I. Laws and Regulations
In 2018, 667,000 industrial design applications were accepted by China National Intellectual Property Administration (CNIPA), said a CNIPA official on January 11. In 2019, it is expected to improve industrial design and trademark protection environment and raise the public awareness about industrial design protection. According to the draft of revised Patent Law, China will further improve the industrial design system by extending the protection term from 10 years to 15 years and adding that the domestic priority of an industrial design could be claimed.
On February 12, China National Intellectual Property Administration (CNIPA) released Several Provisions on Regulating Application for Registration of Trademark for public comment, with the deadline being March 14, 2019. As is known, with optimized trademark registration process, reduced pendency and lower cost, bad-faith filings such as free-riding take place from time to time, so does trademark hoarding for the purpose of profit-making via trademark transfer instead of actual use. Such illegal acts leave negative impact on the order of market-based economy and trademark administration and damage business environment, drawing wide concern of the public. CNIPA pays high attention to it and explores to introduce an efficient mechanism. Referencing to measures against illegal acts of patent filing, CNIPA drafted new regulation, providing guidance to trademark application. The draft covers eight articles, reaffirming good-faith principle established in trademark law and intention of use, illustrating illegal filing acts and legal consequences, introducing specific measures against abnormal filing, and clarifying responsibilities of IPR competent authorities in guiding and regulating trademark registration and use. According to the draft, punitive measures can be applied if possible. Serious criminal acts, such as obtaining financial support via illegal registration of trademark, will be subject to criminal prosecution.
To improve the system concerning protection of foreign GI products, revised Measures on Protection of Foreign GI Products (draft) is released for public comment. Stakeholders can submit suggestions on revision and improvement of the measures before March 29, 2019.
The Foreign Investment Law of PRC (draft) has been reviewed twice by the Standing Committee of the National People’s Congress in December of 2018 and January of 2019 respectively. The draft would welcome the third review on the 2nd Session of the 13th National People’s Congress. The draft covers technology transfer, IPR protection, and protection of legal rights and interests of foreign investors. The emphasis on fair competition and facilitation and liberation of investment illustrates the determination of China in deepening reform and opening-up. According to the second chapter of the draft, foreign-invested enterprises can finance themselves in line with laws, such as by means of public issuance of shares and corporate bonds. China will protect the IPR of foreign investors and foreign-invested enterprises according to law, encourage technical cooperation based on the principle of voluntariness and business rules and ensure the terms of technical cooperation will be determined by investment parties rather than compulsory means. Governments of various levels and relevant authorities should comply with their policy commitments and contracts legally concluded.
Since the implementation of case-filing register system, there have been 64.89 million cases filed with courts nationwide as of the end of 2018, more than 95% of which are registered on spot, according to the Judicial Reform of Chinese Courts (2013 - 2018) published by the Supreme People’s Court (SPC) on February 27. Since the case-filing review system was converted into case-filing register system on May 1, 2015, people's courts have accepted and registered all cases that meet the conditions of admissibility and prosecution, and ensured that all cases are entered and properly handled, and that the difficulties in filing administrative cases are eased completely. According to the white paper, people’s courts are strengthening construction of specialized IPR trial system, with IPR courts being established one by one in Beijing, Guangzhou and Shanghai. As of the end of 2018, these three courts have accepted 194,229 cases, 154,095 of which have been concluded; Shanghai Financial Court has accepted 1,897 cases valued 25.2 billion yuan; and Internet courts set up in Hangzhou, Beijing and Guangzhou have handled a batch of new-type complicated cases in a fair and efficient way.
On March 11, Shen Changyu, Commissioner of China National Intellectual Property Administration (CNIPA) introduced measures taken by the agency to reduce examination period and improve examination quality at the press conference of the 2nd Session of the 13th National People's Congress (NPC). In particular, CNIPA strengthened the development of examination team, built intelligent examination system and optimized management process. In addition, it introduced innovative models, such as centralized examination model and accelerated examination model. “The examination pendency of trademark has been reduced to less than 6 months. We will intensify our work and ensure the pendency will be shortened to 5 months by the end of 2019, so as to meet the needs of the society,” said Shen.
