China intellectual property rights have undergone significant reform in recent years. But is it enough? What more needs to be done?

Elizabeth Chien-Hale, who has spent extensive time working with businesses in both the US and China, explores these issues in this blog post and accompanying podcast.

Last year, the Standing Committee of China’s National People’s Congress voted to approve the establishment of specialized intellectual property courts in Beijing, Shanghai and Guangzhou. This is a significant step, and only the newest in a series of developments signaling China’s readiness to enter into a new stage in its understanding, use and enforcement of intellectual property rights.

These changes can be categorized as follows:

  1. Legislative changes:

Since the Third Amendments to the Patent Law were adopted in late 2008 and went into effect in 2009, SIPO (State Intellectual Property Office of the People’s Republic of China) has initiated another set of changes that would constitute the Fourth Amendments to the Patent Law. While the Third Amendments encompass a broad range of issues, the drafts issued so far for the Fourth Amendments indicate that this would be a much less ambitious project, with a major focus on granting more enforcement powers and tools to the administrative branch. Since China has a dual system of administrative enforcement and judicial enforcement of patent rights, these changes, if passed, would give patent owners another effective channel to seek remedies for their infringed patents. These amendments were open to public comments in 2012 and revised drafts were submitted to the State Council for further examination in 2013.

In addition to the formal legislative process, SIPO has used modifications to its internal guidelines to implement additional changes, such as the inclusion of graphical user interfaces as patentable subject matter under design patents.

  1. Using IP to transform China’s economy:

After a few years of a government-guided push toward increasing the number of patent filings among Chinese enterprises, China is now switching its emphasis from numbers to quality or use/monetization of the granted rights. Measures were implemented to officially characterize patents of dubious quality as “junk patents,” in both the law and the patent examiners’ offices, in order to curb the issuance of patents that clearly lack novelty or inventiveness.

Furthermore, the government is pushing for enabling an active marketplace for patents, either in sale, at auction or as collateral for financing.

China still remains concerned, perhaps more so than developed countries, with the abuse of intellectual rights by rich and powerful patent owners as a way to suppress working companies. This can be seen in a clear tie-in between China’s Anti-Monopoly Law and intellectual property rights.

Finally, gone are the days when Chinese scientists and product developers are merely content to serve their employers. While SIPO may issue a more comprehensive set of guidelines on how to compensate adequately inventors under the Patent Law, since 2009 inventors have, for the most part, been receiving rewards and remuneration for their qualified in-service inventions.

  1. Structural changes:

Circling back to where this discussion started, the Chinese government is also pushing for a set of structural changes, most notably in establishing specialized intellectual property courts.

The exact shape and form of the courts are not clear at this point. However, according to the announcement, these courts will have jurisdiction over both civil and administrative cases, but not criminal cases. Three years after these courts are established, they will also have cross-regional jurisdiction in Beijing, Shanghai and Guangzhou. This is especially good news for patent owners, given the size of China.

While the establishment of these courts potentially marks a major step forward in applying additional legal structure to protecting intellectual property rights, foreign right holders remain concerned regarding the independence of the judicial branch. According to the Chinese Constitution, all powers come from the people and are vested in the various levels of the People’s Congress. Therefore, courts in China, operating quite differently from the American style of separation of powers, will likely remain under the supervision of the People’s Congress in the foreseeable future.

Listen to the podcast by clicking the built in player below:

[audio:http://traffic.libsyn.com/legalcurrent/China_Patent_Reforms_-_Elizabeth_Chien-Hale.mp3]

Elizabeth Chien-Hale is a U.S. patent attorney who has extensive experience in intellectual property issues in China. Chien-Hale is a contributing author on intellectual property for “Corporate Counsel’s Guide to Doing Business in China, 3d, 2012-2013 edition”, published by Thomson Reuters. She operates a website, www.institute-ip-asia.org, where readers can find up-to-date information and articles about IP issues relating to China and other countries.