On November 24, 2019, the General Office of the Central Committee of the Communist Party of China (CCP) and the State Council jointly issued a document titled Opinions on Strengthening Intellectual Property Rights Protection. The document sets out an impressive array of measures for strengthening legislation as well as enforcement of IP rights over the next three years, including through higher civil damages, changes in the standards for criminal prosecution and the use of innovative measures to address online infringements.
The issuance of this document comes just days before China and the US were expected to announce an agreement on IP and other trade issues. Absent an agreement, the US is expected to impose additional duties on Chinese imports starting December 14, 2019.
Any agreement with the US will likely contain further details of the Chinese government’s action plan.
The following is a summary of the main provisions in the Opinions.
- Broad Goals – By 2022, China will strive to effectively curb IP infringements and address the main challenges faced in enforcement work, including the high cost of pursuing remedies, insufficient compensation from civil actions, and difficulties IP owners face generating the evidence needed to bring enforcement actions.
- New Legislation – Chinese authorities will also study the possibility of issuing a unified IP law, while in the meantime accelerating the process of revising the current Patent Law, Trademark Law, and Copyright Law. (Note that the latest amendment of the Trademark Law entered into effect on November 1, 2019. However, the changes in this law were limited to provisions on civil compensation and bad faith trademark registrations.)
- Compensation – Significantly increasing the maximum level of compensation for IP infringements. (As noted above, the Trademark Law was recently amended to these ends, with the maximum level of statutory damages increased from RMB3 million to RMB 5 million and the maximum level of punitive damages increased from 100% to 300% of the base level, and with a minimum 100% level imposed.)
- Bad Faith Behavior – Regulate malicious trademark registration, abnormal patent applications, and bad faith litigation. (Again, the latest amendment of the PRC Trademark Law has already introduced significant improvements in relation to bad faith trademark registration as well as litigation, in part by introducing possible fines against both pirates and their trademark agents.)
- Trade Secrets – Strengthening protection for trade secrets, confidential business information and source code.
- Criminal Enforcement – Strengthening systems for criminal enforcement against IP violations. (Notably, no mention is made of possible amendment to the IP provisions of China’s Criminal Code – last amended in 1997. However, it is likely that Chinese authorities will introduce changes to the current thresholds system for decisions to investigate and prosecute IP crimes, perhaps through the issuance of new judicial interpretations by the Supreme People’s Court.)
- Evidence – Considering the establishment of a notarized evidence collection system for infringements, including one focused on online evidence. Also, exploring ways of reducing the burden of proof imposed on rights holders.
- Case Guidance – Establishing a national case guidance mechanism for IP protection and a public trial mechanism for major cases to be supported by a system to publicize repeated infringements, intentional infringements and an improved mechanism for related penalties, including presumably punitive damages.
- Patents – Exploring the establishment of patent linkage and patent term restoration systems.
- Live Sports Broadcasts – Researching ways of strengthening IP protection relating to live sports broadcasts.
- Ecommerce – Establishing new standards for IP protection by ecommerce platforms and issuance of new rules focused in particular on cross-border ecommerce. (China’s Ecommerce Law entered into effect on January 1, 2019, but it has been widely criticized for failing to introduce significant new obligations on online trade platforms with respect to IP protection. The new document suggests that, rather than issuing new laws or regulations, the government will attempt to improve platform behavior through the use of standards. Whether such standards will be mandatory or merely voluntary remains to be seen. China’s first standard on IP management by online trade platforms (GB/T 37538—2019) enters into effect on January 1, 2020, but addresses only minor issues, and is voluntary.)
- Technical Support – Strengthen scientific and technical support for IP by means of source traceability, real-time monitoring and online identification. A plan to create an intelligent detection system for infringement is to be explored to aid enforcement.
- Big Data / Monitoring – Establishing and improving the National Intellectual Property Big Data Center and the Protection and Monitoring Information Network. This will encompass statistical monitoring of registration, examination and approval of IP rights as well as dispute resolution to aid in judgement and macro-level decision making.
- Industry Associations – Encouraging industry associations and chambers of commerce to establish self-discipline and information communication mechanisms for IP protection.
- Cross-Border Coordination – Strengthening cross-departmental and cross-regional case-handling cooperation systems.
- Accelerated Case Handling – Accelerating the handling of simple cases and disputes.
- IP Protection Centers – Establishing IP protection centers in regions where certain industries are located.
- ADR – Promoting the use of mediation to resolve IP disputes more quickly.
- Exchanges with Industry – Boosting information exchanges with domestic and foreign industry associations, chambers of commerce, and social organizations through meetings and forums held at embassies and consulates in China.
- International Dispute – Strengthening the construction of overseas information service platforms, providing guidance on overseas intellectual property disputes, and establish a coordination mechanism for overseas disputes.
- Local Accountability – Ensuring performance in IP enforcement is incorporated into appraisal systems for the local party committees and governments.