Intellectual property protection in China is a major concern for foreign businesses and a key target for establishment reforms.
In March 2018, the National People’s Congress approved setting up the State Administration for Market Regulation (SAMR), which governs China’s National Intellectual Property Administration (CNIPA).
With the new government restructuring in place, it is time to reacquaint yourself with China’s IP system.
In this article, we provide an overview of intellectual property rights in China, including its legal and regulatory structures and registration procedures.
Law: PRC Patent Law, 1984; amended in 1992, 2000, and 2008
Relevant ministry: CNIPA
A patent grants a legal right to patentees for their creations, including inventions, utility models, and designs.
According to Article 22 of the Patent Law, inventions and utility models shall be novel, creative and of practical use to having a patent been granted. Similarly, Article 23 states that the administration will grant a patent to designs which are distinctive and in no conflict with existing ones.
China grants patents on a first-to-file basis. According to Article 9, patent rights will be granted to the first applicant if two or more applicants apply for a patent for the same invention separately.
Once the patent is granted for an invention-creation, no unit or individual can exploit the patent without permission of the patentee.
China has no patent opposition procedure. Any entity can challenge the validity of a granted patent by filing an invalidation application with sufficient evidence to the Patent Review Board.
A patent application can be submitted in electronic or written form.
A patent application takes three to five years on average for invention patents, while the duration for utility model and design patents is one year.
Foreign businesses without a regular residence or business site in China are obligated to appoint a patent agency to act as its agent.
A patent granted for inventions is valid for 20 years while the term for utility models or designs is 10 years.
Law: PRC Trademark Law, 1982; amended in 1993, 2001, 2014, and 2019
Relevant ministry: Trademark Office (TMO) of the National Intellectual Property Administration (CNIPA)
Registered trademarks approved and registered by China’s Trademark Office (TMO) of the CNIPA gives registrants an exclusive right to use the trademarks.
Like the registration procedure for patent rights, the ownership of a trademark is determined on a first-to-file basis. According to Article 18 of the Trademark Law, foreign businesses must appoint Chinese trademark agencies for their trademark registration.
There are “trademark squatters” in China, referring to people who actively register trademarks to blackmail foreign businesses. Foreign companies, including Apple, Tesla, and New Balance, have filed trademark disputes with Chinese domestic companies accordingly.
The procedure generally takes about 14 to 18 months. Within three months from the date of publication, any person can file an opposition against the trademark.
A trademark in China is valid for 10 years and renewal of registration must be filed within 12 months before the date of expiration.
Law: PRC Copyright Law, 1990; amended in 2001 and 2010 and PRC Tort Liability Law, 2009
Relevant ministry: PRC National Copyright of Administration (CNAC); Copyright Protection Centre of China (CPCC)
The country’s copyright law states that China protects the authors’ copyright in their literary, artistic, and scientific works. According to Article 2 of the Copyright Law, China adopts a policy of voluntary copyright registration so that the copyright owner is not obligated to register his/her copyright.
China’s practice is compatible with the Berne Convention, which automatically protects copyright. However, by getting an issued copyright certificate, the owner can easily prove their right during a copyright dispute and benefit from a tax deduction (for instance, in the case of developing computer software).
CNAC is responsible for nationwide copyright registration, including in provinces, autonomous regions, and municipalities.
For computer software, the CPCC is authorized to handle the registration of copyrighted works.
China’s new restructuring plan has transferred CNAC and CPCC to the Central Propaganda Department’s control, which underlines a power transition from the State Council to the Communist Party.
The Central Propaganda Department, which practices a stricter ideological control under Xi’s administration, has expanded its authorities to the press, media and publication.
It is expected that China will have more control over content during the copyright registration.
Law: Anti-Unfair Competition Law, 1993; amended in 2017 and 2019 and Administrative Licensing Law, 2003; amended in 2019
Relevant ministry: State Administration for Market Regulation (SAMR)
According to Article 9 of the Anti-Unfair Competition Law, the law defines a trade secret as any technical information or business operation information, which is unknown to the public, has commercial values, and about which the owner has taken secret-keeping measures.
Amendment to the law also protects information that has ‘negative value’, including those gained from failed research data or business models. The law specifies that if a third party knows an act of infringement of a company’s trade secrets, this third party will be considered as an alleged party to the infringement of the trade secret as well.
The latest revisions to the Anti-Unfair Competition Law and the Administrative Licensing Law focus on strengthening protections for trade secrets.
Foreign businesses may claim damages and seek compensation due to infringement of trade secrets through the courts. However, the procedure can pose a significant burden to the plaintiff, who is responsible for providing evidence that the defendant knows, obtains, and has disclosed the trade secret. (This burden of proof appears to be reversed for civil trade secret suits when the plaintiff makes certain prima facie showings as per the 2019 amendments.)
By 2014, three specialized IP courts were established in Beijing, Shanghai, and Guangzhou. From 2017, 18 specialized IP tribunals were set up.
In October 2018, the Standing Committee of the People’s National Congress approved the pilot program of the Supreme People’s Court on the establishment of a specialized appellate tribunal to hear appeals in civil and administrative cases of technology-related IP disputes across the country; it began operations January 1, 2019.
The specialized IP courts have been able to streamline procedures and speed up the adjudication process. For example, according to legal experts, the average adjudication time of a case tried by the Guangzhou Intellectual Property Court is less than 50 days, and the average time for simple patent cases of first-instance is now three to four months.
The average adjudication time of foreign-related IP cases handled by the Beijing Intellectual Property Court is now four months. The IP courts use technical fact-finding mechanisms, judicial authentication, and expert consultation to ensure neutrality and scientific objectivity in the adjudication process.
In terms of infrastructure, the specialized IP courts in Beijing, Shanghai, and Guangzhou function as intermediate courts in the Chinese judiciary. There are 18 specialized regional IP tribunals located in Beijing and important cities in 15 provinces – and come under the local Intermediate People’s Courts. The specialized IP tribunal in the Supreme People’s Court is the exclusive appellate venue for technology-related IP lawsuits.
A specialized IP court has 20 to 30 judges and a specialized regional IP tribunal may have between 12 and 15 judges, who come from a mix of law and technology backgrounds or have extensive IP trial experience. IP cases are classified into three categories:
While the Beijing, Shanghai, and Guangzhou IP courts and the IP tribunal of the Supreme People’s Court can only adjudicate civil and administrative IP cases, the specialized regional IP tribunals can adjudicate civil, administrative and criminal IP cases.
In April 2019, the Supreme People’s Court announced that the number of IP-related cases heard by courts at all levels across the country had increased significantly in 2018 – and with a high rate of settlement.
(This article was originally published on October 24, 2018. It was last updated on November 14, 2019.)
China Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Dalian, Beijing, Shanghai, Guangzhou, Shenzhen, and Hong Kong. Readers may write to firstname.lastname@example.org for more support on doing business in China.
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