On April 24, the China High-level Forum on Intellectual Property Protection 2007 was held in Beijing. Vice Premier Wu Yi and Vice Chairman of the CPPCC, Xu Kuangdi addressed the Forum. The Forum was presided over by Bo Xilai, Minister of the Ministry of Commerce, and attended by more than 20 leading members of the Chinese ministries and commissions concerned, heads of 85 large Chinese enterprises, representatives of UNDP and WTO, foreign ambassadors, officials of international organizations and institutions and foreign associations of merchants in China, as well as the representatives of multinational corporations and foreign-funded enterprises. The Chinese government attaches more importance to the Forum this year than it did in the past.

April 26 is "World Intellectual Property Day". In 2004, nine departments including the State Office of Intellectual Property Protection and IPO designated the period from April 20 to 25 as the "Week of IP Protection", to carry out activities across the country and publicly promote IP protection. The organizing committee of the "Week for IP Protection" decided that, beginning with 2005, every April would witness a "China High-level Forum on Intellectual Property Protection" to which government officials, specialists and entrepreneurs from home and abroad would be invited to share opinions on IP protection. Up until now, the Forum has been held three times.

The Forum lasted for the entire day. Wu Yi, Xu Kuangdi and some other distinguished guests delivered speeches on IP protection. In the afternoon, two separate sub-forums held discussions, and they were respectively titled the"Chinese and Foreign Business Summit" and "Summit on Overseas IP Protection of Chinese Enterprises".   

At the Forum, Wu Yi said that IP protection is a logical choice to improve China's international competitive capacity. The Chinese government pays great attention to IP work, and has established IP protection as a national strategy. Great efforts have been made, and great progress has also been achieved.

Addressing the USA's complaints on IP protection against China at the WTO, Wu said that in recent years, China invested in human and other resources for IP protection, and the achievements are unprecedented. Over the past several years, China's IP work was subsequently adopted by WTO in its annual review, and received recognition by most countries, international organizations and institutions, and domestic and foreign enterprises. Regrettably, however, the Office of the United States Trade Representative (USTR), completely ignoring the immense efforts and great achievements made by China, filed a complaint with the Dispute Resolution System for WTO cases against China over intellectual Property and access to the Chinese publication market, which not only violates the consensus initiated by the two nations' leaders that differences should be settled through dialogue, but also, it is the first time within the WTO framework for one member to file two complaints against another. This development will have the worst influence, and certainly will seriously adversely affect the bilateral IP cooperation under the framework of China-US Joint Commission on Commerce and Trade, as well as the cooperative relationship established between the two sides with respect to market access for publications. The Chinese government has expressed strong dissatisfaction with the decision of the United States, and will make active response to the complaints in accordance with WTO rules.

Wu Yi: China's immense efforts for IP protection from three aspects

Wu said that in strengthening IP protection, Chinese government has made immense efforts and great progress in the following three aspects.

Firstly, Chinese government has stepped up the construction of an IP system and improved the IP protection mechanism. Successively, Chinese government has promulgated and enforced the Trademark Law, Patent law, Copyright Law, Anti-unfair Competition Law, and some IP rules, such as the Regulations on Computer Software Protection and the Regulations on the Protection of Information Network Communication Rights. China has also entered into a number of international conventions regarding intellectual property. Now, a systematic, complete IP legal and regulatory system consistent with prevailing international rules has basically taken shape. The State Intellectual Property Office (SIPO), Trademark Office of SAIC, National Copyright Administration of China (NCAC) have been established for respectively taking charge of the issues concerning patents, trademarks and copyrights. Meanwhile, working agencies for IP have been set up in the customs, public security ministry, prosecutorial offices and courts. An IP administration and law-enforcement system has been established. Under the system, the administrative enforcement of law and criminal justice co-exist, IP owners can safeguard their rights, the relevant industries can work for self-regulation, and brokers can serve their clients and social supervision can be achieved. To strengthen the leadership and coordination of IP issues, the government has also set up the National Leading Group of Strategic Development for Intellectual Property and National Working Group on Intellectual Property Protection. With the continuous development of the IP system, all departments concerned are spurred to work under law, cooperate in law enforcement and coordinate administrative enforcement of law and criminal justice, so as to effectively protect the interests of right owners, and help China fulfill its international obligations of protecting intellectual property.