On March 15, 2019, the first fundamental law in the field of foreign investment Foreign Investment Law of PRC was passed by the Second Session of the 13th National People's Congress and will come into force on January 1, 2020. Responding to the concerns of foreign-invested enterprises, China is determined to ensure the fair competition and strengthened property protection for foreign-invested enterprises, and be more compatible with international rules. Regarding IPR protection and technology transfer concerned by foreign-invested enterprises, the law releases a signal that China will continue to promote trade liberation and investment facilitation. For example, Article 22 (2) provides China shall protect the IPR of foreign investors and foreign-invested enterprises, and the legal rights and interests of IPR holders and stakeholders. Those committing IPR infringement shall be subject to liability according to law.
II. Government Policies
On January 24, 2018, the State Council released the Guidance on Supporting Hebei Xiong’an New Area in Deepening Overall Reform and Opening-up. Xiong’an is encouraged to build an IPR protection center offering various services, including IPR fast-track examination, rights identification and protection; and set up an efficient IPR enforcement mechanism to implement punitive damage system and add willful infringements into various credit information systems. It is also encouraged to introduce IPR securitization financing and IPR pledge financing and related risk sharing mechanism. Access to IPR service industry will be eased and restraint on qualifications of stockholders and partners of patent law firms will be relaxed.
The CPC Central Committee and State Council have issued the Outline on Guangdong-Hong Kong-Macao Greater Bay Area Development for implementation by each department and region after taking into consideration actual conditions. As for enhanced IPR protection and utilization, the Outline requires extensive cooperation on IPR protection and professional training, based on the existing IPR cooperation mechanism. Guangzhou IPR Court shall play a better role in strengthening IPR administrative law enforcement and judicial protection, especially in the areas of e-commerce and key import and export sectors. International cooperation in IPR creation, utilization, protection and trade should be strengthened to improve cross-border cooperation mechanism on IPR cases. Based on the existing exchanges, IPR trading can be explored to enhance reasonable and efficient IPR circulation. IPR service clusters should play a role in pushing forward the integration and development of high-end IPR service and local industries. It is suggested to resolve IPR disputes outside court by such means as arbitration, mediation and settlement. Hong Kong should exploit its advantages in IPR protection and related professional service to build itself into a regional IPR trading center. IPR protection mechanism stimulating innovation should be improved. Efforts should be made to build an IPR information exchange mechanism and information sharing platform in the area.
The construction of a new national crop gene bank kicked off on the site of China Academy of Agriculture Sciences (CAAS) on February 26, which is expected to home 1.5 million accessions of germplasm, nearly 4 times that of the current bank. As built in the mid-1980s, the current crop gene bank can only store 0.4 million accessions of germplasm. Poor facilities and low-level informatization cannot meet actual needs. Instead, the one under construction focuses on the demand for scientific research of crop breeding, basic research and industrial development in the future 50 years, featuring world-class automatization and intelligent management system.
Premier Li Keqiang delivered government work report at the 2nd Session of the 13th National People’s Congress on March 5, where he emphasized on the need to strengthen IPR protection and improve punitive damage system for IPR infringement. “We should improve sci-tech supporting capacity, provide more support to basic research and applied basic research, strengthen original innovation, make breakthrough in core and key technologies, improve the innovative mechanism of integration of production-study-research, expand international innovation and cooperation, fully strengthen IPR protection and improve punitive damage system for IPR infringement to promote creation & innovation and transformation & utilization….”
In order to strengthen protection of intangible cultural heritage (ICH), Macao introduces an ICH Directory, based on the article 79 of Cultural Heritage Protection Law, and releases proposed items for public comment, which will last from March 13 to April 11. A total of 12 items are to be added into the directory. Macao Cultural Affairs Bureau and its affiliated library provide consultation text, welcoming Macao citizens to comment by fax, email and EMS or even heading for Macao Cultural Centre on the afternoon of March 23 to attend relevant event.
