On 12 December a Chinese official announced that China needed to improve its IPR protection governance system between the government and both online and offline platforms. Mr. Han, the director of IP Development and Research Center of the CNIPA said that when the co-governance system could be improved, it would lead to the improvement of the IPR system in the realm of e-commerce; hence it would strengthen governance capability and efficiency.
From the point of view of the current Chinese legal system, Chinese e-commerce platforms have formulated special platform rules, which cover different kinds of relationships between business companies in the platform. According to the CNIPA’s evaluation, IPR protection rules are of great importance for business entities.
The IPR protection rules integrated in the Chinese e-commerce platforms mainly deal with identifying and punishing infringement products, providing IP holders with solutions concerning with IPR violation.
The Chinese government has recently established jointly with e-commerce platforms 3 handling regimes for online patent infringement complaints. Mr. Cao, the director of the IP protection department in the CNIPA noted that nowadays e-commerce was considered to be a core of the country’s economic development, but some characteristics of e-commerce platform posed new tasks to the IPR protection work. Despite the sphere of e-commerce appeared not long ago, it has been achieved magnificent results in the IPR protection of e-commerce.
Mr. Cao finally concluded that the next step in protection IP rights will be improving law enforcement cooperation, strengthening IP protection, ways of mediation and arbitration in IP disputes.
WENLING CITY REPORTED ON IP WORK IN 2019
On 10 December the members from the Leading Group of Wenling on the Fight against IPR Infringement and Counterfeiting (Wenling Leading Group) and Administration for Market Regulation in Wenling city, Zhejiang province, jointly held a press conference devoted to results of IP work in 2019. The authorities of these two governmental bodies answered all the questions.
According to the officials’ announcement, Wenling has been taking different measures to improve the IPR situation in this city since 2019, including organizing training activities with customs and other legal bodies, improving the IP mechanism, launching special actions and activities, etc. The Wenling Leading Group and Administration for Market Regulation noted that a significant result had been achieved in the development of trademarks and patents and in IP protection sphere. Mr. Wang, Vice Governor of Zhejiang province, and Mr. Feng, Head of Zhejiang Administration for Market Regulation, are in charge of implementing the aforementioned measures.
The Wenling Leading Group of Wenling and Administration for Market Regulation made a report about IP infringement cases. In 2019 Wenling authorities investigated 128 IP cases with fines and confiscating counterfeiting goods of the total value of 10,5 million yuan and 10 more IP cases were related to criminal cases. As a result, some of the suspects are under criminal detention, some of them are under arrest and others have been prosecuted. The entire above-mentioned statistic demonstrates that Wenling is actually serious about improving the IPR protection, conducting crackdowns and thorough investigations.
CHINA DOESN’T VIOLATE BUT PROTECTS IPR
Lawyers from all over the world believe that IPR protection is much weaker in developing countries in comparison with developed ones. Therefore, the following question arises – if China’s IPR record is out of consideration, will its IPR income level be better or worse?
To answer the aforementioned question, scientists examined countries royalties and their license fee payments to foreign patents, copyright, which are included in the balance of payment data issued by the IMF.
According to the IMF data, the country’s income level and IP payments are in a close direct relation with each other. 1% increase per capita income is associated with 1.85% IP payment increase. In other words, it means that if a country becomes richer, hence its economy becomes more complicated and its IPR protection significantly strengthens.
If Chinese companies were systematically using foreign IP without compensation to a greater extent than other countries at a comparable income level, China's IP payments would be low for its income level. However, in practice there is another situation. On the contrary, China’s IP payments have grown immensely since 2000. For example, before China joined the WTO in 1999, its IP payments were approximately $1.3 billions, while by 2017 China’s IP payments had increased to $28.7 billions. This statistic directly implies that China’s IP payments have grown on average by 20% annually. If we compare China’s IP payments with IP payments of European countries, like France (7,9%), the Republic of Korea (6,5%) or Mexico (-1,9%), we’ll reveal that their IP payments annual rates are lower than China’s.
The other way to evaluate China’s IPR protection is to examine where multinational companies place their operations. As a rule, multinationals won’t locate their operations in those countries where their IPR will be abused on a great scale. 2018 statistic demonstrates that China was the key region for foreign direct investment (FDI) among the entire world with the exception of the USA; it continues attracting more FDI.
Despite a high rate of China’s IP payments and IPR protection, its IP regime is still far from perfect. But China continues working on strengthening IPR protection, opening IPR courts alongside the country, making amendments in “Trademark law” and improving IP legislative body work.
In November and December 2019 officials from Gongbei, Shekou, Tianjin and Dongxing Customs invited the staff of Schmitt & Orlov company to participate in training events, devoted to the IPR topical questions. All the training sessions were conducted in the aforementioned Customs houses; more than 30 officials and custom officers attended these training sessions.
On 1 November Gongbei Customs arranged a training session in Zhuhai city. Zhuhai is one of the important cities of Guangdong province and one of the central cities of the Pearl River Delta. Furthermore, Zhuhai has got 9 first-class sea ports and owing to this fact, Gongbei Customs plays a significant role in cracking down IP infringements.
The officials of Gongbei Customs reported, they successfully joined to a six-month “Longteng Action”, due to which Gongbei Customs had taken protection measures for 94 batches of shipments, among them, 19 batches had been confirmed as an infringement, involving 147,000 pieces of infringing goods.
The other IPR training was arranged by Shekou Customs on 19 November. Shekou Customs is affiliated to Shenzhen Customs in Nanshan District, Shenzhen city. Shekou Port is one of the largest transit centers of China. Hence, Shekou Customs plays an important role in cracking down infringements coming in and out of Shenzhen.
According to Shekou Customs’ report, this Customs mainly deals within fringing goods through a freight channel, and the infringing goods are garments, different bags, shoes and light industrial products, as well as electronics.
On 3 December S&O attended a training session, having arranged by Tianjin Customs. Tianjin Customs is one of the few Customs in Northern China, which seizes the biggest amount of counterfeit products coming out of China. For 2019 Tianjin Customs has been seizing 10 batches of infringing IPR cases, with more than 660,000 pieces of goods and the damage price exceeds 99.3 million yuan. In general, the infringing goods include bikes, hard drinks, sporting shoes, solar batteries, famous branded bags, kids’ toys, garments etc.
On 9 December S&O participated in a training session, having arranged by Dongxing Customs. Dongxing, a county-level city under the jurisdiction of Guangxi Zhuang Autonomous Region, it borders with China in the south west and with the Beibu Gulf in the southeast and with Vietnam in the southwest. Dongxing Port is one of the three land border ports with the largest number of people entering and leaving China.
Despite Dongxing Customs is affiliated to Nanning Customs, but handling IPR cases is under their jurisdiction. Dongxing Customs seize counterfeit goods through Pingxiang and Dongxing Ports. Dongxing customs usually confiscate footwear, mobile phone accessories, sports equipment, stationery, etc.
Gongbei, Shekou, Tianjin and Dongxing Customs have drawn to the conclusion that, the amount of counterfeit products is constantly increasing. Customers think that only joint effort will help to cope with IPR problems and decrease the quantity of infringing products in the regions controlled by the aforementioned Customs.