Improvements in the IP Protection in China

China, like many developing countries has a problem with IP protection and fake goods. In fact, I just read about the arrival of unauthorised copies of Apple’s new iPad arriving in the Chinese market.

Japan had this problem for the past thirty years – as does Korea. It’s part of an evolving and dynamic economy which literally did not exist 25 years ago.

In problems, it’s important to look at the relevant solutions, and take action towards implementing the solutions.

Case in point: China has vastly improved its IP enforcement in recent years – a point underreported in the Western Media.

China’s Supreme Court, the highest legal body in China, recently distributed a white paper entitled: “Intellectual Property Protection by Chinese Courts in 2009.”

The paper covered the following sections:

I. Fair and efficient adjudication of Intellectual Property cases according to law has made the judicial system a leading force in Intellectual Property protection.

II. Judicial protection for Intellectual Property has served the needs of socioeconomic development and has observed and delivered the National Intellectual Property Strategy.

III. Enhanced judicial supervision and guidance has created greater consistency in adjudication practices and decision-making.

IV. Capacity building for Intellectual Property judges has improved judicial competence and quality.

This important 60-page white paper summarises China’s IP situation and creates a road map for the future of China’s IP protection.

The report says “In 2010, our national intellectual property strategy will enter a critical phase, where new circumstances, new tasks and new challenges await.”

Again, there are many fake products available in China but the situation on the ground is improving rapidly – hand in hand with China’s maturing economy.

The white paper cited that criminal sanctions are an important means of protecting intellectual property by the People’s Courts. Besides imposing principal punishments and regulating the use of probation, other punitive measures that include the imposition and enforcement of heavier criminal fines, recovery of criminal proceeds, seizure of criminal tools, destruction of infringing goods, ordering payment of damages, are also means to deprive perpetrators of the financial capacity to repeat the offence.

The Beijing 2008 Olympics marked a major turning point for IP protection in China. In the run-up to the Games, there was a proliferation of unofficial Olympic goods being sold within China. Realising it had to protect its own valuable IP, the Government swiftly cracked down on the manufacturers and sellers. The case is the same for “fake goods” when it comes to the Shanghai World Expo 2010.

The white paper highlighted the fact that the Peoples’ Court of Pudong New District, Shanghai, conducted a live webcast of hearing the first Expo-related intellectual property criminal case. Finally, the court found the defendant, Shanghai Changzheng Material Co., Ltd guilty of selling counterfeit trademark goods, and imposed a criminal fine of 180,000 yuan ($26400), and sentenced its principal Tan Tian to 2 years’ imprisonment and a criminal fine of 100,000 yuan ($14670). The case was a good example of the effectiveness of judicial protection of Expo intellectual property.

As Chinese companies mature, innovate and develop their own IP – they will naturally move to secure it. An example of how IP protection is improving on-the-ground in China: Microsoft was recently awarded a relatively large judgment in a copyright case. Software in China is primarily protected by the Copyright Law (and not the Patent Law). This case is remarkable for the size of judgment.

Recently a local court in Shanghai ruled on Thursday that Dazhong Insurance must pay Microsoft 2.17 million yuan ($317,900) as a compensation for using pirated Microsoft software, NetEase.com reported.

Court evidence showed that Shanghai-based Dazhong installed and used at least 450 sets of nine pirated Microsoft programs. Microsoft demanded that the defendant to stop the infringement and pay 2.25 million yuan in compensation.

I conclude with a paragraph from the white paper that says "By providing powerful judicial protection for intellectual property, the People’s Courts hope to contribute effectively to the building of an “innovation-based nation” and a xiaokang (authors note: Xiaokang is roughly translated to “basically well-off”) society."

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