Liaoning Provincial People’s Government released the Measures of Liaoning on Patent Awarding. According to the Measures, patent rewarding introduced by Liaoning government held every two years is aimed to reward patent projects of economic and social significance carried out in the province. In particular, the first prize covers 5 projects, the second prize covers 15 projects and the third prize covers 30 projects, with total projects not exceeding 50 ones. Qualified individuals or units can put forward suggestions concerning rewarding to the office of award committee. The introduction of the measures means the upgrading of sector award to government award, marking a milestone in patent development of the province. Meanwhile, it will boost patent quality and strengthen IPR utilization, thus further serving the development of real economy.
Beijing and Qingdao are selected as IPR military-civil integration pilot cities, according to the General Office of China Intellectual Property Administration (CNIPA) and the Office of the Equipment Development Department of CPC Central Military Commission. The addition aims to extend the pilot coverage, which will last for three years from February 2019 to January 2022.
China National Intellectual Property Administration (CNIPA) released a notice on allowing 72 enterprises to use special marks concerning geographical indication (GI) products. According to the notice, 72 enterprises producing 12 kinds of products, such as Laishui Juglans hopensis and Yanshou rice, are granted with GI protection. These enterprises filed applications for use of special marks concerning GI products with local authorities, based on Regulation on Protection of GI Products. After examined by provincial IPR administrative departments and identified by CNIPA, their applications are approved.
III. Law Enforcement
On January 10, Alibaba Group released its 2018 annual report on IPR protection. According to the report, Alibaba has built offline cooperation with the public security departments in 31 provinces, municipalities directly under the central government and autonomous regions nationwide in 2018, offering them 1,634 pieces of clues on counterfeiting cases, with each involving a value of goods exceeding the statutory minimum of 50,000 yuan for criminal investigation and assisting them in the capture of 1,953 suspects, with cases solved valuing 7.9 billion yuan. Looking back to the achievements in counterfeiting in 2018, Zheng Junfang, Alibaba’s chief officer of platform governance cited the word “dramatic drop”. “In 2018, with the concerted efforts of Alibaba and social communities, the counterfeiters could hardly find room for survival. Various indicators presenting the extent of counterfeiting saw dramatic drop for the first time,” Zheng said. This is not only attributed to the high importance attached by China to IPR protection, but also the approach of “fight counterfeits in the same way we fight drunk driving”.
According to the preliminary statistics released by the General Administration of Customs of China (GACC), customs at various levels nationwide detained 44,500 batches of imported and exported goods infringing IPR (+132.1%) in 2018, containing 22.94 million pieces of goods (-43.4%) valued at 200 million yuan (-11.1%). GACC plans to launch a special action for protection of foreign enterprises’ IPR, so as to create a sound international business environment. During the four-month “Longteng” action for protection of enterprises with outbound IPR advantages, Chinese customs detained 385 batches of exported and imported goods suspected of infringing IPRs of domestic enterprises, involving 2.09 million pieces of goods valued at 61.14 million yuan. Reportedly, GACC will maintain the action in 2019 to support domestic enterprises, particularly private enterprises, in indigenous innovation, and encourage them going global.
IPR cases in Guangdong maintained the first position nationwide, accounting for 1/4 of the total. In 2018, courts in Guangdong concluded 83,000 IPR cases of first instance, up 40.8% over 2017. Guangdong has been well known for concluding complicated IPR cases of great significance. In 2018, one monopoly case closed by a Guangdong court was selected into the “Top 10 Civil Dispute Cases Concerning Monopoly 2008-2018”. Guangdong Higher People's Court has released Guidelines on Trial of Standard Essential Patent Dispute Cases. As the first professional, all-round and regulatory trial guidelines, it not only provides guidance for Guangdong courts in handling such case, but also promotes the introduction of related domestic legislation and development of international rules. Such efforts create a level playing field for local companies to participate in international competition.
