China’s National IP Strategy Plan

Nowadays, the importance of intellectual property is widely-recognized by the international community as a part of the rapid development of science and technology, rise of the knowledge economy and the acceleration of process of economic globalization. The creation, protection, utilization and administration of intellectual property have become an inevitable choice for a country to shape its strategy for national power promotion.

What is a National IP Strategy? Why is it Important?

According to the definition by the World Intellectual Property Organization (WIPO), a national IP strategy (NIPS) is “a set of measures formulated and implemented by a government to encourage and facilitate effective creation, development and management of intellectual property.” A NIPS provides a clear picture of where a country wants to go and how it will get there by using the IP system.

So far, a few countries and/or regions have established their NIPSs to create better linkages between the country’s economic objectives, development priorities and resources and the use of IP. Over 20 of the NIPSs (including those of Japan, South Korea, the European Union, Australia, Canada and others) are collected and archived in WIPO’s IP Asset database.

How Was China’s NIPS Formulated and Implemented?

China became aware of the importance of establishing its own NIPS in the new millennium, particularly after joining the World Trade Organization (WTO) in 2001.

President Mr. Jintao Hu first brought up the national strategic goal of building an innovation-oriented country at China Science and Technology Conference in January 2006. The following month, a state document pointed out that a national intellectual property strategy should be one of the major policies and measures for perfecting a nation’s market economy system and promoting indigenous innovation.

In June 2008, the State Council issued and promulgated the National IP Strategy Outline (hereafter referred as the Outline), officially upgrading IP to the level of national strategy for the first time. In the meantime, the country introduced an interministerial joint conference mechanism involving 28 governmental departments to be in charge of coordinating the entire project and pushing forward an annual implementation plan for the Outline based on each year’s specific situations and goals. Under the unified leadership of the State Council and the coordination of interministerial joint conference, a thoughtful deployment of implementing the Outline is carried out in and across administrative departments, from central government to local authorities, from coastal area to inland, as well as from pilot to scale.

In the next five years (2008-2013), in order to form an effective and efficient network of national IP operation, specific strategies were issued and deployed one-by-one, focusing on different types of IP (patents, trademarks and copyright) as well as for specific areas (such as for the agricultural sector, the forestry industry, national defence, the central enterprises, science and technology, radio and television media and other fields). Sixteen members of the interministerial joint conference, 28 provinces (autonomous regions and municipalities), and 159 cities (districts) have formulated implementing documents on carrying out the Outline under their responsibilities, and over 1,000 specific measures have been administered.

At the end of 2014, after the Outline had been implemented for six years, the State Council further reviewed and issued the Action Plan for Further Implementation of the National IP Strategy (2014-2020) (hereafter referred as the Action Plan). The Action Plan reinforces the pursuits of the Outline by further strengthening the IP system.

What is Set Out in China’s NIPS?

According to the Outline, China’s goal by 2020 is to build the country into a nation with a high level of IP creation, utilization, protection and administration. The legal environment for IP should be much better, the public IP awareness should be significantly increased and the quality and quantity of IP should be able to provide effective support for building China into an innovative country.

The Outline has determined the guiding principle of “innovation encouragement, efficient utilization, lawful protection, and scientific administration,” centering the national strategy on IP system transformation and optimization.

The Outline has set out seven specific tasks for various IP types including patents, trademarks, copyright, trade secrets, new varieties of plants, and other specific areas such as geographical indications, genetic resources, traditional Chinese medicines, folk arts and integrated circuits. The Outline has also determined nine key strategic measures to assist the completion of the tasks and achieve the set goals.

Overall, the Outline has made a blueprint of strategy formulation.

Further to such an effort, the newly released Action Plan specifies objectives in quantitative terms. For example, China is targeting an increase in the number of invention patents owned per 10,000 habitants (from four in 2013 to 14 in 2020); the number of registered copyrights of works (from 845,000 in 2013 to 1 million in 2020) and computer software (from 164,000 in 2013 to 200,000 in 2020). By 2020, the annual amount of IP rights pledge financing is expected to reach Rmb180 billion (US$29.3 billion); the total transaction amount of technology contracts registered on the national technology market should reach Rmb2 trillion (US$325.4 billion); and export income from royalties and franchise fees for proprietary rights should reach US$8 billion. The Action Plan also sets forth practical main actions, foundation works and supporting measures to achieve the objectives.

What Has Been accomplished?