Secondly, Chinese government carries out IP protection actions and effectively protects the interests of right owners. In recent years, Chinese government carried out nationwide IP protection actions, and consistently adopted a highhanded policy in dealing with infringing acts, which has resulted in an improvement in IP protection each year. The year 2006 witnessed seven actions, including "Operation Sunshine", "Blue Sky Fair", "Hawk No.2" and "100-day Action for Anti-piracy". Among these, the public security organs countrywide placed a total of 836 cases on file for investigation; the prosecutorial organizations approved the arrest of 988 criminal suspects; and the courts concluded 6,441 IP trials. The departments of patent, customs, industry and commerce as well as other organs filed and tackled 17,243 IP cases, and the total value involved in the cases was nearly 1 billion yuan. These operations dealt powerful blows to criminal and regulatory offences, and effectively protected the interests of right owners. 

Thirdly, Chinese government does more publicity work to create a sound atmosphere for IP protection. The "Week for IP Protection" is one of the examples. In 2005, the State Council Information Office issued a white paper titled "New Progress in China's IP Protection". Further, since 2006, the National Working Group on Intellectual Property Protection has issued the annual working program for IP protection. All relevant departments carry out a series of promotional and universal legal education activities, such as "Seminars on IP Protection by Heads of Key Enterprises" and the "Project of Fostering IP Talents". IP-reporting, appeal and service centers have been set up in 50 large and medium-sized cities throughout the country to facilitate social supervision. A Complaint telephone hotline (The number is 12312) and Internet online reporting and a complaint page are available. A convenient, fast and effective IP protection network has also been established. When an infringing act occurs, the rightful owner may easily complain, report or consult through the telephone or Internet. Most problems have been properly resolved.   

Wu Yi: Six Key Tasks of the Action Plan on IP Protection

China's Action Plan on IP Protection 2007 promulgated a few days ago consists of 10 aspects and 276 provisions. Wu mainly addressed six aspects. Firstly, the legal and regulatory system for IP protection is continuously improved. Considering the actual situation of IP protection under criminal justice and the characteristics of criminal and regulatory offences of IP infringement, China will formulate and amend 14 laws, regulations and rules of IP protection involving trademark, copyright, patent and customs, and promulgate 7 judicial interpretations and guidance opinions on IP, so that IP protection will have further legal safeguards.  

Secondly, China will continuously institute a hard-core crack-down on infringement by: (1) carrying on nationwide IP protection actions and cracking down on various infringing acts; (2) reinforcing the momentum to crack down on criminal activities when key areas, key industries or key enterprises are involved, and supervising the solution of major cases; (3)imposing disciplinary punishment over local leaders in addition to legal proceedings when the problem is serious; (4) seriously investigating and punishing public functionaries involved in local protectionism or even colluding with criminals. The supervisory departments and prosecutorial organizations will further intensify their administrative supervision and legal supervision. 

Thirdly, efforts are made to promote the use of copyrighted software among enterprises. In 2006, with the concerted efforts of NCAC and all parties concerned, most large state-owned enterprises in Beijing have realized the copyrighting of software. The task for 2007 is to consolidate the achievements and ensure that the headquarters of the central enterprise groups and the large state-owned enterprises under their leadership use copyrighted software, and meanwhile, promote other large state-owned enterprises supervised by the State-owned Assets Supervision Administration Commission, and the enterprises of all ownership properties to use copyrighted software.  

Fourthly, China will guide and support enterprises to strengthen IP protection. The Chinese government will provide training and other services to enterprises, and help them solve the problems and difficulties arising in IP protection. More importantly, the government will guide them to establish and improve their IP management systems, and their IP protection capability. In addition, the Chinese government will study the feasibility of setting up an overseas right-safeguarding hotline and network service platform so as to assist enterprises in properly dealing with overseas IP disputes and international trade barriers for IP. An IP reporting system will be established for periodical communication and coordination with foreign-funded enterprises on IP issues.   

Fifthly, the construction of an IP protection platform is highlighted. While putting a full play to the present IP report and complaint system, we will further improve and standardize the IP report, complaint, and service center, "12312" telephone for reports and complaints, and the report and complaint website. We will increase the investment from eight aspects and with 46 particular measures to heighten the influence and service function of the above channels so that they will become a work platform for IP safeguarding, reporting, education, consulting and communicating to rightful owners, enterprises and government departments.  
Sixthly, national IP strategies are promulgated. In order to promote the creation, protection, application and management of IP, the National IP Strategy Formulation Leading Group Office, in January of 2005, organized experts and scholars from more than 20 departments and units to formulate the National IP Strategy Outlines (the Outlines). Now, 20 special reports and the draft Outlines have been finished, and will be officially promulgated before the end of this year. China's IP work will be under better guidance.