Under the command of the Ministry of Public Security, Shanghai police caught 47 suspects and detained a large number of counterfeiting equipment and finished products, valued at over 100 million yuan. Such an action is carried out with Cambodian counterparts. On January 15, supported by China’s embassy to Cambodia and assisted by the law enforcers in Cambodia, the task force arrested the suspects, destroyed 2 hideouts, detained 3 counterfeit production lines and 16 sets of equipment among others. The case involved various well-known cigarette brands, including Chunghwa, Yuxi and Panda.
In 2018, procuratorial organs nationwide approved the rest of more than 5,000 suspects and initiated public prosecution against more than 8,000 suspects in a series of IPR infringement cases, Zheng Xinjian, a director from the Supreme People’s Procuratorate (SPP) said on February 22. According to Zheng, procuratorial organs supervised the handling of 10 serious trademark infringement cases, jointly supervised the handling of 22 cases with relevant central government authorities, urged administrative law enforcement departments to transfer more than 300 IPR infringement cases, and supervised law enforcement of public security organs over 200 IPR infringement cases, effectively solving problems of substituting fines for criminal punishment and others. In 2018, procuratorial organs approved the rest of 12,000 suspects in 3,000 cases involving manufacturing and selling of fake drugs or inferior drugs, food not meeting safety standards, and toxic and hazardous food. Procuratorial organs have held special campaigns on supervision of cases involving food and drug safety for 5 consecutive years. In 2018, procuratorial organs recommended administrative law enforcement departments transfer 3,000 suspects and supervised the investigation of 1,000 cases by public security organs.
According to the Supreme People’s Procuratorate (SPP), procuratorial organs nationwide prosecuted 15,000 suspects involved in 9,000 cases concerning manufacture and sales of fake goods in 2018. “By earnestly exerting functions in 2018, procuratorial organs have severely cracked down on cases infringing the rights and interests of consumers, actively handled civil, administrative and public interest litigation, issued suggestions when finding out management gaps in the process of handling cases. All efforts are made to promote the judicial protection of consumers’ rights and interests, make people buy, use and eat assuredly and comfortably,” said Sun Qian, Vice President of SPP. As Sun Qian introduced, procuratorial organs strengthened judicial protection in 2018, approving the arrest of 8,083 in 4598 cases concerning manufacture, sales of fake goods and prosecuting 15,811 people in 9,127 cases. In particular, there were 3,981 cases concerning manufacture and sales of fake drugs, 2,319 cases of manufacture and sales of toxic and harmful food, 1,396 cases of manufacture and sales of fake goods and 1,358 cases of manufacture and sales of food with falling safety standards.
IV. Events and Campaigns
On January 8, 2019, President Xi Jinping attended the National Science and Technology Award Ceremony held by the CPC Central Committee and the State Council in Beijing. He presented top science award metal and certificate to Liu Yongtan from Harbin Institute of Technology and Qian Qihu from the Army Engineering University of People’s Liberation Army. A total of 278 projects and 7 experts were honored at the 2018 ceremony. In particular, 38 projects were awarded state natural science prize, 67 the state technological invention prize and 173 the state scientific and technological progress prize. Besides, 2 experts were awarded top state technological prize and 5 foreign experts the international science and technology cooperation prize.
China-EU cooperation on agricultural products is moving forward in a faster pace. High quality is key to the co-win of both markets. While more EU countries are launching characteristic products in China, Chinese agricultural products are increasingly entering European market, ushering in the upgrading of agricultural products trade between both sides.
