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The Latest Development of China’s Intellectual Property System

Linda Liu & Partners
 
The past 4 decades has witnessed the booming of Chinese economy and economic aggregate reaching a new level. China’s GDP (Gross Domestic Product) soared to RMB101.5986 trillion in 2020 from RMB367.9 billion in 1978 with its economic scale expanded 276 times, making it the world's second largest economy. Especially in 2020, despite the impact of COVID-19 pandemic, with the joint efforts of the nation as a whole, China's GDP in 2020 reached RMB 101.5986 trillion, 2.3% increase over the previous year at comparable prices, according to the preliminary calculations in the report of the State Council of China, becoming the only major economy in the world achieving positive economic growth.
 
Over the past 40 years, as China's economic development mode has shifted from labor-intensive to innovation-driven, strengthening intellectual property protection has gradually become an objective demand for China's current and future economic development. On November 30, 2020, Chinese President Xi Jinping pointed out at the study session of the Political Bureau of the CPC Central Committee themed on intellectual property for the first time that intellectual property protection is related to the modernization of national governance system and governance capacity, high-quality development, people's well-being, the overall situation of the country's opening up and national security. The strengthening of intellectual property protection has been lifted to the height of the national governance system, which is unprecedented. It is foreseeable that intellectual property protection will play an increasingly important role in China's innovation-driven development.
 
In fact, in the past 2020, despite the onslaught of COVID-19 virus, China's intellectual property protection industry is still advancing with remarkable results achieved in right acquisition and confirmation, right enforcement and legal construction of intellectual property rights.
 
Let's start with a look at China's intellectual property right applications in 2020.
 
I. The situation of intellectual property right applications

According to the latest statistics released by China National Intellectual Property Administration (Hereinafter referred to as “CNIPA”)
 
Patent
In 2020, 530,000 invention patent applications were granted. As of the end of 2020, China (excluding Hong Kong, Macao and Taiwan) had 2.213 million valid invention patents and the number of invention patents per 10,000 people reached 15.8, exceeding the 12 targets set in the Outline of the National Thirteenth Five-Year Plan.
 
In 2020, CNIPA received 72,000 PCT applications, 67,000 of which were from domestic applicants.
 
In 2020, China granted 2.377 million utility model patents and 732,000 design patents. 48,000 patent reexamination cases were concluded with a year-on-year increase of 28.9%. 7,000 invalidation cases were announced concluded, increasing by 34.1% compared with the previous year.
 
Trademark
In 2020, 5.761 million trademarks were registered in China. 7,553 applications for Madrid Trademark Registration filed by Chinese applicants were received.
 
149,000 trademark opposition cases and 358,000 various trademark review cases were concluded in 2020, with a year-on year growth of 64.7% and 7.8% respectively.
 
Geographical indications
CNIPA accepted 10 geographical indication applications, and approved 6 products protected by geographical indication. CNIPA approved 1,052 enterprises to use the special signs of geographical indications and 765 geographical indication trademark registrations. As of the end of 2020, a total of 2,391 products protected by geographical indication were approved, 9,479 enterprises were approved for the use of special signs, and a total number of 6,085 geographical indication trademarks were registered.
 
Integrated circuit layout design
 
A total of 14,375 applications for integrated circuit layout design were received, and 11,727 certificates were issued, increasing by 72.8% and 77.3% respectively compared with last year.
 
Intellectual property protection and utilization
 
In 2020, over 42,000 administrative adjudication rulings on patent infringement disputes were made within the national intellectual property system. The social satisfaction score of intellectual property protection exceeded 80 points for the first time, reaching 80.05 points.
 
In 2020, China's patent and trademark pledge financing projects reached 12,039, an increase of 43.8% year-on-year; the total amount of pledge financing reached RMB 218 billion, an increase of 43.9% year-on-year.
 
The above statistics reveal Chinese and foreign enterprises’ passion on intellectual property right application and protection in China, despite that the world economy was hit hard by COVID-19 pandemic in 2020.
 
At the same time, China accelerated its examination speed, albeit the increase of its application amount. In the first half of 2020, China shortened its examination period to 20.3 months for invention patent, 15.2 months for high-value patents, 6.4 months for utility models and 3.2 months for design.
 
In order to leverage the quality of the granted patents, CNIPA unceasingly strengthens the training on the examination ability of examiners, improves their search ability, and tightens the examination on those low quality patent applications with low degree of innovation, in particular, the so-called abnormal applications that are patchwork or made up. China's invention patent granting rate remained at below 50% in the latest two years, which, however, has exerted little influence on the patent applications that are highly innovative.
 
II. Intellectual property law construction has been further improved
 
China completed the amendment to the Patent Law of the People's Republic of China and the Copyright Law of the People's Republic of China in succession in 2020, following the amendment and implementation of the Trademark Law of the People's Republic of China and the Unfair Competition Law of the People's Republic of China in 2019.
 
