China and Intellectual Property Rights : Synonyms or Antonyms ?

China and Intellectual Property Rights : Synonyms or Antonyms ?

Co-authored by – Shravani Deshmukh, Yesheshvini Ojha, Sanika Surve and Tressa Maria

Exploring the possibilities of the IPR regime in China and their take on the world’s intellectual property. This article will focus on the following topics-

  • Intellectual Property Rights in China
  • The conduct of China towards World IP
  • Suggestions

Intellectual Property Rights in China

As countries across the world were recognising the importance of incorporating laws related to intellectual property, China took its time to formulate laws which ensured the protection of intellectual property (IP) in their country. As they started reform and opening to the outside world, it became essential to establish an intellectual property rights (IPR) protection system to rapidly develop social productive forces, promote overall social progress, meet the needs of developing a socialist market economy as well as to expedite China’s entry into the world economy.

Since the end of the 1970s, China has done a tremendous amount of effective work in this field, covering in a little more than a dozen years a distance which took other developed countries scores of years, even a hundred years, establishing a relatively comprehensive legal system for the protection of IPR, thereby attracting worldwide attention for its achievements not only in establishing the system but also in enforcement[1]. The IP rights protected under the Chinese law are concerning patents, trademarks and copyrights. 

Patents: Patents are governed by the Patents Law of People’s Republic of China, 1984. This law has been amended several times in 1992, 2000 and 2008. The authority which grants patents filed for is the State Intellectual Property Office (SIPO). The Ministry governing the same is China’s Intellectual Property Administration (CNIPA). There are two types of patents which are protected in China: invention patents, utility patents. Along with these, protection is provided to designs as well under the patents law. Invention patents are protected for a period of 20 years whereas the protection of utility patents is only up to 10 years.  The patent law in China works on a ‘first to file’ principle which means if two individuals or entities apply for the same patent, the patent will be granted to the person who filed for the patent first. This is provided under Article 9 of the Patent Law. According to Article 22 of the Patent Law, inventions and utility models shall be novel, creative and of practical use to having a patent been granted. Similarly, Article 23 states that the administration will grant a patent to designs which are distinctive and in no conflict with existing ones. Another feature of the patent law in China is that the law does not provide for a procedure of calling for opposition to the patents. A patent application takes three to five years on average for invention patents, while the duration for utility model and design patents is one year[2].

Copyright: China is a signatory to the Berne Convention on copyright. Copyright legislation is based on China’s 1990 Copyright Law, amended in 2001, and the Copyright Implementing Regulations of 2002[3]. An important legislation regarding the implementation of copyrights is ‘The Regulations for Implementation of the Copyright Law of the People’s Republic of China.’ The National Copyright Administration Office governs the copyright procedures in the country. Copyright can be granted for the protection of literary, artist and scientific works. China follows a system in which copyrights are not to be registered compulsorily. It is a voluntary action on the part of the author or creator. Another authority responsible for copyrights is the Copyright Protection Centre of China (CPCC). It governs the grant of copyright for computer software[4]. The Copyright Law offers a non-exhaustive list of ‘works’ and enumerates some examples. The procedure for obtaining a copyright certificate will take about three months. 

Trademarks: Trademarks in China are governed by the People of Republic of China Law 1982 which underwent several amendments in 1993, 2001, 2014 and 2019. The principle of ‘first to file’ is followed while registering trademarks as well. According to Article 8 of the Trademark Law,  any signs , including words , graph graphs, letters, numbers, three-dimensional symbols, color combination combinations, sound or any combination thereof, that are capable of distinguishing the goods of a natural person, legal person or other organization from those of others may be applied for registration as trademarks[5].

The Trademark Office under the National Intellectual Property Administration governs the application and registration of trademarks. According to Article 18 of the Trademark Law, foreign businesses must appoint Chinese trademark agencies for their trademark registration[6]. The trademark application form must be submitted to the Trademark Office and must be registered in both English and Mandarin. After accepting the application, the Trademark Office will issue an Acceptance Notice and the mark will be published. Registration of a trademark can take 12-15 months. 