Since the release of the Outline, China has achieved spectacular progress and great accomplishments in the past few years.

IP Creation Increased

By 2014, China had topped the world in invention patent applications for four consecutive years. It had also retained its No. 1 world ranking in terms of trademark applications for 12 straight years. At the same time, copyright registrations of creations and software from China also set a record high in the country’s history last year.

At the same time, the structure of IP has been optimized. Technologies in the fields of aerospace, next-generation mobile communications, numerically-controlled machine tools and large-scale computers have realized significant breakthroughs and obtained a number of core IP assets. In an evaluation of 2014, China has presented advantages in patent possession in 21 out of 35 technical categories determined by the WIPO, and 23 Chinese brands have broken into the Global 500 brand list, resulting in a substantial increase in core IP assets.

IP Utilization Enhanced

The ability of market players to apply IP in taking part in market competition has been enhanced markedly. Since IP pledge financing was introduced in 2008, enterprises have gathered over Rmb100 billion (US$16.3 billion) from IP pledges over the past years. A patent insurance program has also made progress: in 2013, 530 enterprises put 1,855 patents into insurance for Rmb64.4 million (US$10.5 billion).

There is also a significant increase in the proportion of the added value of IP-intensive industries to GDP. In 2012, the added value of high IP-intensive industries was Rmb13.7 trillion (US$2.23 trillion), accounting for 30.7% of GDP. Total asset contribution rate and profit cost ratio have been steadily increased to 17.8% and 9.2%, respectively.

In addition, industrial clusters have formed to realize a sustained and rapid development through efficient use of IP. For example, new plant varieties, products of geographical indications have become an important pillar of promoting agricultural development and of increasing the income of farmers. Home textiles companies in Nantong, Jiangsu province, lighting companies in Zhongshan, Guangdong province, and a number of distinctive groups have organized themselves as IP alliances to generate more influence on IP matters in the industry. Big corporations like Huawei, ZTE and Tencent have stood out through skilful operation of IP and have occupied advantageous position.

An Advance in the IP Legislation and System

Fourteen IP-related laws and regulations have been constituted and revised since 2008, 40 policies and rules have been adopted by provincial-level governments and nine judicial interpretations have been released by the Supreme People’s Court. In general, these documents help enhance the protection for the exclusive IP rights, establish and improve the long-term mechanism of IP exercises and intensify the punishment of infringement and unlawful behaviours.

The Supreme People’s Procuratorate and several departments of the State Council have set up specialized units for IP matters. The Central Military Commission approved the establishment of National Defense Intellectual Property Office. IP examination cooperation centres have been set up in several regions of China. Province-city-county IP administration cascades have been further perfected. The court system has introduced 420 IPR tribunals in the past five years and set up three specialized IPR courts in Beijing, Guangzhou and Shanghai in 2014.

In the meantime, talent team construction has been strengthened. Nineteen professional training centres have been established. Every year, over 300,000 people take part in all kinds of IP training. Universities and institutions have established IP schools and have added IP programmes to their undergraduate and graduate curriculum.

IPR Protection Improved

In the past years, administrative authorities tackled 309,000 trademark law violation cases, 53,000 counterfeiting and piracy cases, 17,000 patent infringement disputes and another 130,000 IP cases at customs. The number of IP-related criminal cases cracked by the public security organs quadrupled in five years. The courts handled 254,000 civil IP cases with an average growth of 37.6% and 21,000 criminal IP cases and gave guilty verdicts to nearly 30,000 people.

In addition, special campaigns, such as Campaign of Cracking Down on IP Infringements and the Production and Sale of Counterfeit and Shoddy Commodities and Sword Campaign have also reaped good results, where unlawful IP use has been forcibly deterred, with the legitimate rights and interests of IP right holders effectively protected.
 
Public Awareness and International Cooperation Promoted

A wide range of IP cultural constructions have been carried out. IP education has been added into law popularization propaganda as one of the key contents. Various forms of activities (e.g. “Publicity Week,” “Trademark Festival,” and “Green Bookmark”) have been applied, resulting in the increases of public awareness of IP and social satisfaction at IP protection.

In the past years, China also actively participated in IP negotiation with WIPO, APEC and other international or regional organizations to discuss subjects like the reform of the Patent Cooperation Treaty system, genetic resources protection, traditional knowledge protection and audiovisual performances, etc. In 2013, WIPO opened an office in Beijing to serve as a platform to strengthen the relationship between China and WIPO and to offer several services as arbitration and mediation.

