DetailsChina¡¯s Current IP Right Environment
Since joining the World Trade Organization (WTO), China has strengthened its legal framework and amended its IPR and
related laws and regulations to comply with the WTO Agreement on Traded-Related Aspect of Intellectual Property Rights
(TRIPs). Despite stronger statutory protection, China continues to be a haven for counterfeiters and pirates. According to
one copyright industry association, the piracy rate remains one of the highest in the world and foreign companies lose
over one billion dollar in legitimate business each year to piracy. On average, 20 percent of all consumer products in the
Chinese market are counterfeit. If a product sells, it is likely to be illegally duplicated. U.S. companies are not alone, as
pirates and counterfeiters target both foreign and domestic companies. Though Chinese governments have given
commitments to tackle the problem, enforcement measures taken to date have not been sufficient to deter massive IPR
infringements effectively.
The Best Protection Is Prevention
Though China is a party to international agreements to protect intellectual property (including WIPO, Bern Convention,
Paris Convention, among others), a company must register its patents and trademarks with the appropriate Chinese
agencies and authorities for those rights to be enforceable in China. Copyrights do not need to be registered but
registration may be helpful in enforcement actions. China has mended many times its Patent Law to extend the scope
of protection. To comply with TRIPs, China Patent Law extended the duration of patent protection to 20 years from the
date of filing a patent application. Chemical and pharmaceutical products, as well as food, beverages, and flavorings are
all patentable. China follows a first to file system for patents, which means patents are granted to those that file first even
if the filers are not the original inventors. This system is unlike the United States, which recognizes the ¡°first to invent¡± rule,
but is consistent with the practice in other parts of the world, including the European Union. Under China's patent law, a
foreign patent application files by a person or firm without a business office in China must apply through an authorized
patent agent, while initial preparation may be done by anyone.
China¡¯s IP Right Enforcement System
Protection of IP in China follows a two-track system. The first and most prevalent is the administrative track, whereby an
IP rights holder files a complaint at the local administrative office. The second is the judicial track, whereby complaints
are filed through the court system. (China has established specialized IP panels in its civil court system throughout the
country.) Determining which IP agency has jurisdiction over an act of infringement can be confusing. Jurisdiction of IP
protection is diffused throughout a number of government agencies and offices, with each typically responsible for the
protection afforded by one statute or one specific area of IP-related law. There may be geographical limits or conflicts
posed by one administrative agency taking a case, involving piracy or counterfeiting that also occurs in another region.
China's courts also have rules regarding jurisdiction over infringing or counterfeit activities, and the scope of potential
orders.
Though companies are finding commercial opportunities in China, there are many potential pitfalls companies should
be aware of, including issues related to the protection of intellectual property. It is strongly advised to consult a China
IP lawyer if you have any IP issue with your business in China.