The Hindrances

Statistical analysis states that China has registered the largest number of invention patents for the ninth consecutive year and largest number of trademarks for the eighteenth consecutive year[7]. This data shows how IP registration is rampant in China, however this also brings forth the other side of the big picture wherein the other IPs seem to not hold much prominence in the country.

In the case of online video gaming that has been a growing business in China, so has been the piracy issue of the same. There are various sites which provide for pirated games and movies which has been a major concern. Within the Chinese copyright law, there is no clear understanding if games can be held into the ambit of software or other works. However, despite such ambiguity, the courts have now given broad and beneficial interpretation to the Copyright law in order to prevent infringement of the copyright owners in video games.

This can be seen in various copyright infringement cases  decided by the judiciary. The courts have been on toes thereby levying heavy penalties and giving imprisonment to the infringers of copyright or committing piracy of the protected works. The same could be seen in the case of Qiu in Sichuan wherein the defendant, Qui being an employee at the licensee company of the game software ‘Renren’, got hold of the password of his company’s server and downloaded the source code of the game. He resigned from the company and started his own venture wherein he  only changed the game skin of ‘Renren’ while keeping the core structure as it was and introduced it as a new game called ‘Big winner’. The Sichuan court of China sentenced Qui for an imprisonment of 5 years and fined him with 4 million RMB[8].

Thus, while Chinese Judiciary is in constant efforts to curb IP infringement and trying to clear the country’s image as the one who has no regards to IPR, there are certain instances wherein such efforts seem to be lost. Since the country recorded the largest number of patent registrations, there is no doubt that China is moving towards becoming a tech giant in the world. But this also brings attention to the various allegations made on China by technologically well advanced countries like the USA wherein they have claimed that there is technology transfer that takes place between these countries in lieu of larger market share for the foreign businesses in China.

The country is also known to be a hub of counterfeit products in the world. The Chinese customers are overwhelmed by the brands and are often active shoppers of counterfeit products. The joy of having a product of a particular brand overpowers the fact that the same is a product of an IP infringement of the original company. Hence, the trademark infringement remains a concern in China. The Chinese companies conduct research of the trending brands outside their country and tend to register their trademark in China. The ‘first to file’ policy of the Trademark Law in China makes it difficult for the genuine companies to get registration in the country. However, the Trademark Registry has realised the problems caused by applications filed in bad faith and have taken measures to restrict the same[9]. The Standing Committee of the National People’s Congress announced the amendments to the Trademark Law (“Law”), which have been in force from November 1, 2019. The amendments provide for the dismissal of the applications filed frivolously on immediate basis at the stage of examination. Even the trademark agencies which file trademark applications in bad faith will be penalised under the new amendment. Furthermore, in order to tackle the counterfeit goods; on request of the right holder the new changes in the law gives power to the court to destruct and dispose of the counterfeit goods, materials and tools used in manufacturing of those goods without any compensation to the counterfeiter. It has enabled extended protection to genuine goods by not allowing counterfeits to enter commercial channels even when the marks concerned have been removed.

The Conduct of China towards World IP

As the world progresses towards becoming a global borderless village, intellectual property is set off to become an essential for all the powerful economies.  IP can change the way a nation develops. More IP in sectors like tech, pharmaceuticals and other puts a nation on the map of development. With such development, affairs amongst nations with respect to their IP are also more or less affected. There is an implied position to have peaceful exchange and use of IP within nations if it is globally registered. Moreover IP theft and counterfeiting is not really encouraged across the world.

