Upholding Development of Intellectual Property with Chinese Characteristics

By Shen Changyu

On November 30, 2020, the Political Bureau ofthe19th Communist Party of China (CPC) Central Committee conducted a collective study on strengthening the intellectual property (IP) protection in China. General Secretary Xi Jinping presided over the study and delivered an important speech, in which he fully recognized the historic achievements in China’s IP protection, elaborated on the significance of the work, analyzed the current situation and the tasks at hand, and made major arrangements for comprehensively enhancing the protection of IP. His important remarks reflected strategic vision and is profound and clear in its message, providing the ultimate guidance for IP protection in China. Therefore, we must fully understand and implement his remarks.

I. Historic achievements in IP development with Chinese characteristics

In his speech, General Secretary Xi Jinpingreviewed the history of China’s IP work from the founding of the People’s Republic of China (PRC) to reform and opening-up and today, especially during the extraordinary period after the 18th National Congress of the CPC.He made the insightful observation that, with the continued progress in this field, China had blazed a trail of IP development with its own characteristics and made historic achievements. China started from scratch and gradually grew into a real leading country in IP. This only took China several decades in contrast to the centuries that developed countries had spent. The accomplishment is valuable, and the experience is worth studying.

The Party’s leadership over IP has been continuously strengthened. China began to make exploratory efforts on IP protection shortly after the founding of the PRC. Since the Third Plenary Session of the 11th CPC Central Committee in 1978, IP work has been put on a more standardized basis. In 2008, IP development became a national strategy with the introduction of theOutline ofNational Intellectual Property Strategy. It gained even greater prominence after the 18th CPC National Congress, with General Secretary Xi Jinping making a series of instructions andpresiding several meetings of the CPC Central Committee on Comprehensively Deepening Reforming (leading group) to review and adopt critical guidelines and lay out overarching plans, such as theGuideline on Strengthening Intellectual Property Rights (IPR) ProtectionandOverall Plan for the Pilot Reform of Comprehensive Management of Intellectual Property. The CPC Central Committee and the State Council issued a number of policy documents, including theAction Plan for Further Implementation of the National Intellectual Property Strategy (2014-2020), Opinions of the State Council on Accelerating the Construction of a Leading Intellectual Property Nation under the New Conditions,and theNational Program for Intellectual Property Protection and Application Plan During the 13th Five-year Plan Period. An inter-ministerial mechanism was created in the State Council to implement the IP strategy, the State Administration for Market Regulation established, and China National Intellectual Property Administration (CNIPA) was restructured, realizing the centralized and unified management of patents, trademarks, geographical indications (GI) of origin, and layout designs of integrated circuits as well as the comprehensive enforcement of laws on patents and trademarks. Efficiency of administrative management was greatly improved. Multiple IP courts were established and the Supreme Court now runs an IP tribunal, giving stronger judicial support to IP protection.

The legal system for IP protection has been increasingly improved. Starting from the 1980s, China has promulgated a number of laws and regulations to build a legal framework that recognizes international practices and cover various aspects of IP. They include the laws on trademarks, patents, copyright, and anti-unfair competition and regulations on protection of new varieties of plants, integrated circuit layout design, and Olympic symbols. The framework has been constantly updated in practice. New developments in recent years have been particularly important in intensifying the legal support. The new Civil Code established the most important legal principles for IP protection and amendments were made to the laws on patents, trademarks and copyright, which put in place a system of punitive damages for infringements consistent with high international standards. In the meantime, China has joined almost all the major international conventions on IP and conscientiously honored its treaty obligations. It has become a strong advocate of and contributor to international IP rules.

