China Economics Innovation

Intellectual Property: Introduction of China’s Intellectual Property Strategy

China has promulgated its own intellectual property strategy, which is aimed at promoting innovation and the use of new technologies by China’s industries. It’s hoped that via the implementation of the strategy, all innovations will be respected and more wealth will be created…

China has promulgated its own intellectual property strategy, which is aimed at promoting innovation and the use of new technologies by China’s industries. Following is an introduction of the country’s intellectual property system:

Science and civilization in China have lasted thousands of years. As a profound tradition, knowledge and intellectuals have been truly respected. Chinese people have zealously advocated innovation. Papermaking, gunpowder, the compass and movable type printing are four gifts China contributed to the world, which have changed the history of mankind. Those inventions have been recounted in children’s books, alongside Thomas Edison’s bulb, Alexander Graham Bell’s telephone and the Wright brothers’ airplane.

However, Chinese science and civilization has declined over the past four centuries. Why did it happen? One of the key reasons is that knowledge and technology was not perceived as a commodity, and a modern intellectual property (IP) system was not established in China until the 1980s. Comparatively, Europe boasted an IP system as early as the 17th century, which boosted the development of the Industrial Revolution. Therefore, an IP system is a basic guarantee for the enhancement of a country’s innovation and is of great significance to economic development and social progress.

Accompanied with the technological revolution and economic globalization, IP has gradually become a strategic resource and core to competitiveness. China has learned a bitter lesson from centuries of backwardness. People have realized that more importance should be attached to the IP system, which is essential for the country’s sustainable development.

Three decades ago, a modern IP system emerged in China with the implementation of Reform and Opening-up. China promulgated the Trademark Law in 1982, the Patent Law in 1984 and the Copyright Law in 1990. Over the past 20 years, China also enacted laws to protect Geographical Indications, Trade Secrets, New Plant Varieties and Layout Designs of Integrated Circuits. After its accession to the World Trade Organization (WTO) in 2001, China amended its IP laws in line with its commitments, which, at present, accords with WTO standards.

From then on, great efforts have been exerted by Chinese courts and government agencies to effectively enforce the law. Since the 1990s, the number of foreign patent applications filed in China has increased more than five-fold, among which, patents filed in China by American companies have seen an average annul growth of 19 percent. By 2006, foreigners’ registered trademarks in China had reached 490,000. Multinational companies (MNCs) have set up an increasing number of R&D centers in China. All these demonstrate that IP laws have been enforced firmly in China, which is applauded by foreign investors.

Since the end of 20th Century, the knowledge-based economy has seen rapid development. More than half of the GDP of the Organization for Economic Cooperation and Development (OECD) member states comes from knowledge-based industries. In 2006, IP made up more than one third of the U.S. enterprise’ value, almost equivalent to half of the U.S. GDP. It’s widely acknowledged that economic development of countries such as the U.S. was greatly enhanced by innovation. Consequently, IPRs have become an important issue of international trade. Therefore, a large number of countries have shown increasing concerns about intellectual property rights (IPRs). For instance, Japan implemented an IP strategy in 2002.

Over the years, the Chinese government has been promoting industrial innovation. Statistics show domestic patent applications have increased nearly 20-fold since the 1990s. This means if infringement occurs, Chinese companies are also victims. Hence they have raised higher demands for IPrs protection. At present, more than 90 percent of IP lawsuits are filed by domestic enterprises. Therefore, it’s imperative for China to maintain a fair market, which protects IPRs and inspires innovation.

It’s hoped that via the implementation of the strategy, all innovations will be respected and more wealth will be created. It’s also hoped that the country will be turned into a dreamland for inventors and innovators from around the world. First, Chinese IP law and public policies will be optimized. The amendment of the Patent Law, Trademark Law and Copyright Law has been listed in the Chinese government agenda, which plan to legislate on the protection of Genetic Resources, Traditional Knowledge and Folklore, ensure the rights of Reasonable Use in case of education and R&D and formulate IP-related policies conducive to the development of relevant industries and regions. It shares the view with the U.S. Supreme Court that the abuse of IPRs will be prohibited. In order to ensure sufficient market competition and guarantee consumers’ rights and interests, an anti-abuse law is highly required.

Moreover, it’s a priority to boost the creation and usage of IPRs. The government encourages companies in creating and using IPRs and welcomes MNCs to be engaged in state technological innovation projects to obtain market reward with IPRs. Particularly, the government supports foreign companies in setting up innovation-based business in China and embraces inventors all over the world in realizing their innovative ideas.

Furthermore, China is to strengthen enforcement of IP laws. Law enforcement faces various difficulties in all countries. To more efficiently enforce the IP law, Chinese People’s Courts will keep playing a leading role, and government agencies will fulfill their duties. Finally, a profound understanding of the significance and value of IPRs has a great bearing on China’s future. Therefore, China is going to foster an environment that encourages innovation and boosts awareness of IPrs. In addition, the country’s education will emphasize the enlightenment of creative thinking, the cultivation of innovation and inspiration.

When Thomas Edison’s bulb enlightened the U.S. in 1879, China was still in the Dark Ages. Not until the 1980s had a comprehensive IP system been established in China. As for IP legislation, China in just a few decades completed the foundations that developed countries had spent centuries building, which displays the strong determination and painstaking efforts China has spent in establishing and improving its IP system.

However, it’s well known that carrying out such a system is costly, and the system and its implementation must reflect the level of economic development. As a developing country with per capita income lower than the world average, it’s not surprising that China would lack the ability and law enforcement resources to effectively implement the system. Therefore, it would be too much to ask for the current level of IP protection in China to reach that of developed countries.

Chinese government acknowledged that an IP system is of great importance to innovation. As Abraham Lincoln once declared, “The Patent System added the fuel of interest to the fire of genius.” However, the basic principle of IP protection is to keep a balance between the right holders and the public. The ultimate goal of an IP system is the peace and common development of mankind. All of the world should adopt an appropriate strategy and build a comprehensive IP system to encourage innovation, boost the application of knowledge and ensure a fair market. IPRs should neither obstruct information dissemination and free trade, nor harm the public interest.

Chinese government holds that developed countries bear obligations of technological transfer, and the generation of IPRs comes along with its intrinsic social responsibilities. Current world crises of energy resources, food, climate change and environmental protection, are all tied in with IPRs. To handle these challenges, each member of the global village must work closely with a broader outlook, and shoulder common but different responsibilities. Only this way, can we realize mutual benefits and peaceful development, and embrace a better future for all humanity.

By Itamar Medeiros

Originally from Brazil, Itamar Medeiros currently lives in Germany, where he works as Director of Design Strategy at SAP.

Working in the Information Technology industry since 1998, Itamar has helped truly global companies in multiple continents create great user experience through advocating Design and Innovation principles. During his 7 years in China, he promoted the User Experience Design discipline as User Experience Manager at Autodesk and Local Coordinator of the Interaction Design Association (IxDA) in Shanghai.

Itamar holds a MA in Design Practice from Northumbria University (Newcastle, UK), for which he received a Distinction Award for his thesis Creating Innovative Design Software Solutions within Collaborative/Distributed Design Environments.

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