With stricter norms in and around  geographically and as they open to possibilities to enhance their intellectual property regime, China has been on the forefront on both sides.  Across the world, China has developed an image of counterfeiting and duplication. However, they have also tried to control and establish a more honest regime has been an active concern for companies operating in China. One of the major problem they face is IP enforcement that sway company strategies and operations in China. It is pertinent to note that China’s IP laws have ruminated international standards. They indeed have made steady efforts to better protect and enforce IP rights. However, challenges remain, including issues within  China’s IP legal framework in areas such as enforcement amongst others.

A bird’s eye view makes China, the world’s largest source of counterfeit goods. The Chinese government is constantly torn between tackling the counterfeiters and keeping up with the market demand once in a while. They often read between procedural loopholes and proactively seek to invalidate legitimate patents and trademarks, deploy advanced techniques such as reverse engineering, and find new ways to infiltrate legitimate distribution networks and build their own parallel networks.

Moreover, not just foreign brands but also Chinese local brands have been victims of duplication. Since the early 1980s, counterfeiting has reached a critical level, estimated as great as 15 – 20% of all brand products in China[10]. A more conservative number from the China State Council in July 2004 estimated that the market value of counterfeit goods is at $19-24 billion annually. Based on the $7 trillion worth of total retail sales of consumer goods in China, counterfeiting is a very sizable activity in the nation’s economy. One estimate gauged the sales of counterfeits are estimated to be about $299 billion globally[11]. Another source, the International Chamber of Commerce, estimated that counterfeit products account for 8% of world trade[12].

Thus, if we look into the above stats, counterfeiting has already become a consuming issue in China and also a significant focus in its international trade relationships. It’s a huge challenge for ecommerce companies to filter out Chinese counterfeiters on their platform. Throughout the years, marketplaces have tried to give opportunities to Chinese people to ensure diversity in the market and avoid counterfeiting altogether. However, this only increased it on their marketplaces. Honest trade opportunities are thus of no use as it usually results in substantial loss to that market place.  For example, Amazon has tried welcoming Chinese goods on board their e-commerce platform. According to research by Marketplace Plus[13] Chinese and Hong Kong sellers now make up a little over 11% of Amazon’s total marketplace. According to an OECD report[14], over 60% of the world’s knockoffs originate from China — a big chunk of an industry worth half a trillion dollars per year. The report primarily covers all physical counterfeit goods, which infringe trademarks, design rights or patents, and tangible pirated products, which breach copyright. It can be noticed via the report that “emerging economies tend to have the infrastructure for large-scale trade but often suffer from governance gaps and may lack the institutions and enforcement capacity to effectively tackle counterfeiting”. Moreover, China is the top location for fake goods, its most innovative companies also suffer from counterfeiters. The report gives a country wise perspective, where companies had their intellectual property rights infringed. In the 2011-13 seizures in the United States, whose brands or patents were affected by 20% of the knock-offs, then Italy with 15%, and France and Switzerland with 12% each. Japan and Germany stood at 8% each followed by the UK and Luxembourg.

There has been a long-standing dispute regarding intellectual property within China and the USA. Of the 3.3 million patent applications filed worldwide in 2018, China accounted for roughly half, according to the World Intellectual Property Organization. Computer technology and electrical machinery were the most popular categories of patent applications from China as the country aims to be a world leader in areas like 5G wireless networks and artificial intelligence[15]. Several brands from the States have gone ahead and sought relief from such duplicate companies or counterfeiters. One such example is Under Armour. In 2016, Under Armour, Inc sued Uncle Martian[16] (China) Co Limited for manufacturing and selling shoes bearing an obvious copy of Under Armour’s well-known logo. The Fujian Province Higher Court issued a preliminary injunction against Uncle Martian and later the Higher Court ordered Uncle Martian to stop using the contested trademarks, destroy all infringing products, pay approximately $300,000 in damages and publish a statement to “eliminate the adverse effect of Uncle Martian’s infringement”.

