On February 11, 2010, an opinion piece written by Mr. Benjamin Bai and published by the Wall Street Journal, attracted wide attention from the Chinese media.

 

After analyzing a large amount of data, the article entitled, “ Yes, China Does Protect Intellectual Property,” concluded: China is always criticized for weak protection of intellectual property, but the reality is not as bad as people thought.

 

Mr. Bai is a native Chinese and an experienced U.S. patent attorney. He told a China IP reporter: “I always want to make the western world know the real intellectual property developing situation in China, so I wrote this article to the Wall Street Journal.”

 

Of course, no matter what the evaluation is, the overall status of intellectual property is changing in China.

 

 

“I think we can use ‘increase’ and ‘innovation’ to summarize the situation,” Professor Liang Musheng Huazhong from Law School of Huazhong University of Science and Technology said in an interview: “‘Increase’ refers to the changes in number of intellectual property lawsuits while ‘innovation’ is for China’s judicial protection of intellectual property.”

 

These statistics may indicate that the number of intellectual property cases will maintain its high growth.

 

President of the IP Tribunal under Beijing Higher People’s Court, Chen Jinchuan, predicts that as intellectual property awareness of the whole society is enhanced generally, the IP protection awareness of civil subjects will become stronger and stronger and the number of intellectual property cases will continue to increase. In 2009 courts at all levels in Beijing handled 6,262 various IP-related cases of first instance with a yearly increase of 31.89%.

 

As early as the beginning of 2009, with regard to the increase and complexity of IP cases, the Supreme People’s Court issued two documents to guide the trial of intellectual property cases, i.e. Several Opinions on Enhancing IP Trial to Serve the Overall Situation Under Current Economy and Several Opinions of the Supreme People’s Court on the Implementation of National Intellectual Property Strategy.

 

“A lot of new circumstances and new problems emerge but there is no ready law to comply or case to follow. Judges shall follow the current laws and adhere to the principal of fairness, honesty and credit to make timely and fair decisions, which brings in many challenges to the IP trial work in the court and broadens the field of IP trials.” In face of the new situation and new problems have been encountered in the trial of IPR cases, President of IPR Tribunal under the Chongqing Municipal Higher People’s Court Meng Hongyong said.

 

Shanghai No.1 Intermediate People’s Court summarized the characteristics of the IPR trial work in 2009 as, “new types and foreign-related cases increased.” Last year the court received a total of 295 civil IP cases of various types, including 239 cases for first instance, 53 for second instance, 2 for retrial and one case for pre-trial preservation of evidence.

 

“Intellectual property trials must find new ways to protect innovation. The essence of the intellectual property system is to protect innovation, and therefore, IP protection should also adopt novel ways to protect innovation” said Qian Feng, President of Chongqing Municipal Higher People’s Court and Director of the Professional Committee for IP Trial Theory under the China Law Society.

 

The originality of Chongqing Municipal Higher People’s Court was praised by the Supreme People’s Court as the “Chongqing Mode”. To be specific, Chongqing has taken the lead in establishing the new model of IPR cases management with integration of, “three forces, three trials and three functions,” and combines the innovation in mechanism, institution and trial management.

 

 

China’s judicial IP protection not only changes the opinion of foreign media, but also encourages more Chinese and foreign enterprises to protect IPR from the market perspective and achieve win-win outcomes.

 

However, just three years ago, domestic enterprises did not have much knowledge of intellectual property. Once at a global intellectual property protection and innovation forum, Commissioner of State Intellectual Property Office Tian Lipu admitted that more than 90% of Chinese enterprises had neither applied for international patents nor domestic patents. Some domestic enterprises still lacked independent innovation capacity as well as the ability to master and utilize intellectual property systems. They needed to enhance their ability to deal with intellectual property disputes and participate in international competition.

 

At present, the situation has changed significantly.