IP administrative authorities have established cooperation with global counterparts, shaped dialogue and collaboration mechanisms, and set up information exchange programmes, patent prosecution highway programmes and other programmes. The authorities also have worked prospectively to establish early warning mechanisms and overseas IPR protection and dispute settlement mechanisms, found overseas IP service and assistance centres and develop close cooperation with the enforcement departments of Customs to better serve the enterprises’ need of “going global.”

Where are the Opportunities?

Benefiting from Streamlined IP Examination

According to the Action Plan, China will improve its IP examination system by promoting electronic filing, perfecting fast passage for (patent) examination, setting up green passage for trademark examination and fast registration passage for software copyright. By 2020, the (substantive) examination time shall be shortened from 22.3 months in 2013 to 20.2 months for patent, and from 10 months in 2013 to nine months as early as 2015 for trademark. In addition, guidelines for testing of new varieties of plants and a protection standard system for the establishment of geographical indication products will be formulated to facilitate works in these regards.

Enjoying Efficient and Effective IP Protection

In the next years, the leading role of judicial protection should be brought into full play. Pursuant to the intention and outcome of the recent law amendments, acts of repeated infringement, collective infringement and mala fide infringement should be punished intensively. Credit standards related to IP protection will be established to assist the administrative enforcement and market supervision, by including acts of mala fide infringement in the social credit evaluation system, disclosing the relevant information to credit reporting agencies and raising the social credit level for IP protection.

Taking Advantage of Preferential Policies

Strong financial support. The central and local financial authorities of different levels have arranged funds to support the implementation of the IP strategy. Financial capital and funds are provided with giving priority to promoting research outputs and the industrialization of IP. For micro-, small- and medium-sized enterprises, aid and funds can be granted for patent mapping, reducing IP application and maintenance expenses and elevating IP creation and utilization.

Recognition through enterprises’ participation and performance. Indexes regarding IP creation and utilization are taken into account for national sci-tech project inspection, management performance assessment of state-owned enterprises, as well as the determination of hi-tech enterprise, which may also entitle the enterprises to financial subsidies. In the meantime, enterprises are also encouraged to get involved in the formulation of international and national standards by presenting their advanced technological and IP knowledge.

Special program of pertinence and practicability. In an attempt to look for better IP operations, pilot projects and demonstration/model programmes (for cities, enterprises, indigenous innovation parks) have been set up. For example, Shenzhen, Suzhou, Changsha and some other places with a high concentration of innovative enterprises have been chosen to explore IP centralized management methods. Several batches of pilot enterprises have been selected to explore IP needs and service modes: they can enjoy a series of favourable policies in addition to rights defence services and patent information retrieval at small or zero cost; for those export-oriented enterprises, the pilot programme will also provide an IP surveillance service that enables them to be warned if there is a high risk that their products might infringe others’ IP rights after export, and therefore avoid suffering from corresponding economic loss.

“Going global” strategy. IP-related information for major destinations for trade and foreign investment will be gathered and released in time; IP training is provided to support enterprises in their IP efforts in foreign countries; overseas IP protection and assistance centres are being established to help enterprises to secure IP protection promptly in local places. Enterprises are also encouraged to form overseas alliance for IP protection.

Making Use of Public Resources and Service Platforms

According to the Action Plan, public service platforms for various basic information of IP, e.g. patents, trademarks, copyright, new plant varieties, geographical indications, folklore, genetic resources, have been launched or under construction; interconnection among the platforms will be built to enable search across platforms.

In addition, national-level service platforms for patent operation and industrialization, transfer and trading of variety rights, IP online trading, IP investment/financing and e-business are being developed.

Data and statistical resources such as world IP information and IP indicators will be open to the society for free or at low cost; and search/retrieval tools will gradually be provided at no charge to enhance the convenience in using IP information. In addition, a professional IP database in terms of specific industries or needs will be established to encourage social institutions to perform deep processing of IP information and provide a market-oriented IP information service to meet the multi-level needs of the society.

Conclusion

There is no doubt that China’s NIPS is ambitious and promising. Since its implementation in 2008, it has been generating changes for IP operations. Therefore, it is suggested that professionals and IP rights owners follow up with the development of the relevant policies, make good use of IP exercises and take the same into consideration when making their own plans.

 

This article is originally published on the special issue of China Strategies – A Guide to Protecting and Enforcing Your Intellectual Assets by Asia IP in April 2015.