Xiong Xuanguo: Judicial Protection of IP in Court Made Progress

Xiong Xuanguo, vice president of the Supreme People's Court said that since China's entry into the WTO, the market economy has been developing rapidly, China's opening to the outside world has been deepening, and the judicial protection of IP in people's courts has seen substantial progress in the following seven points:  

1. Sustained growth in the number of IP cases. Civil cases: from 2002 to 2006, all national courts filed 54,321 first instance IP cases, and concluded trials for 52,437, representing an average annual increase of respectively 17.1% and 19.3%; Administrative cases: in 2006, all national courts filed and concluded 1,396 cases of first instance, in which administrative cases for patent matters were increased by 36.7%, and for trademark matters, by 12.4%. Criminal cases: all national courts filed and concluded 505 and 769 cases involving criminal infringement upon IP respectively for 2005 and 2006, an increase of 31.2% and 52.3%, respectively. 

2. Continuous improvement of the standards for justice. Since 2001, the Supreme People's Court has unveiled over 20 judicial interpretations on IP, involving patents, trademarks, copyrights, new plant varieties, layout-design for integrated circuits, technological contracts, unfair competition, domain names, and crimes against IP. These interpretations ensure a unified standard of justice. Take the judicial interpretation of criminal cases as an example. After the great adjustment of the punishment standard for IP infringement cases in the Interpretation of the Supreme People's Court and the Supreme People's Prosecutorate on Some Issues Concerning the Application of Law in the Trial of IP Infringement Cases in 2004, the Supreme People's Court and the Supreme People's Prosecutorate jointly issued the Interpretation on Some Issues Concerning the Application of Law in the Trial of IP Infringement Cases (II) this April to obviously lower the quantitative standard of punishment for infringement upon copyrights, and clearly defines the meaning of "reproduction and distribution" in criminal infringement upon copyrights, unifies the punishment standard for IP infringement acts committed by units or by individuals, and further specifies the application of probation, and increases the penalties and fines. 

3. Continuous rise of efficiency of legal protection for IP. To actively perform the duty of judicial protection for IP, the people's court strengthens the communication among the judgment departments inside the court, initiatively coordinates with the administrative and law-enforcing organs, and intensifies the cooperation with public security organs and prosecutorial organs. In addition, if the court, in the course of a hearing finds any loophole in enterprises or other departments' IP management system, it will offer judicial suggestions to guide them in developing their system, strengthening their management, intensifying their consciousness of IP and improving their capability of IP protection. 

4. Heightened transparency of judicial protection. Besides public hearing, the people's court will timely open to the public the judgments in effect and release the trial information through the news media, networks and publications. In March of 2006, the website of China IP Judgments and Decisions was opened, and the news release system on IP judicial protection was established. 
 
5. A continuously improved judgment mechanism. Considering the professional features of IP cases, the Supreme People's Court comparatively centralizes the judgments for civil cases concerning IP issues to guarantee the quality of its judgments. Ordinary cases, in principle, will be submitted to the intermediate and superior courts for the first instance trial. Cases involving patents, new plant varieties and layout-design of integrated circuits will be referred to the designated intermediate courts for the first instance hearing. Meanwhile, 21 basic-level courts are authorized to hear some IP civil cases. 

6. Fresh progress in the professional upgrading of judges. By 2006, all national courts had set up 172 IP trial divisions and 140 IP collegiate benches. Judges with high political and educational qualifications and rich experience in handling civil cases conduct the civil trials for IP cases. China has 1,667 civil judges for IP cases. In the five years since China's entry into the WTO, the Supreme People's Court held eight rounds of training courses on judging practices of IP cases, and a total of 1,035 judges participated in the trainings.  

7. Further strengthened foreign exchanges and cooperation. To share the advanced experience and knowledge of other countries, the Supreme People's Court cooperates with WIPO and EU, and strengthens business exchanges with the countries and regions with a rich experience in IP protection, so as to enhance China's judicial protection competency for intellectual property.

Adrian Otten: IP protection plays a crucial role in China's Trade Development

Adrian Otten, director of the Intellectual Property Division of the WTO Secretariat, explained why IP protection plays a crucial role in the trade development of a trade power like China.

Firstly, what is the minimum standard for IP protection? This is expressly stated in the relevant WTO agreements. It is a common understanding among all WTO members that a balanced trade system shall consider the interests of all members, including those gaining competitive advantages backed up by their technology, innovative ability and service of products. However, it does not mean that IP protection will infringe the interests of other members. In fact, just as indicated in article 7, a balanced IP protection system shall first of all be conducive to technical innovation and transfers, and to the social and economic benefits of all the members.

