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October, 2017

People's Daily highlights China's recent IP reforms in front-page story

Original article: The People's Daily

This editorial in China's official Communist Party newspaper highlights some of China's recent efforts in the area of intellectual property protection. The article traces the recent slew of reforms to the CCP's 2012 Party Congress, when the CCP's Central Committee set out to strengthen China's overall IP environment. 


Several key reforms are noted. One of those is a new draft version of China's Patent Law proposed in December 2015. Under the revised law, wilful patent infringement would become punishable with punitive damages of up to thrice the standard damages. Statutory damages would be increased to RMB 100,000 to RMB 5 million from RMB 10,000 to RMB 1 million. 


The article also points out that China's ranking in the World Intellectual Property Organization's Global Innovation Index has risen to No. 22, which is the highest among middle-income countries. 

Analysis:

Coming on the eve of China's 19th Party Congress, and placed on the front page of the official Party newspaper, this article looks like a message from China's leadership that it is serious about strengthening the patent protection. To be sure, elite Chinese politics is something of a black box for the majority of us without access to the CCP's inner circle, and we sometimes have to make educated guesses about things. But President Xi Jinping himself recently spoke in public for the first time about the need for China to bolster its overall IP environment. 


"The significance of China President Xi Jinping’s address can’t be overstated, especially to the extent it reflects an embrace of a more robust IP regime in one of the world’s leading economies," wrote IP lawyer Gaston Kroub in an August post on the Above the Law website. 


Given that Xi is China's most powerful leader in decades - some would say since erstwhile CCP Chairman Mao Zedong - he has the potential to push through major IP reforms. There are plenty of vested interests in China's massive counterfeiting industry, but the only benefit to keeping it afloat is supporting certain local economies. Otherwise, it's an indelible stain on the China brand, suggesting to the world time and again that the PRC is far from its stated goal of becoming an advanced manufacturing nation. 


Across the Taiwan Strait, neighboring Taiwan has largely stamped out its once-thriving counterfeit industry. It wasn't so long ago that the island was both a low-cost manufacturing hub and a production center for fake goods. But as Taiwan's own firms started to develop world-class IP of their own, they became serious about protecting it. And the legal system moved in tandem with that trend. 


There's no reason that the Chinese mainland cannot do the same thing. Granted, it's a much larger geographic territory, but it has followed a similar trajectory to Taiwan regarding its transition from an agrarian economy to a manufacturing powerhouse, and now it is moving up the value chain. 


Ultimately, China will be the largest beneficiary of a more robust IP protection regime, Kroub says "It will take time, but a robust IP regime will help China from being a country that primarily makes items, to also selling those items under Chinese brand names to foreign markets. It is not hard to imagine a Chinese pharma company arising that takes advantage of stronger IP rights in the country to gradually build a reputation as a trusted supplier of life-saving medications." 

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