The comprehensive IP strength of China has been grown rapidly. The past decades have seen China’s IP work starting from ground zero and continuously scaling new heights. Progress has been particularly remarkable after the 18th CPC National Congress, with an increasing number of core patents, famous trademarks, valuable copyrights and high-quality products of GI. In 2020, China’s average ownership of invention patentsreached 15.8 per 10,000 people and the country had 30.173 million valid registered trademarks, not including the statistics of Hong Kong, Macao, and Taiwan. Both figures were more than four times that of 2012. In 2019, China boasted the most patent cooperation treaty (PCT) applications and the third largest number of trademark applications in the Madrid system. Social satisfaction with IP protection in China has increased from a score of 63.69 in 2012 to 80.05 in 2020. China moved up to the 14th place in the Global Innovation Index in 2020 from the 34th in 2012, leading the middle-income economies and making the fastest progress in the world; it has 408 of the world’s top 5,000 brands, worth a total of 1.6 trillion US dollars; its position in theDoing Business Report jumped to the 31st in 2020 from the 91st in 2012, making one of the top ten economies with the greatest improvement in business environment for two consecutive years. In 2019, the value added of patent-intensive industries accounted for 11.6% of China’s GDP. Latest statistics also show that businesses using the GI of the PRC create a direct value of 639.8 billion RMB. The substantial progress in IP has provided strong support for China’s economic and social development.

The international IP cooperation network has been steadily expanded. China has been dedicated to promoting multilateral, peripheral, mini-multilateral, and bilateral international IP cooperation in a coordinated manner to build a new pattern of international IP cooperation. China deeply involves itself in multilateral affairs under the framework of the World Intellectual Property Organization (WIPO) and resolutely safeguards the multilateral IP system. The WIPO has opened its China Office,and theBeijing Treaty on Audiovisual Performances,the first international IP treaty signed in China and named after a Chinese city, has taken effect. China has successfully held two high-level meetings on IP cooperation under the Belt and Road Initiative (BRI); considerable progress has been made on eight programs in the areas of IP protection, review cooperation, capacity building, and public awareness. China actively promotes pragmatic international IP cooperation, such as China-US-EU-Japan-ROK, BRICS, China-ASEAN, and China-Africa. It has opened the Patent Prosecution Highway (PPH) with 30 countries and regions. TheChina-EU Agreement on the Cooperation on, and Protection of, Geographical Indications was concluded after 22 rounds of negotiations, covering 275 products for each side and greatly enhancing China-EU economic and trade relations. With a greater number of international partnerships, China’s global weight and influence in IP is on a constant rise.

Approaches and measures for IP work keep improving. The general principle for China’s IP work is to make progress in a steady way and strive for high-quality development so that IP can be instrumental in achieving high-quality economic and social development. China’s approach to IP protection is a holistic one, promoting rigorous protection, inter-departmental coordination, efficiency and equality. The use of IP is facilitated with institutional development, creation of platforms and support for industries. The management of IP is strengthened across the entire chain of invention, application, protection, management, and services and covers all kinds of IP for an enhanced combined effect. Recognizing the importance of the primary levels of the work, China has become increasingly professional and efficient in IP review; the capacity of local authorities is expanding; and public awareness of IP is growing thanks to nationwide campaigns. We have been enforcing strict self-governance of the CPC, fully relying on the party organizations and CPC members at all levels of the IP administration system to overcome challenges and lead the way forward, deepening the integration of party building and our work, and solidly pushing forward the fight against corruption. High-standard party building is the compass and engine of high-standard development of IP administration in China.

II. A correct reading of the major issues related to IP protection in the new era

Understanding the significance of IP protection. General Secretary Xi Jinping notes that innovation is the most important force driving development, and protecting IP is protecting innovation. IP protection is about whether a nation has a modern governance system and capacity, whether it can achieve high-quality development and make life better for its people, and whether it can stay open to the world while maintaining national security. These observations highlighted more than ever the importance of IP protection; we should make IP protection an essential part of economic and social development and provide all the support it needs. In particular, we must strictly protect IP to facilitate the development of a modern property right system, deepen market-oriented reforms of production factors, and creates conditions for the market to play a decisive role in resources allocation and allows the government to deliver its rightful functions.we must crack down on IP infringement and counterfeiting to ensure high-quality market supply and economic growth.we must protect consumer rights and interests and ensure product safety for the people.we must improve China’s business environment and build an economic system ofhigh-level opening-up.we must protect homegrown core technologies and conduct effective reviews in the transfer of IP to foreign entities.

