Benoit Misonne and Dan Prud’homme from IP Key say a number of significant pieces of intellectual property (IP)-related legislation in China will undergo revisions in 2014. In the following article they urge EU businesses to stay abreast of these changes, in order to contribute to the reform process and to ensure that they are able to adapt and compete effectively in China’s rapidly changing IP landscape.

Change is afoot

Over the coming year there will be an ongoing review of the latest revisions to the Patent Law and implementing and administrative guidelines to the law will be drafted. Similarly, the Copyright Law and its implementing and administrative guidelines will undergo further review and revisions.

The Trademark Law, on which new revisions were finalised in 2013, is set to take effect on 1^st May, 2014, and implementing regulations and according administrative/examination guidelines will need to be finalised and promulgated.

A range of other IP-relevant laws, regulations, and other measures including: the Service Invention Regulations; a judicial interpretation, and perhaps other measures, related to trade secrets; regulations involving competition and IP; the Protection Measures for IP Rights During Exhibitions; and the Promotion of Science and Technology Achievements and Transformations Law, among potential others, will likely also undergo revisions and some of these may be finalised.

Additionally, key changes are being considered or are taking place within China’s IP-related institutions. One of the most significant leadership changes was the replacement of Director Tian Lipu of the State Intellectual Property Office (SIPO) with Shen Changyu, an engineer and academic, as of 1^st January, 2014.

In terms of responsibilities at IP-enforcement institutions, pending passage and implementation of the latest revisions to the Patent Law, local IP bureaus will enjoy increasing administrative powers. In Shanghai the authorities have announced a novel structure for enforcing IP rights in the newly launched Shanghai Free Trade Zone, with a unified administrative organ handling patent and copyright disputes and a branch of the State Administration of Industry and Commerce (SAIC) handling trademark disputes; and there are ongoing discussions about exactly how different aspects of IP enforcement will work inside the zone. Further notable institutional changes in China’s IP environment are possible in 2014.

What this means for EU businesses

As of the latter half of the last decade, the IP reform process in China has changed from one responding largely to foreign pressure to comply with the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement commitments, to one arguably driven more so by domestic necessity for reform.

Chinese firms are inventing more than ever and while in some areas awareness of the importance and workings of IP rights are still underdeveloped, Chinese entities do understand and are taking notable steps to protect their own IP rights. For example, in terms of patents, it is telling that 98 per cent of recent patent litigation cases are between Chinese entities. This increasing awareness and utilisation of the IP system has also translated into pressure by Chinese entities to further improve/reform their domestic system. In the same vein Chinese academics and government recognise that the only way China will become more innovative in the future is to improve its IP protection environment.

Given that some of China’s IP reforms in 2014 will be significant it is critical for EU businesses to be mindful of these revisions and how they might impact their business. The reforms may create or otherwise warrant changes in firms’ innovation spending, IP management and enforcement, and their overall profitability and competitiveness. By being aware of these changes firms can capitalise on opportunities and attempt to mitigate risks posed by the reforms.

Moreover, in addition to being aware of the changes, EU businesses should become as involved as possible in providing input into the reform process. Institutions like the European Union Chamber of Commerce in China (European Chamber), and their various working groups, including the IPR Working Group, have long been highly involved in commenting on and providing suggestions to China’s IP authorities in terms of revising IP-related laws, regulations, other measures, and even via suggesting some institutional reforms.

Feedback from numerous Chinese government ministries and agencies indicate that these comments and suggestions are taken seriously and often integrated into the reform process. As of 2014, the European Chamber’s efforts in this regard will be supplemented by a new EU project set to officially launch activities in January: IP Key.

Conclusion

China will witness a variety of changes in its IP framework in 2014, including legislative and institutional reforms. These reforms are increasingly part of China’s efforts to protect IP to stimulate domestic innovation, but are equally important to EU businesses operating in China and provide an important opportunity for EU firms to potentially influence these reforms for their own benefit. Alongside the European Chamber, the new IP Key project—funded by the European Commission (EC) and implemented by the Office for Harmonisation in the Internal Market (OHIM) and the European Patent Office (EPO)—has planned over 30 activities in 2014, which will channel EU businesses’ interests into the Chinese legislative and institutional-reform process. Through these efforts, EU businesses will hopefully enjoy an IP and innovation environment in China that is increasingly effective, fair, transparent and otherwise based upon international best practices.

The IP Key project is the EC’s financial vehicle for the EU-China New Intellectual Property Cooperation, an agreement between the EU and China. Concluding in 2016, this three-year project will build on the long and productive history of EU-China cooperation on IP issues—most recently via the IPR2 project—and will further enhance cooperation by:

• Providing support to the EU-China IP Dialogue and EU-China IP Working Group;
• Facilitating the development of an IP and innovation framework in China that better allows for self-determined “sustainable competitiveness” and better mitigates business risk; and
• Improving the IP legal framework and predictability of IP enforcement in China.

IP Key will undertake activities in these areas both independently and in partnership with Chinese government counterparts. The activities will take the form of workshops, peer exchanges on best practices, database/IT tools implementation and studies, among others, and will cover all types of IP rights and certain related innovation issues.