What You Need to Know about Intellectual Property Protection in China: An Overview and Tips

Introduction

Intellectual property (IP) refers to the creations of the human mind, such as inventions, artistic works, designs, symbols, names, and images. IP is protected by law through various types of rights, such as patents, trademarks, copyrights, etc. IP protection enables the creators or owners of IP to benefit from their work or investment, and to prevent unauthorized use or exploitation by others.

IP is a valuable asset for businesses and individuals in the global economy. According to Statista, the market size of IP licensing in the United States was estimated to be approximately 62.18 billion U.S. dollars in 2023, increasing from 43.5 billion dollars in 2013. According to WIPO, IP activity worldwide has been growing steadily over the years, with more than 3.3 million patent applications, 14.4 million trademark applications, and 1.3 million industrial design applications filed in 2021.

China is a major player in the global IP market, as both a source and a destination of IP rights. China accounted for 54% of the world's patent applications, 51% of the world's trademark applications, and 54% of the world's industrial design applications in 2021. China is also a key partner for many foreign companies and individuals who seek to protect and exploit their IP rights in the Chinese market.

However, IP protection in China also poses many challenges and risks for IP rights holders. China has been widely criticized for its weak enforcement of IP rights and its high incidence of IP infringement and theft. IP rights holders face various obstacles and difficulties in obtaining, maintaining, and defending their IP rights in China. Moreover, IP rights holders need to adapt to the changing legal and business environment in China, as well as to the evolving needs and preferences of the Chinese consumers.

Therefore, this blog post aims to provide an overview of the current situation and trends of IP protection in China. It will cover the following topics:

• The legal framework of IP protection in China: How are IP rights regulated and administered in China?
• The enforcement of IP rights in China: How can IP rights holders protect and enforce their rights through different legal channels and mechanisms?
• The challenges and risks of IP infringement and theft in China: What are the common types and sources of IP infringement and theft in China? How can IP rights holders prevent and mitigate them?
• The opportunities and benefits of IP protection and innovation in China: How can IP protection and innovation create value and competitive advantage for businesses and individuals in China?

By reading this blog post, you will gain a better understanding of the importance and complexity of IP protection in China. You will also learn some practical tips and strategies on how to protect your IP rights effectively and efficiently in China.

The legal framework of IP protection in China

China has a comprehensive legal system for IP protection, which consists of laws, regulations, and judicial interpretations. China has also acceded to the major international conventions on IP protection, such as the Paris Convention, the Berne Convention, the Patent Cooperation Treaty (PCT), the Madrid Agreement and Protocol, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The main laws that govern IP rights in China are:

• The Patent Law, 1984; amended in 1992, 2000, and 2008
• The Trademark Law, 1982; amended in 1993, 2001, and 2013
• The Copyright Law, 1990; amended in 2001 and 2010
• The Anti-Unfair Competition Law, 1993; amended in 2017
• The Law Against Unfair Competition of Technology Contracts, 2002
• The Regulations on Protection of Layout Designs of Integrated Circuits, 2001
• The Regulations on Protection of New Varieties of Plants, 1997
• The Regulations on Protection of Geographical Indications of Agricultural Products, 2008

The main authority that administers IP rights in China is the China National Intellectual Property Administration (CNIPA), which was established in 2018 as part of the State Administration for Market Regulation (SAMR). CNIPA is responsible for issuing and managing patents, trademarks, geographical indications, layout designs of integrated circuits, and new varieties of plants. CNIPA also handles patent reexamination and invalidation, trademark opposition and cancellation, and IP-related administrative enforcement.

Other authorities that are involved in IP protection in China include:

• The Ministry of Culture and Tourism (MCT), which oversees copyright protection and enforcement
• The General Administration of Customs (GAC), which implements border measures to prevent the import and export of infringing goods
• The National Copyright Administration (NCA), which coordinates with other authorities on copyright-related issues
• The State Intellectual Property Office (SIPO), which represents China in international IP organizations and negotiations

China has also established specialized IP courts and tribunals to handle IP-related civil and administrative cases. There are four IP courts in Beijing, Shanghai, Guangzhou, and Chengdu, which have jurisdiction over first-instance cases involving patents, new varieties of plants, layout designs of integrated circuits, technical secrets, computer software, etc. There are also 20 IP tribunals across the country, which have jurisdiction over first-instance cases involving trademarks, copyrights, unfair competition, etc. The Supreme People's Court (SPC) has set up an IP court as well, which hears appeals from the lower-level IP courts and tribunals.

