China IP Savvy Growing
Daniel Hempel of The Daily Law Journal did a story the other day entitled, "China's IP Savvy Grows, as Do Legal Protections" [subscription required] The story starts out on how developing countries eventually reach the point where "stealing of intellectual property becomes obsolete" and then notes how "Chinese business leaders and officials have put an increased importance on the laws protecting the country's intellectual property rather than stealing from others."
Hempel sees big changes in China's IP landscape:
Across the Chinese intellectual property landscape, much is changing. Trademarks, once nonexistent, now have well-established laws under the country's limited free-market reforms. Patents are an increasingly powerful tool for growing Chinese businesses, to the extent that Chinese companies have felt confident enough to sue suspected American infringers.The filing of trademarks as well as lawsuits over trademark infringement are soaring in China. These lawsuits mostly involve Chinese plaintiffs as well as defendants, but actions against foreign infringers are becoming more common. In 2002, there were about 370,000 applications for trademarks. By 2005 that number had nearly doubled to 664,000, according to the State Administration of Industry and Commerce for the People's Republic of China.
Hempel then quotes me on the benefits of securing a Chinese trademark:
"Securing a trademark in China can be an effective tool for distinguishing your product from your competition and allowing you to charge a premium price for it," he wrote on his firm's China Law Blog.In the same post, he cited a case in which watermelons were sold at a premium because they were branded as coming from Linquan County, known for its succulent melons. Later, a rumor was spread that the watermelons had been injected with HIV, causing their price to plummet.
"It hurt that brand," Harris said in an interview. "But it shows that they recognize the importance of a brand."
Hempel then goes on to note that "while trademarks have proved effective, the success of defending patents is a less developed field of Chinese law." David Frazee, an IP attorney at Perkins Coie's Menlo Park office (and an accomplished soccer referee, and poker and Jeopardy player!) compared Chinese patent law to a soccer referee:
"The rule on the field is decided by whoever has the whistle," he said. "The rule book on patents is very thin. There is a lot of room for discretion and corruption, and precedent doesn't mean as much."Despite the ambiguity, securing a strong patent portfolio means Chinese companies can go on the offensive to defend their intellectual property, Frazee added.
Xiang Wang, an IP attorney with San Francisco-based Orrick, Herrington & Sutcliffe's Beijing office, believes "as Chinese companies amass more IP knowledge and lessons learned from legal battles overseas, they will quickly come to grasp IP outside of China and then take on roles as plaintiffs."
However, copyright protection remains "China's IP bugaboo" and it "obfuscates the progress in patent and trademark:
"'Copyright is a tough one,' Harris said with a sigh."
Despite continued piracy, Frazee expresses optimism and applauds China "for how far it has come with its intellectual property regulation." Zhang too is upbeat on the future of China's IP protection: "'Here in the West, the concept of IP protection was also weak,' Zhang said, speaking of the United States 100 years ago. 'Every nation has a similar development.'"
I concur (with no sigh).
Comments
Dan, thanks for a perspective that's underrepresented in the expat China blogsphere.
"China", as in PRC, only emerged from the ashes of two hunderd years of colonialism, WWII, and civil war - 50 years ago.
That doesn't even take in consideration of another 20 years of chaos and struggle with CCP's ideological sh!t.
They've come a long way in 30 years. It's a real darn shame that there are still people, educated, supposedly enlightened, in this world that hold a static view of "red China".
Posted by: Charles Liu | August 8, 2007 12:45 AM
...yeah. But China has had law schools since the early twentieth century and not all of China was colonized or affected by all these catastrophes to the same degree or at the same time. Shanghai had a vigorous bar in 1920, but the same thing could hardly be said about Lanzhou.
And regardless what happened before 1949, it was completely uncalled for to abolish the entire legal system, which is in effect what the CCP tried to do. And that party is still in power.
So let's measure progress by a little bit more than two or three decades. It's not that the knowledge about IP law didn't exist, it was never put to much use for quite a while. And that is not a good defense when we identify flaws in China's legal system.
Posted by: Bystander | August 8, 2007 6:08 AM
congrats on winning the best business blog in china. Holler.
Rock on.
Posted by: Mike | August 8, 2007 6:33 AM
@Charles:
On Imagethief you proclaim you've never even been to China, so where do you gain all of this sudden insight into China?
Whether it was the PRC, ROC or the Qing dynasty, China has been China for a long time. Ask a real Chinese person about similarities between today's CCP and past Chinese dynasties. They are run the same way. When Jiang Ze Min retired and kept control of the military, he was following a long, long tradition of outgoing emporers holding on to the reigns of the military so that they can push through their policies because when they were the emporer, the previous emporer also ran the military.
And just like the China of the past, the eunuchs (now known as the Politburo and its Standing Committee) choose the new emporer.
China got to where it is because of the West, and the fact that there is a static view of China is because China hasn't changed much.
Posted by: nanheyangrouchuan | August 8, 2007 9:20 AM
Today's IP law is driven by westerners with capitalism influence. China historically had no IP law. To the most, it only recognized the authorship. Copying was even encouraged by authors for the belief that a good scholar should write books for the benefit of the public.
China is different at least in the recent 100 years. China did have law schools and a bar system in the early 20 century initiated by the ROC and now the system is still in Taiwan. But the current legal system of the PRC is really new to the Chinese people. The fact that many judges were not even trained with formal law education at the beginning of the new legal system tells us this point. I have met young Chinese lawyers who were judges before they become attorneys in law firms.
Few people live long enough to see the changes of China in 100 years. Because of this, many Chinese who have no external exposure may think China has not changed. I am a true Chinese and have heard people from different ages and from both sides of the Taiwan Straits. The bureaucracy may be the same, but the morality and concept of modern law to the average Chinese are different. Chinese don't like law suits. It is not until recently that Chinese are moving toward more litigations and less mediations. There is no doubt that IP protection (or enforcement) is still new in China.
Posted by: John | August 10, 2007 11:22 PM