China is not meeting its international obligations to protect IPR, harming the innovation process in China and elsewhere. It is important to create a process and ensure legitimacy of the same. Not just for IP within their landscape but they will have to ensure fair use of IP from around the world. China’s effort to dominate the landscape for intellectual property also extends to trademarks.

Multinational enterprises (MNEs) are increasingly conducting research and development (R&D) in countries such as China and India, where IPR protection is still far from adequate.  China entered into two strike policies with big brands like Louis Vuitton and Gucci wherein they have agreed to not sell fake goods in their market. In the event, such goods are sold the vendor will be evicted from the market. But there seems to be a major lack of enforcement and incapability of the Chinese government pertaining to protection of IP as the vendors in the Silk Alley of Beijing began to sell the knock offs within one week of such agreements. The leniency of the Chinese officials was witnessed wherein they only warned the vendors pertaining to the sale of counterfeit rather than taking any action against such trade. 

All in all, China is in a sensitive yet progressive position when it comes to IPR. There is a lot of friction as the there is also tackling that has to be done with development. It is a far-fetched objective, but with constant effort and determination. China is definitely on the road to progress in to a better IPR regime.

Suggestions and Conclusion

China has been constantly putting in efforts to protect IP of the other countries and in its own as well.  However, the same is not achieved to the fullest due to the lack of enforcement of the introduced laws in the country. Instead of leaving the vendors who sell counterfeit goods on warning or minimal penalties, there should be stricter mechanisms such as heavy penalties or cancellation of license of the vendors so as to curb this issue. The IP offices responsible to grant registrations should be vigilant enough to not grant registrations to frivolous applications. The trade agreements should be based on IPR protections and principles of fairness and equity in order to maintain smooth trade relations of the country and provide healthy competition in the market. China as a country has immense power and brain to succeed in technology advancement if put to use correctly. They do have a tendency to bank on other inventions to make a new. The country should start encouraging novel Chinese IP more.

[1] Intellectual Property Protection in China, Permanent Mission of the People’s Republic of China to the United Nations Office at Geneva and other International Organizations in Switzerland (07 July 2020, 02:00PM)

[2] Frank Ka-Ho Wong, Intellectual Property in China: Laws and Registration Procedures, China Briefing, (07 July 2020, 03:00PM)

[3] Intellectual Property Rights In China, Intellectual Property Office (07 July 05:00PM)

[4] Lifang and Partners, Copyright in China, Lexology (07 July 2020 05:30PM)

[5] Article 8, Trademark Law of the People’s Republic of China

[6] Supra Note 2

[7] Huaxia, Intl Community highly praises China’s efforts in IP Protection, XINHUANET, July 8,2020 last updated on March 01,2020 on 21:03.

[8] China’s Supreme People’s Procuratorate Issues Top Example Cases of Criminal Intellectual Property Rights Infringement in 2019, NATIONAL LAW REVIEW, Vol. X, 190, April 26, 2020.

[9] China’s Amended Trademark Law to Curb Bad Faith Filings, Baker McKenzie, 04 November 2019. ‘The Standing Committee of the National People’s Congress announced the amendments to the Trademark Law (“Law”), which have been in force from November 1, 2019.’

[10] Zhu, Kan. “Anti-counterfeiting in China,” mimeo (2001), New York University School of Law.) (06 July 2020, 04:00PM)

[11] Chakraborty, Goutam, Anthony Allred, Ajay Singh Sukhdial, and Terry Bristol “Use of Negative Cues to Reduce Demand for Counterfeit Products,” Advances in ConsumerResearch, 24(1997): 345-349.

[12] Freedman, David H. “Faker’s Paradise,” Forbes ASAP, April 5 (1999): 49-54.


[14]  Global trade in fake goods worth nearly half a trillion dollars a year – OECD & EUIPO

[15] Why intellectual property is key to the trade dispute between the US and China-

[16]Under Armour v. Uncle Martian: A Case Study in Protecting American Trademarks in China Against Homegrown Squatters

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