China's legal framework of IP protection has been evolving over the years to keep pace with the development of the economy and society. China has revised its laws and regulations to improve the quality and efficiency of IP examination and registration, to enhance the level and effectiveness of IP enforcement, to promote the creation and utilization of IP assets, and to foster a culture of respect for IP rights. China has also participated actively in international cooperation and exchange on IP matters, to align its standards and practices with global norms and to address common challenges and opportunities.

The enforcement of IP rights in China

IP rights holders in China can enforce their rights through three main channels: administrative, civil, and criminal. Each channel has its own advantages and disadvantages, depending on the nature and severity of the infringement, the evidence and remedies available, and the costs and duration involved.

Administrative enforcement

Administrative enforcement refers to the actions taken by the relevant government authorities to stop or punish IP infringement upon the complaint or report of the IP rights holder or any interested party. The main authorities that handle administrative enforcement of IP rights in China are:

• CNIPA, which deals with patent infringement and counterfeiting
• The Trademark Office (TMO), which deals with trademark infringement and counterfeiting
• The Market Supervision Administration (MSA), which deals with unfair competition and trade secret infringement
• The National Radio and Television Administration (NRTA), which deals with broadcast piracy
• The Ministry of Public Security (MPS), which deals with online piracy and cybercrime

Administrative enforcement is usually faster, cheaper, and simpler than judicial enforcement. It can also result in immediate cessation of infringement, confiscation or destruction of infringing goods or materials, imposition of fines, or revocation of business licenses. However, administrative enforcement has some limitations, such as:

• The scope and jurisdiction of the authorities may vary depending on the location and type of infringement
• The evidence requirements and procedures may differ among the authorities and may not be transparent or consistent
• The remedies are limited and may not fully compensate the IP rights holder for the damages suffered
• The decisions of the authorities are not legally binding and may be challenged or ignored by the infringer
• The authorities may lack sufficient resources, expertise, or motivation to handle complex or large-scale cases

Civil enforcement

Civil enforcement refers to the actions taken by the IP rights holder to initiate a lawsuit against the infringer in a court of law. The main courts that handle civil enforcement of IP rights in China are:

• The IP courts in Beijing, Shanghai, Guangzhou, and Chengdu, which have jurisdiction over first-instance cases involving patents, new varieties of plants, layout designs of integrated circuits, technical secrets, computer software, etc.
• The IP tribunals across the country, which have jurisdiction over first-instance cases involving trademarks, copyrights, unfair competition, etc.
• The SPC IP court, which hears appeals from the lower-level IP courts and tribunals

Civil enforcement is usually more effective, comprehensive, and authoritative than administrative enforcement. It can result in injunctions to stop or prevent infringement, compensation for damages or reasonable expenses, publication of judgments to eliminate adverse effects, or preservation of evidence or property. However, civil enforcement also has some challenges, such as:

• The burden of proof lies with the IP rights holder and may be difficult to obtain or preserve
• The litigation costs and duration may be high and unpredictable
• The damages awarded by the courts may be low and insufficient to deter infringement
• The enforcement of judgments may face obstacles or resistance from the infringer or local authorities
• The judges may lack uniformity or expertise in applying the laws and standards

Criminal enforcement

Criminal enforcement refers to the actions taken by the public security organs or the procuratorates to investigate, prosecute, or punish IP infringement that constitutes a crime under the Criminal Law. The main crimes related to IP infringement in China are:

• Counterfeiting registered trademarks
• Selling goods bearing counterfeit registered trademarks
• Infringing patents
• Selling goods infringing patents
• Infringing trade secrets
• Infringing copyrights
• Selling goods infringing copyrights