As the country deepens domestic reforms and increases international cooperation with a more open attitude, IPR protection has been given higher priority by judicial authorities and governmental departments, according to Ma Yide, an IPR professor with Zhongnan University of Economics and Law in Hubei province. "I believe we will have a bright future if we continue to highlight IPR protection in various aspects," said Ma, who is also a deputy to the 13th National People's Congress. IPR-related affairs will also be hot topics among legislators and political advisers attending the annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference National Committee this year, Ma said. He welcomed a draft amendment to the Patent Law, noting plans to raise the range of fines for violators to between 100,000 yuan ($14,490) and 5 million yuan when the loss to patent holders, or the benefits gained by violators, cannot be determined. The current range is from 10,000 yuan to 1 million yuan. "This means IPR protection is a high priority, as evidenced by the legislation," he said, adding he hoped the draft, which was submitted to the NPC Standing Committee for the first review in December can be adopted after being further improved this year. Meanwhile, he said he was glad to see the Supreme People's Court, the nation's top court, establish a special court in January to handle civil and administrative appeals related to patents. He considered the setup a key step in showing China's determination to combat IPR violators, and the new court will be effective in helping prevent inconsistencies in handling patent-related disputes across the nation.
On February 21, Commissioner Shen Changyu of China National Intellectual Property Administration (CNIPA) met with a delegation of Saudi Authority for Intellectual Property (SAIP) led by Chief Executive Officer Abdulaziz bin Mohammed Al Suwailem in Beijing. The two sides communicated on the latest developments in the work of the two offices, and exchanged views on future cooperation. Shen Changyu remarked that the two offices have both carried out important institutional adjustments in the past year, providing a broader space for the cooperation between the two offices. Suwailem highly commended China’s great achievements in the IP field. He expressed that the strengthening of IP cooperation between the two countries is conducive to the development of Sino-Saudi economic and trade relations, and hoped that the two sides may carry out more cooperation in fields of personnel communication and training, application of artificial intelligence technology as well as IP protection.
On March 5, a delegation from Japanese External Trade Organization (JETRO) Beijing visited Tianjin IPO for communication. Tomotaka Homma, Director of JETRO Beijing, expressed appreciation over Tianjin IPO for its support and applauded Tianjin’s efforts in creating a sound business environment and defending the legal rights and interests of enterprises. He hoped both sides could strengthen cooperation to promote the rapid development of Japanese enterprises in Tianjin. Lan Zhaoqi, Deputy Head of Tianjin IPO, noted that both sides jointly carried out training and workshop based on the MOU signed between Tianjin government and JETRO. Both sides should actively engage in the Belt and Road initiative to effectively service enterprises of both sides.
On March 7, China National Intellectual Property Administration (CNIPA) held a meeting on deploying the work of improving patent examination quality and efficiency. He Hua, Deputy Commissioner of CNIPA attended and addressed the meeting. Focusing on the crucial indication remarked by General Secretary Xi Jinping on improving IPR examination quality and efficiency, He Hua required to finish the task deployed by the State Council on reducing patent examination pendency and achieve results in the battle of improving quality and increasing efficiency. An official introduced on the meeting the program on improving invention patent examination quality and efficiency. According to the program, CNIPA will increase human resource properly and strengthen reform of patent examination management to create a sound business and innovation environment.
The National Copyright Administration of China has appraised and selected ten major copyright events in 2018, which are released as follows: I. The Publicity Department of the CPC Central Committee supervised the copyright-related work nationwide. II. The ecosystem of online music copyrights continued to turn better. III. The “Jianwang 2018” action focused on the efforts to rectify the copyright order of short videos. IV. The Chinese Financial Media Copyright Protection Alliance was founded. V. The e-commerce platforms and anti-piracy alliances jointly curbed the acts of online sales of pirated goods. VI. Piracy cases were handled in many local areas to protect the copyrights of Jin Yong’s works. VII. Beijing Internet Court heard the first copyright infringement case. VIII. The 2018 China Copyright Gold Medal was awarded. IX. The value added of China’s copyright industry exceeded 6 trillion yuan. X. The rules of judicial adjudication about copyrights continue to improve.
