Recent changes in IP protection in China

By David Lin, Dare & Sure Law Firm
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The relationship between IP … and data and competition … is growing increasingly tighter and the trend towards industrial integration of those involved is increasingly clear

After a 40-year period of rapid growth, China’s economy has entered a new stage, placing greater importance on innovative and quality growth. In conjunction, intellectual property (IP) protection has also begun to exhibit relatively significant change, being spurred both by external pressures arising from international trade wars and by changes in China’s own economic structure.

Additionally, due to market size and trade integration, China has become one of the world’s major IP jurisdictions, with a significant number of foreign companies electing to wage their IP battles in China. Under such changing circumstances, the author would argue that changes in four areas are worth the attention of relevant entities.

Legislative change

In 2019, amendments of laws relating to IP have become frequent, with soon to be issued bills including the fourth revision of the Patent Law, judicial interpretations for the trial of administrative cases involving the granting and confirmation of patent rights, and new judicial interpretations for the Law Against Unfair Competition.

Those that have already been issued and implemented include judicial interpretations for act preservation in IP disputes and the E-Commerce Law, which contains numerous provisions relating to IP.

From the perspective of the above-mentioned laws and judicial interpretations that have already been, or are in the course of being, revised, the trend in IP protection in China can be summarized in four points: (1) increases in the statutory measure of damages; (2) easier securing of preliminary and interlocutory injunctions; (3) greater concurrence of the patent system with those extant internationally, particularly in the medical field; and (4) increasingly greater entanglement with the internet, data and competition.

Judicial-level change

The Supreme People’s Court’s Intellectual Property Tribunal officially began work in 2019. It is specifically tasked with trying appeals of technology and monopoly cases, and, together with the 18 IP tribunals that have been spread around China’s main economic development belts in the past few years, as well as the three Intellectual Property Courts in Beijing, Shanghai and Guangzhou, has essentially given rise to a dedicated court system for IP adjudication in China.

In contrast with the organizational method for trying other traditional cases, under this new structure can be sensed an enhancement in the quality of adjudication of IP cases, a uniformity of standards, and the emergence of a professional legal community.

David-Lin-Managing-Partner-Dare-&-Sure-Law-Firm
David Lin
Managing Partner
Dare & Sure Law Firm

Complemented by the above-mentioned increase in the measure of damages and the legislative resources for the issuance of temporary injunctions, and seconded by technical investigation, judicial evaluation, evidence preservation, allocation and shifting of the burden of proof, and dovetailing with the preliminary ruling system, a number of cases worthy of attention and having influence beyond the jurisdiction of China have occurred recently. With the strengthening of protection, the enthusiasm of parties seeking IP remedies in China continues to increase.

Of course, the issue that cannot be overlooked is that, as the number of cases has exploded in such economically vibrant regions as Beijing, Shanghai and Guangzhou, the speed of judicial adjudication has slowed. However, due to the existence of the Supreme People’s Court’s Intellectual Property Tribunal, which is specifically responsible for appeals, on the one hand it definitely increases the centralization of adjudication power over IP cases at the centre, while on the other hand it lays a solid foundation for uniform adjudication standards.

Accordingly, the practice of parties often opting for Beijing, Shanghai or Guangzhou as the seat for resolving disputes out of fear of strong local protectionism has begun to change, and a strategy seeking to establish case jurisdiction in the regions, where the other 18 IP tribunals are located, has started to be considered by more parties and lawyers.

Specific areas to watch

From practical experience and industry observation, the author is of the opinion that the medical, chemical, telecommunication, internet, data and entertainment industries will be the areas to draw the greatest attention for their IP disputes for a relatively long time into the future, and will be the most active part of the legal services market.

That is because the changes in China’s socioeconomic structure and age structure are causing people to place greater emphasis on health and quality of life, and local pharmaceutical enterprises are also rapidly maturing and strengthening their strategies in the IP field.

Furthermore, China’s gap with advanced countries in the 5G communication, internet, big data, artificial intelligence and entertainment sectors is minimal, and it is on pace to surpass them, but these sectors are swarming with deep-pocketed competitors, which is bound to lead to a large number of foreign-related IP disputes.

Integration trend

The relationship between IP, on the one hand, and data and competition on the other, is growing increasingly tighter and the trend towards industrial integration of those involved is increasingly clear.

As mentioned above, the internet, big data and artificial intelligence sectors are the trending sectors in the global economy, and from current US, European and Chinese judicial and law enforcement practice it can be seen that relevant IP disputes are invariably intertwined with data protection, competition and anti-monopoly issues.

The multi-faceted demands of IP disputes place numerous pressures on, and pose numerous challenges to, legal service providers, and traditional IP practitioners will in future need to be more competitive, and will need to give greater consideration to specific industry integration, no longer providing their services along the lines of the division of law departments in academia.

David Lin is managing partner at Dare & Sure Law Firm. He can be contacted on +86 138 1199 8250 or by email at linwei@DareSure.com