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April, 2018

China outlines new strategy to boost IP protection

Original article: People.com.cn

The Chinese government highlighted its focus on boosting intellectual property protection ahead of China's National Intellectual Property Awareness Week, which runs from April 20-26. Speaking at a forum on IP protection, State Intellectual Property Office director Shen Changyu said that China is actively working to shape global rules on IP rights. He said that law enforcement and the court system are working hard to enforce IP protection. 

Analysis:

We have reason for measured optimism about the future of IP protection in China. All indicators point to strong support from China's senior leadership for better enforcement of IP rights, in particular, harsher punishment for trademark infringers. At the recent Boao Forum in Hainan, Chinese President Xi Jinping vowed that China would better protect IP rights, addressing concerns foreign companies have about forced technology transfers and outright theft of trade secrets. This was the third time that Xi spoke publicly in favor of IP protection in the past eight months. He first advocated support for stronger IP protection at a financial work conference in July. He spoke about the subject again during November's meetings of the National People's Congress. 


With IP rights of American companies at the crux of the Sino-U.S. trade spat, we sometimes overlook their importance to Chinese firms. It is true that a robust IP protection regime could curb the speed of Made In China 2025, Beijing's bid to become an advanced manufacturing powerhouse. True technological innovation takes time. If Beijing can't appropriate certain technology from others, it will have to develop that technology on its own. 


But if IP protection in China is robust, domestic firms will feel more confident about investing in research and development. That will create a virtuous cycle in the long run. Zhang Yaqin, president of search giant Baidu, told state-run China Daily in April that stronger enforcement of IP rights would provide China with "a big boost in confidence when exploring domestic and foreign markets" and would be "a key driver for companies to invest heavily in cutting-edge technologies which would bolster the country’s long-term growth." 


Meanwhile, foreign companies who feel confident that their trade secrets are safe in China will be more willing to invest in the country's long-term development. “We want to move forward with innovation from China to the rest of the world, and we are here to make Chinese industry more competitive on the global stage,” Merck executive Allan Gabor told China Daily. 


At a recent forum on IP protection, State Intellectual Property Office director Shen Changyu outlined a four-pronged national strategy to boost enforcement of IP rights. The first prong involves the creation of a dedicated IP-protection law-enforcement team, assumedly at the national level. Secondly, Beijing intends to amend its Patent Law so that violation of the law results in heavier fines. In the amendment to the Patent Law submitted to the State Council for review, it is recommended that punitive damages be more than doubled, up to a maximum of 2.99 times the intended infringement, Shen said, adding: "Let counterfeiters pay a heavy price."


The third and fourth prongs of the strategy are less concrete. The former calls for the establishment of an "intellectual property protection center" and the latter for promoting "open, inclusive and balanced" global rules on IP rights. Shen linked that initiative to the 40th anniversary of the launch of China's economic reforms. 

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