Criminal enforcement is usually the most severe and deterrent form of enforcement. It can result in imprisonment, fines, confiscation or destruction of infringing goods or materials, suspension of business activities, revocation of business licenses, or deportation for foreigners. However, criminal enforcement also has some limitations, such as:

• The thresholds for criminal liability are high and may not cover all types or degrees of infringement
• The procedures and standards for criminal investigation and prosecution are complex and strict
• The coordination and cooperation among different agencies may be lacking or inefficient
• The discretion and influence of local authorities may affect the outcome or fairness of criminal cases
• The protection of suspects' rights may conflict with the interests of IP rights holders

In summary, IP rights holders in China have various options to enforce their rights against infringement. They need to choose the most suitable channel based on their specific circumstances and objectives. They also need to be aware of the advantages and disadvantages of each channel and the challenges and risks they may encounter. They should also seek professional advice and assistance from qualified IP lawyers or agents to ensure their rights are effectively and efficiently protected and enforced in China.

The challenges and risks of IP infringement and theft in China

IP infringement and theft are serious problems that affect the interests and reputation of IP rights holders in China. IP infringement and theft can take various forms and sources, such as:

• Counterfeiting: The production or sale of goods that bear a trademark identical or similar to a registered trademark without authorization, or that imitate the appearance, packaging, or quality of genuine goods
• Piracy: The reproduction or distribution of works protected by copyright without authorization, or that violate the moral rights of the author
• Trade secret misappropriation: The acquisition, disclosure, or use of trade secrets by improper means, such as theft, bribery, fraud, breach of contract, etc.
• Patent infringement: The making, using, offering for sale, selling, or importing of a patented product or process without authorization
• Other types of infringement: The violation of other types of IP rights, such as geographical indications, new varieties of plants, layout designs of integrated circuits, etc.

IP infringement and theft can cause various harms to the IP rights holders, such as:

• Loss of revenue and market share: IP infringement and theft can reduce the sales and profits of the IP rights holders by diverting customers and creating unfair competition
• Damage to brand image and reputation: IP infringement and theft can erode the goodwill and trust of the IP rights holders by lowering the quality and safety of their products or services
• Loss of innovation and competitiveness: IP infringement and theft can undermine the incentive and ability of the IP rights holders to invest in research and development and to create new products or services
• Exposure to legal liability and risk: IP infringement and theft can expose the IP rights holders to potential lawsuits or penalties by the authorities or other parties for violating their IP rights or obligations

IP rights holders in China need to be vigilant and proactive in preventing and mitigating the risks of IP infringement and theft. They should adopt some practical measures, such as:

• Conducting due diligence and background checks on potential partners, suppliers, customers, employees, etc.
• Registering their IP rights with the relevant authorities and customs in China
• Monitoring the market and online platforms for any signs of infringement or theft
• Taking prompt and appropriate actions to stop or deter any infringement or theft
• Seeking legal advice and assistance from qualified
• Educating and training their staff and partners on the importance and protection of IP rights
• Cooperating and communicating with other IP rights holders, industry associations, government agencies, and media on IP-related issues

By taking these measures, IP rights holders in China can reduce the likelihood and impact of IP infringement and theft, and enhance their confidence and competitiveness in the Chinese market.

The opportunities and benefits of IP protection and innovation in China

IP protection and innovation are not only challenges but also opportunities and benefits for businesses and individuals in China. IP protection and innovation can create value and competitive advantage for them in the following ways:

• Enhancing product differentiation and quality: IP protection and innovation can help businesses and individuals to develop new or improved products or services that meet the needs and preferences of the customers, especially in the high-end and niche markets. IP protection and innovation can also help them to enhance the quality and safety of their products or services, which can increase customer satisfaction and loyalty.
• Increasing market access and share: IP protection and innovation can help businesses and individuals to enter new markets or expand existing markets, both domestically and internationally. IP protection and innovation can also help them to gain or maintain market share, especially in the emerging and dynamic sectors, such as e-commerce, biotechnology, artificial intelligence, etc.
• Reducing costs and risks: IP protection and innovation can help businesses and individuals to reduce their costs and risks, especially in the long run. IP protection and innovation can help them to avoid or minimize the losses caused by IP infringement or theft, such as litigation costs, reputational damage, etc. IP protection and innovation can also help them to optimize their resources and processes, such as R&D, production, distribution, etc.
• Stimulating collaboration and learning: IP protection and innovation can help businesses and individuals to stimulate collaboration and learning, both internally and externally. IP protection and innovation can help them to foster a culture of creativity and openness within their organizations, which can improve their productivity and performance. IP protection and innovation can also help them to establish or join networks or platforms with other stakeholders, such as universities, research institutes, industry associations, etc., which can enhance their knowledge and skills.

There are many examples of successful IP creation and commercialization in China, such as:

• Huawei: Huawei is a leading global provider of information and communications technology (ICT) solutions. Huawei has invested heavily in R&D and IP creation, with more than 100,000 patents granted worldwide by the end of 2020. Huawei has also leveraged its IP assets to enter new markets or sectors, such as cloud computing, smart devices, digital transformation, etc.
• Alibaba: Alibaba is a leading global e-commerce platform that connects millions of buyers and sellers across the world. Alibaba has developed various innovative products or services based on its IP portfolio, such as Alipay (a mobile payment service), Taobao (an online marketplace), Tmall (an online retail platform), etc. Alibaba has also established various initiatives or platforms to support IP protection and innovation among its users, such as Alibaba Cloud Innovation Center (ACIC), Alibaba Intellectual Property Protection Platform (IPP Platform), etc.
• BYD: BYD is a leading global manufacturer of electric vehicles (EVs) and batteries. BYD has created various IP rights related to its core technologies, such as iron-phosphate batteries, electric motors, power electronics, etc. BYD has also utilized its IP rights to collaborate with other partners or customers, such as Daimler (a German automaker), DiDi (a Chinese ride-hailing company), etc.

To seize the opportunities and benefits of IP protection and innovation in China, businesses and individuals need to adopt some practical strategies, such as:

• Developing a clear and comprehensive IP strategy that aligns with their business or personal goals and objectives
• Conducting regular IP audits and assessments to identify their IP assets and liabilities, as well as their strengths and weaknesses
• Implementing effective IP management and protection systems and measures to safeguard their IP rights and interests
• Seeking professional advice and assistance from qualified IP lawyers or agents to handle IP-related matters, such as registration, licensing, litigation, etc.
• Exploring various IP-related opportunities and incentives, such as government policies, subsidies, awards, etc.
• Engaging in IP-related innovation and learning activities, such as R&D, training, education, etc.

By taking these strategies, businesses and individuals can enhance their IP protection and innovation capabilities and performance in China. They can also contribute to the development of China's IP system and culture, which can benefit the society and economy as a whole.

Conclusion

This blog post has provided an overview of the current situation and trends of IP protection in China. It has covered the following topics:

• The legal framework of IP protection in China: How are IP rights regulated and administered in China?
• The enforcement of IP rights in China: How can IP rights holders protect and enforce their rights through different legal channels and mechanisms?
• The challenges and risks of IP infringement and theft in China: What are the common types and sources of IP infringement and theft in China? How can IP rights holders prevent and mitigate them?
• The opportunities and benefits of IP protection and innovation in China: How can IP protection and innovation create value and competitive advantage for businesses and individuals in China?

By reading this blog post, you have gained a better understanding of the importance and complexity of IP protection in China. You have also learned some practical tips and strategies on how to protect your IP rights effectively and efficiently in China.

However, this blog post is not exhaustive or definitive. IP protection in China is a dynamic and evolving field that requires constant attention and adaptation. Therefore, we recommend that you keep yourself updated on the latest developments and changes in the IP laws, policies, and practices in China. We also suggest that you seek professional advice and assistance from qualified IP lawyers or agents in China when dealing with any IP-related matters.

We hope that this blog post has been informative and helpful for you. If you have any feedback or questions, please feel free to contact us. Thank you for reading.

Published at March 25th, 2023