Mastering a strategic direction of IP protection. General Secretary Xi Jinpingpointed out that to build a modern socialist country in all respects, we must, from the standpoint of national strategy and the requirements of entering a new development stage, comprehensively strengthen IP protection, promote the construction of a modern economic system, stimulate the innovative vitality of the whole society, and advance the forming of a new development paradigm. His words make clear the goals and tasks of IP protection in the new era. We must work with a greater sense of responsibility, mission, and urgency, pinpoint the role of IP work in buildinga modern economic system, and strengthen IP protection to spur innovation at home and encourage China’s openness to the world. This will help build a high-standard market system and a more robust open economy in China and support the new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other.

Understanding the historical stage of IP protection in China. General Secretary Xi Jinping said that China was transitioning from a main IP importer to a leading IP creator, marked by a shift from quantity to quality. These words recognize the progress made so far and set a higher goal for the future. They aptly define the historical stage we are in at present. At this new, historical starting point, we must stay motivated by our achievements and continue to march forward under the CPC’s leadership with renewed passion and full recognition of the new circumstances and new tasks, and uphold IP development with Chinese characteristics. In particular, we must stay focused on the overarching goal of high-quality development, which can only be supported by better IP creation, application, protection, management and services and increased international IP cooperation. IP protection must make new and steady progress at a higher level.

Following the fundamental principle of IP protection. Commitment to the people is the fundamental political principle of the CPC. General Secretary Xi Jinping notes that IP must be protected in a fair, reasonable and strict way that suits China’s needs and is in the interests of the people. At the same time, the rights of individuals and businesses must not be allowed to transcend their appropriate boundaries to undermine public interests or suffocate innovation. His observations reflect a people-centered philosophy of development, a value we must uphold. In IP protection, we must examine our performance against such standards as whether the people’s lawful rights and interests regarding IP are well protected, whether innovation capacity is effectively activated, and whether economic and social development is promoted. We must be firmly rooted in China’s needs, striving to develop an IP system that works for China’s development and incorporates the good practices in the world. We must protect IP fairly and reasonably to strike a balance between the interests of the owners and the general public so that lawful rights are respected and knowledge is spread and used to the benefit of the people.

Implementing the right strategies for international cooperation and competition. General Secretary Xi Jinping notes that China should follow the vision of building a community with a shared future for mankind and the principle of openness, inclusiveness, balance, and universal benefits, get deeply involved in the global governance system within the framework of WIPO, and improve the rules and standards for IP and related international trade and investment. In doing so, we will make the global IP governance system fairer and more equitable. China would deepen IP cooperation with BRI countries and regions to encourage the sharing of knowledge. General Secretary Xi made clear our strategies of the IP work for international cooperation and competition. We must increase international cooperation in IP protection as a way to promote reform and opening-up. In particular, we should make good use of platforms provided by WIPO, the BRI, China-US-EU-Japan-ROK, and BRICS to improve the global IP governance regime. In a balanced way, we must also urge foreign governments to offer enhanced protection for Chinese IP as we continue to protect the lawful IP of foreign businesses in China.

Identifying the priorities of IP protection. General Secretary Xi Jinping has made important instructions on various aspects of IP protection, including an overarching plan, the rule of law, whole-of-chain protection, institutional reform, international cooperation and competition, and national security implications. These instructions demonstrate a strategic and future-oriented vision and is highly relevant and of guiding value for IP protection. These six aspects link together and integrated each other, and cover all the critical fields and links in IP protection. We must fully understand these instructions, establish a holistic view, be clear about our priorities and work for progress on all fronts. Only in this way can we honor our commitment to upholding General Secretary Xi Jinping’s core position on the CPC Central Committee and in the Party as a whole, and upholding the Central Committee’s authority and its centralized, unified leadership. This is also the way to make sure General Secretary Xi Jinping’s instructions translate into action on the ground.

III. Adhering to IP development with Chinese characteristics and making a new starting point for reform and development

At the new historical starting point, we must effectively implement General Secretary Xi Jinping’s instructions and plans of the CPC Central Committee on IP work. At this new stage of development, we must follow the new development philosophy, and promote the new development paradigm. We must enhance our political awareness, refine our political judgment, and be more resolute in our actions in following our own path of IP work with Chinese characteristics. We must enhance our competence under the new circumstances so that we continue to make new achievements in reform and development in this field, lending strong support to the development of a modern socialist country in all respects.