V. Data and Statistics
In 2018, patent and trademark-pledge financing totaled 121.9 billion yuan, an increase of 11.8%, said Shen Changyu at the national meeting of IP directors, adding IPR comprehensive utilization will be further promoted, and risk compensation and sharing mechanism will be improved. Invention patents in the mainland of China (excluding Hong Kong, Taiwan and Macao) totaled 1,602,000, an increase of 18.1%, with every 10,000 population owning 11.5 invention patents. Valid trademarks (excluding trademarks owned by non-residents and Madrid registrations) reached 18.049 million, an increase of 32.8%, with every 10,000 market entities owning 1,724.
According to the Contribution of Chinese Copyright Industry to Economic Growth 2017 released by Chinese Academy of Press and Publication, value added by copyright industry in 2017 has reached about 6.081 trillion yuan, accounting for 7.35% of GDP and presenting 20% increase over 2016. According to the research, urban employment in copyright industry reached 16,734,500 in 2017, accounting for 9.48% of the total urban employment. Exports of copyright goods are valued at 264.773 billion yuan, accounting for 11.70% of the value of total export goods.
According to the 2018 China Patent Survey Report, China’s strict IPR protection scores marked results, with market players steadily improving their capabilities in patent utilization. The reform to delegate power, streamline administration and optimize government services in the patent field makes significant progress. The 2018 patent survey, covering 25 provinces, autonomous regions and municipalities directly under the central government, involves 4 types of patent holders, including companies, universities, scientific organizations and individuals holding valid patents as of 2017 and 3 types of patents, including inventions, utility models and designs.
Zheng Jianbang, Deputy Chairman of Chinese People’s Political Consultative Conference (CPPCC) led a group for study of “online IPR protection” in Beijing. The group visited Beijing Internet Court and Beijing IP Court to have an understanding of the work on case filing, litigation service and IPR cases trial. It is introduced IPR infringement cases present fast increase in recent years. From 2015 to 2018, IPR infringement cases accepted by Beijing Internet Court increased from 833 to 2016. From September 9, 2018 to December 31, 2018, Beijing Internet Court handled 3,040 cases in total, 79.3% of which were IPR cases. At the meeting, relevant units updated their work and the CPPCC delegates raised their comments and suggestions.
According to WIPO’s first report on Technology Trends – Artificial Intelligence (AI), AI patents worldwide doubled over four years from 2013 to 2016. In terms of AI patents held by enterprises, America and Japan took the leading position, while China shows rapid increase in AI patents held by its academic sector. According to the report, AI patent families register 340,000 since the launch of AI study in 1950s, accounting for 0.6% of the total patents globally. In terms of patent applications filed by enterprises, IBM stands first, followed by Microsoft, Toshiba, Samsung and NEC. Regarding patenting activities carried out by academic sector, Chinese Academy of Sciences (CAS) and Tsinghua University rank on the top, with 17 of top 20 universities and public research institutions being from China.
As of the end of 2018, invention patents per 10,000 population recorded 111.2 in Beijing, ranking first in China and 10 times the national average. Valid trademark registrations also achieved significant increase, reaching 1,500,500 and increasing by 31.4% in 2018. In 2019, Beijing will provide strictest IPR protection, continue to improve business environment, improve the IPR operation system and strengthen IPR service and management. The city will also advance the integration and development of patents, trademarks and geographical indications.
According to the Statistical Communique of National Economy and Social Development 2018 released by the National Bureau of Statistics, the R&D expenditures recorded 1.9657 trillion yuan, increasing by 11.6% over 2017 and surpassing the average level of 15 EU countries. In 2018, China accepted 55,000 international patent applications filed under PCT. As of the end of 2018, China has owned 8,381,000 valid patents, with 10,000 population holding 11.5 invention patents. In 2018, technology contracts signed totaled 412,000, valued 1.7697 trillion yuan and up 31.8% over 2017.