A Prospective Study on Intellectual Property Protection in China

On 25th April 2011, the China Supreme Court and 27 ministries of China Central Government jointly released their 2011 Action Plan on Intellectual Property. The plan indicates that the Chinese government has made a firm decision to take action concerning intellectual property protection. My analysis of certain aspects of the plan follows.

Amendment to Copyright Law
The Action Plan indicates an intention to amend the Copyright Law of PRC. In the beginning of 2011, some industrial associations (including China Audio-Video Association, China Software Association and China Written Works Copyright Association) and law professors jointly suggested the Copyright Law of PRC should be amended. The Copyright Law of PRC was enacted in 1990. Its framework and guiding ideology was based on the practice of that time but great change has occurred in technology, business models and consumers’ habits during the past 20 years. Therefore the framework of 20 years ago can’t work well with the practice nowadays. Most of those calling for amendment agree that the cultural industries will be damaged as the audio and video industry has been. In 1990s the audio and video industry was prosperous; writers, singers and publishing houses could earn high profit from their business. However, this industry collapsed when digital technologies and the Internet appeared. If due protection measures and judicial remedies were taken, things may have been different. Therefore people appeal for appropriate reform of the Copyright Law to protect the cultural industries.

Intellectual Property Tribunals
Currently there are civil tribunals, criminal tribunals, administrative tribunals and execution divisions in each junior court with intellectual property cases being handled by civil tribunals. However, in general, IP matters require judges to be equipped with certain knowledge of science and engineering.

The Action Plan indicates that the Supreme Court should release judicial interpretation to guide junior courts in establishing intellectual property tribunals. To begin with, only certain junior courts are appointed to have such a tribunal as part of a trial. If the trial proves successful, IP tribunals may be established throughout China. This will enhance the professional level of judges and will promote the development of theory and judicial practice of intellectual property.

Legal Service in Intellectual Property
Current laws and regulations do not allow law firms to practice in patent and trademark agency unless they have agents who are qualified patent or trademark agents and the law firms obtain license specially for patent/trademark agency (which is different from the license to practise law). In practice law firms collaborate with agency firms for the business of patent filing and trademark registration.

The Action Plan indicates that new rules will be introduced to allow lawyers to practice patent/trademark agency business directly provided they meet certain standards. This will allow suitably qualified lawyers scope to be involved in patent or trade mark prosecution as well as legal matters surrounding the IP such as lisensing, litigation and so on. So too, it will enhance the client-lawyer privilege if lawyers are permitted to conduct patent or trademark agency business.

Trade Secret Protection
According to the Action Plan, a judicial interpretation should be adopted by the Supreme Court and the laws and regulations that govern trade secret protection should also be amended.
There is no single code to govern trade secrets. Trade secrets are governed by some articles in PRC Law on Anti-Unfair Competition, PRC Law on Labor Contract, PRC Contract Law and other laws. The relevant laws were adopted in 1990s.

Modern enterprises frequently rely on trade secrets in their product development strategy and in order to maintain their market position. Many enterprises have suffered great loss when their trade secret is disclosed by employees who have left them or by competitors through illegal measures. However, it is difficult for enterprises to obtain compensation for trade secret breaches through legal procedures like litigation or arbitration. Like current copyright law, present laws relating to trade secret protection have become outdated and inadequate for modern industry.

In addition to the plans covered in this post, the Action Plan also mentions changes planned for geographical indications, new plant varieties, IP infringement litigation in foreign countries and IP infringement investigation by foreign countries. It covers nearly all important aspects of intellectual property in legislation, judicial practice and legal service practice. It shows the intellectual property business has developed quickly in China and such development requires the updating of legislation and judicial practice. The changes in law and judicial practice envisaged in the Action Plan will profoundly impact all players in the China market.

Image credit: baaker2009

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