Makingan overarching, future-orientedplanon IP protection. Efforts must be accelerated to formulate a strategy to make China strong in IP and draw up a plan for IP protection and application during the 14th Five-Year Plan period. Our goals, tasks, measures, and actions must be outlined and yearly plans laid out and executed. Sticking to the principle of balancing between the interests of IP owners and those of the public, we must provide effective IP protection and at the same time guard against the over expansion of rights. We must implement programs to enhance IP quality and address the “bottleneck” challenges. We must support the reshaping of industrial infrastructures to facilitate IP creation and accumulation. We must continue to carry out the trademark development strategy and use GI to spur rural revitalization, which will support China’s high-quality economic and social development.

Enhancing the rule of law under the new circumstances. We must implement the relevant stipulations in the Civil Code, amend the implementing rules of the Patent Law, establish disputes settlement mechanism with nationwide influence, and steadily implement the early-resolution mechanism of disputes in pharmaceutical patents. We must continue with investigation and research on the amendment of the Trademark Law and strengthen GI legislation. Institutions must be strengthened to guide administration and law enforcement and promote harmony between the standards of review and authorization, administration and law enforcement, and judicial adjudication. The online mediation mechanism of the IP authorities and those of the courts should be better connected to provide more mechanisms for dispute settlement. IP authorities must intensify law enforcement cooperation with other authorities to minimize infringement and counterfeiting in the geographical areas and fields where they are most rampant.

Making coordinated effort to strengthen IP protection across the whole chain. There should be better coordination among different authorities to build a protection network covering all stages, including review and authorization, law enforcement, judicial protection, arbitration and mediation, industry self-discipline, and public integrity. We must develop a comprehensive management system to provide systematic protection and an easily accessible public service system and carry out capacity building programs to provide better and more standardized services. We must promote the use of information technologies and the development of smart infrastructure to enable stronger online as well as offline protection. We must continue with the different types of pilot programs for regulation at different levels based on a credit rating system for the purpose of building an IP credit system. We must step up effort to educate the public to foster respect for and protection of IP.

Strengthening innovation and deepening institutional reforms in IP. Decisions and plans made by the CPC Central Committee since the 18th National Congress must be effectively implemented to generate real results. We should look at how to make differentiated IP policies for various sectors and geographical areas. We should improve the review system by updating the approach, innovating technologies, and changing working methods to deliver better and more efficient reviews that meet public demand. We must give due attention to IP protection in new areas such as big data, AI, and genetic technologies to support their healthy growth. We must improve the IP assessment framework by building stronger mechanisms, improving standards, refining the ownership regime, and tackling IP abuses to ensure the value realization of IP.

Engaging actively in international cooperation and competition. China will be fully involved in the multilateral activities under the WIPO framework, expedite China’s ratification of the Hague Agreement Concerning the International Registration of Industrial Designs, actively participate in Free Trade Area (FTA) negotiations on IP, and encourage the development of international rules and standards for IP and the relevant international trade and investment to make the global IP governance system fairer and more equitable. We will increase international awareness about China’s IP work, familiarizing the world with China’s dedication and progress. We will deepen IP protection under the BRI to stimulate innovation in BRI cooperation. We will also fully implement the IP section in Regional Comprehensive Economic Partnership (RCEP) and China-EU Agreement on Cooperation on, and Protection of, Geographical Indications to increase bilateral trade.

Defending national security in IP. We must stick to the holistic approach to national security, strengthening the development and protection of core technologies and exercise law-based management of outbound transfers of IP that bear on national security. We must improve the laws, regulations and policies on countering monopoly and fair competition to build a toolbox for curbing illegal activities. We must develop efficient early-warning and emergency response mechanisms to guard against international risks, build national overseas centers for advising on responses to IP disputes, and provide early-warning and legal assistance for Chinese businesses overseas in handling IP risks, so as to effectively protect China’s development interests.

Shen Changyu is Secretary of Party Committee and Commissioner of China National Intellectual Property Administration.

Translated from the 3rd Issue of Qiushi Journal in 2021.