a more and more favorable IP environment for IP owners, in the aspect of not only administrative examination but also judicial protection. And it can be expected that applicants may obtain an IP right in a shorter period and at a lower cost, and in the meantime the judicial protection for IP rights will be more powerful.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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