On April 10, 2010, the Ministry of Science and Technology (MOST), the National Development and Reform Commission (NDRC) and the Ministry of Finance released for public comment a draft notice1 revising several of the more controversial provisions contained in China’s national indigenous innovation product accreditation rules issued in November of last year. The revised notice relaxes certain eligibility requirements on intellectual property rights (IPR) ownership, trademark registration and technology requirements as well as addresses a number of issues that foreign stakeholders have raised concerning China’s innovation incentive policies. The revised notice does not amend the six product areas eligible for accreditation in the 2009 notice:

(i) computer and application equipment, (ii) communication products, (iii) modern office equipment, (iv) software, (v) newenergy products and (vi) highly efficient energy-reducing products.

On IPR ownership, the revised notice appears to allow indigenous innovation accreditation for products based on IPRs licensed for use in China from overseas. This is a significant departure from the 2009 requirement, which limited intellectual property to products solely developed and owned in China. Under the revised notice, an applicant must either own or have the right to use such IPRs in China through the applicant’s self-innovation or IPR transfer, and possess IPRs free from any disputes or controversies. The requirement obliging trademarks and brands to be first registered in China is also removed under the revised notice. Instead, applicants must now have exclusive rights to a product's registered trademarks and brands, or have the right to use the trademarks and brands in China. The revised rules also remove the emphasis contained in the 2009 accreditation requirement, which required products to possess highly advanced technologies that reach or surpass international standards. Instead, a product must now possess advanced technologies that have proven effective in substantially improving the original product's structure, performance, quality, craftsmanship, energy conservation, energy-efficiency and pollution reduction.

All manufacturers with Chinese legal entity status in China can voluntarily apply for national indigenous innovation product accreditation on condition that their products meet certain eligibility requirements. MOST will review the applications, identify eligible national indigenous innovation products and incorporate them into the Catalogue of National Indigenous Innovation Products. Such products will be entitled to support granted under the PRC Law on Science and Technology Advancement and other related laws and regulations.

Generally, reaction to the revisions has been positive, as the major concern regarding IPR ownership under the 2009 Notice has been addressed in the revised notice. However, some concerns remain. For example, the revised notice does not explicitly address the linkage between the list of national indigenous innovation products and government procurement preferences. The deadline for interested parties to submit comments on the content of the revised notice is May 10, 2010.

For more information please visit http://www.most.gov.cn/tztg/201004/t20100409_76710.htm. Please note this link is to a Chinese language website.