 

For example, in the, “First Overseas Patent Protection Case for Chinese Companies,” Shenzhen Netac Co. and the PNY company from the United States reached a settlement. Netac Co., as the inventor of flash disk technology and patent holder, will get millions of patent license fees annually. In July 2009, Apple reached a trademark transfer agreement with HanWang and spent USD 3.65 million on purchasing the “i-phone” trademark.

 

In addition, Yancheng Jiekang Sucralose Manufacturing Co., Ltd. of Jiangsu Province took the initiative to go abroad, requested to join in the “337 investigation” and eventually won the case. This set a positive example of breaking the attempt of Western transnational corporations to maintain a market monopoly in intellectual property disputes and blockade China from participating in competition.

 

Of course, both Chinese and foreign parties have seen wins and loses in the intellectual property game. In 2009, Beijing No.1 Intermediate People’s Court decided that the Yancheng Zhongwei Bus Company, Zonda Industrial Group, Beijing Zhongtong XingHua Auto Sales Company infringed the design of the plaintiff, German Neoplan Vehicle Co., Ltd., and should compensate Plaintiff 21,16 million Yuan. So far, this is the largest IP infringement case won by multinational corporations in China.

 

“China’s judicial protection of intellectual property treats domestic and foreign enterprises with no discrimination.” President of CCS Media (Beijing) Company Xiong Shengyou has a deep understanding on this. In order to better protect intellectual property, he first registered the design patent when engaged in the “Multi-media Fund-raising Machine” project in Beijing. His original company, the Ningbo Bolang Electric Appliance Co., Ltd, has applied for dozens of patents. From his point of view, it is a decisive factor for business operations, whether or not intellectual property protection is fully emphasized. In the gathering of business CEOs, the most discussed topic now is intellectual property. Many companies introduced a large number of intellectual property professionals or adjusted the corporate organization to train staff for intellectual property strategy work.

 

Recently the World Intellectual Property Organization (WIPO) released statistics, which show that China became the fifth largest source of PCT applications in 2009.

 

 

On February 12, the State Intellectual Property Office translated the article Yes, China Is Indeed Protecting Intellectual Property and published it on its official website.

 

This article first argued against the erroneous understanding that patents are useless in China. In its view, the Patent Law has been developing fast in China. In 2009, the China Patent Office granted over 580,000 patents, increasing by more than 41% over the previous year and becoming the third busiest patent office after Japan and the U.S. At the same time, it surpassed the United States to become the one handling the most patent cases. In 2009, SIPO received 24,406 litigations, 4.6 times more than that of 2001. The United States received only 8,000 in 2009.

 

Then, the article stated that multinational corporations, however, turned a blind eye to the progress of China. In 2008, multinational companies only submitted 10% of patent applications and lodged less than 5% of patent lawsuits, becoming the group with the least patent litigations. Part of the reason for this phenomenon was that they believed China’s judicial system was more supportive of local companies in suits with multinational corporations and therefore local companies won most of the cases.

 

It concluded that foreign companies could also win in Chinese courts. For example, in 2009, two Chinese companies infringed the patented design of German Neoplan Bus Company and the latter got USD 3 million for compensation. This case is the largest tort damage case ever won by a multinational corporation in China. In the past, the average compensation gained by multinational companies was less than USD 50,000. Last month, a court in Beijing made two Chinese companies compensate USD 1.3 million to a British manufacturer of an electric kettle.

 

The article’s conclusion is supported by data. In the patent infringement cases in China, the success ratio for multinational companies has increased by 50%. In some cities, the figure is even more than 90%. Although it may be premature to declare victory based on these statistics, they do imply that it is absolutely wrong to think multinational corporations can not win in China.

 

Finally, it suggested that multinational companies have benefited from China’s positive actions in intellectual property protection. Although there are still a number of problems in China, multinational companies should operate under an assumption - that China is actively protecting intellectual property and working on related plans. It is more effective to learn how to work within the existing system than to hope for a better system.

 

“The click rate and reference rate of this article surpassed lot of current events,” Web Editor for the Chinese version of Wall Street Tang Hongshun told the reporter. In his view, objectivity and impartiality is the ethics of news. This article reflects the true state of intellectual property in current China.