Secondly, even if we do not consider the domestic interests of intellectual property, for any product involving intellectual Property, being either trademark or technology, the exporters will sell them in the export market only when they are sure that it will not cause harm to the market. WTO's statistics shows that in the latter half of 2006, China, for the first time, replaced the United States as the second largest exporting country in the world. And among export products, the proportion of IP-intensive products was growing. The latest report by WTO shows that from 1998 to 2004, the export of products with low technical content doubled, while products with high technical content increased five times, accounting for more than half of the total trade volume.

Thirdly, IP protection will better serve to attract foreign investment, and is especially helpful for the technical transference between hi-tech joint ventures, or between parent companies and the subsidiaries of multinational corporations. The more developed an IP system is, the safer it will be for technical transactions, and enterprises will have a stronger desire to make investments. On this point, the Ministry of Commerce has recently issued a report which impresses me very much. The report points out that in the technology-intensive industries in China, i.e. automobile, electronic message manufacturing and IC manufacturing, foreign investment has more than doubled. China relies on foreign technology, but also develops its own.   

Fourthly, IP protection is important for the promotion of domestic research and development, the encouragement of creative production, such as the production of film, literature and software, and the development of identifying marks, such as trademarks and geographic marks. In recent years, China achieved dramatic progress in establishing and utilizing a modern IP system. According to the statistics by SIPO, 80% of the 476,000 patent applications filed in 2005 were from domestic enterprises. And the percentage is over 50% for invention patent applicants. This is a level only attainable by a few of the most advanced countries. OECD pointed out recently that the research and development power of China has developed rapidly, increasing from 0.6% of GDP in 1995 to the present 1.3%. In fact, if only purchasing power is accounted for, China has been recognized as the second largest country in R & D investment in 2006, second only to the United States.

Fifthly, in promoting the upgrade of industry and helping China become an international R & D center, IP protection also plays an important role. Recently, globalization and the internationalization of research and development attracted more and more attention. China and some other developing countries actively participate in it. More and more companies and countries have begun to carry out R & D work worldwide. A good example of this is that increasingly more multinational companies have set up R & D centers in China, which focuses not only on the Chinese local market, but also on world production. A recent investigation by the United Nations Trade and Development Organization shows that China has become the most attractive land for R & D investment in the world, followed by the United States and India.

Sixthly, the importance of overseas IP rights safeguarding is on the rise. China exports products, services and even technology to foreign countries, Chinese and Chinese enterprises will own increasingly more IP, and China will become an international R & D center. A strong argument for this is that in the past decade, the number of patent applications to the US Patent and Trademark Office made by China has increased 15 times. Therefore, I also hope that China will understand that it is not only merely her responsibility or the requirement for protecting others' intellectual Property to abide by the Agreement on TRIPS, but also for the protection of her own intellectual Property.
  
David Teece: The world must have patience with China.

David Teece, professor with University of California Berkeley, at the Forum said, "my colleagues and I all think that compared to the United States and some other developed countries, China is still a developing country. However, China has made great efforts to reform her innovation system and strengthen the protection of IP. For example, China has held many training courses participated in by leaders and staff. In the last year, China sent a group of high-level officials and judges to the university where I served to accept the training offered by the first class experts and scholars in the United States".    

"To establish an effective innovation and IP system is not something that can be undertaken in a day. It took the developed countries more than 100 years to realize it. Therefore, the world must have patience with China, and allow her to proceed step by step. Scholars studying development are more aware of the fact that ample land, labor force and capital are no longer sufficient for wealth creation. Social organizations, which include government policies and the legal system, are the key to success. Without a suitable legal system, Property, or favorable policies, the market role will never be completely fulfilled. Wealthy countries have stable political systems, as well as respected Property records. In addition, they also have stable monetary policies, well-educated labor resources, efficiently running judicial systems, and smooth channels for the transfer of rights. All these factors are crucial."

Karla Norsworthy: Chinese enterprises should formulate patent policies applicable in companies

Karla Norsworthy, vice president of IBM, said that more and more intellectual properties have been created through the cooperation with customers, collaborators, universities and governments. Owing to the accelerated cooperation among the different national organizations and the enhanced degree of economic interdependence among different countries, in order to build up a healthier IP environment worldwide or in individual countries, no country is a detached island in the present global economy. Since China's entry into WTO, she has greatly improved her IP laws and regulations. Now she is also committed to improving her IP legal system and law-enforcement mechanisms. IBM is greatly appreciative for this. To improve China's IP environment, the most essential factors are to provide more training and legal education to IP specialists, and more investment in trade organizations. China's enterprises need them to develop, to consult and to create intellectual properties. To attain and apply a first world-level IP system, Chinese enterprises should consider formulating their patent policies, which involves a commercial patent practice and maintains consistency with respect to the major points.