The current Patent Law of China came into effect in 1985 and was amended for three times in 1992, 2000 and 2008. On October 17, 2020, the 22th Session of the Standing committee of the 13th National People's Congress passed the Decision on the Amendment to the Patent Law of the People's Republic of China, declaring that the amended law shall enter into force as of June 1, 2021.The fourth amendment to the patent law, affected by various domestic and international factors including the influence of Sino-US trade friction, lasted for as long as 10 years.
 
This amendment to the Patent Law mainly focuses on three aspects: strengthening the protection of the legitimate rights and interests of patentees, promoting the implementation and utilization of patents, and improving the patent granting system.
 
● For malicious infringement, one to five times punitive damages can be imposed, and the lower limit of statutory compensation will be risen from RMB10,000 to RMB 30,000, and the upper limit will be increased from RMB 1 million to RMB 5 million;
 
● Establish a drug patent linkage system that parallels judicial and administrative procedures, enabling the patentees of innovative drugs to prevent infringing generic drugs from entering the market in the drug approval process;
 
● Extend the protection period of design patents to 15 years and introduce partial design patents into the scope of protection, granting design patents with domestic priority;
 
● Establish compensation system for the protection period of invention patent under the circumstance that the issuance of invention patent is delayed due to the unreasonable examination, and the extension system for the protection period of the new drug invention patent to compensate for the delay in its market launch caused by the lengthy administrative examination and approval of the new drug.
 
In addition, this amendment fully embodies the spirit of the country to promote the implementation and utilization of intellectual property rights, and conducts system design in service inventions, rewards and remuneration, and open licensing systems, etc.
 
The amendment to the Copyright Law conforms to the needs of the development of the times and the advancement of content dissemination technology. Many changes have been made in the protection of the object, the content of rights, the ownership of rights, the restriction of rights and legal responsibilities, and the protection on copyright has been strengthened.
 
In addition to amendments at the law level, the Supreme People's Court issued a large number of judicial interpretations in 2020, providing guidance for local people's courts at all levels in the trial of specific cases to ensure the accuracy and consistency of the application of the law.
 
On November 16, 2020, the Supreme People's Court issued the Several Provisions of the Supreme People's Court on the Evidence in Civil Litigation Concerning Intellectual Property Rights (“Provisions”). This Provisions contains 33 articles and has been implemented since November 18, 2020. In general, the Provisions, based on the trials practice of intellectual property cases, further improves the important systems such as evidence submission, evidence obstruction, evidence preservation and judicial appraisal, evidence cross-examination and determination, damage compensation, etc., in order to appropriately reduce the burden of proof borne by right holders and effectively solve the problems of “difficulty in producing evidence” and “high cost of safeguarding rights” faced by right holders in litigation, which is of great significance for strengthening judicial protection of intellectual property rights.
 
The continuous improvement of China's intellectual property-related legal system has laid a legal foundation for the development of intellectual property. In the course of formulating and improving laws and regulations, the National People's Congress, the State Council and CNIPA have extensively solicited opinions from relevant enterprises and social organizations, making the voices from all walks of life and key players in innovation heard to the greatest extent. Foreign companies have also actively participated in solicitation of opinions and provided valuable suggestions for the improvement of China's intellectual property legal system.
 
III. Intellectual property protection has been further strengthened
 
First of all, as far as judicial protection is concerned, the Supreme People’s Court of China established an Intellectual Property tribunal to uniformly hear intellectual property appeal cases involves technical issues nationwide in 2019. Two years of practice has been proved that this innovation in the trial model has played a very good role in improving the trial level of relevant courts across the country, and gradually responded to the concerns of the society. In addition, the construction of intellectual property courts across the nation is also steadily advancing, and the cross-regional jurisdictional trial system is continuously optimized.
 
Statistics of 2020 have not yet been released. According to statistics from Beijing, Beijing's courts at all three levels accepted 66,710 civil and administrative cases with regard to intellectual property, including 42,330 civil intellectual property cases and 24,380 administrative intellectual property cases. A total of 66,973 intellectual property cases of various types were concluded with 42,983 civil cases and 23,990 administrative cases.
 
The average amount of compensation awarded in IP infringement cases by Beijing courts has increased significantly compared with the previous five years. Therein, the average amount of the awarded compensation increased from RMB 118,526 in 2015 to RMB 417,823 in 2020 in trademark cases; from RMB 428,056 to RMB 619,078 in patent cases; from RMB 25,443 to RMB 39,645 in copyright cases; and from RMB 434,624 to RMB 846,845 in unfair competition cases.
 
National statistics have not yet been released. As far as 2019 is concerned, local people's courts across the country received 399,031 civil cases of first-instance, and concluded 394,521cases, marking a year-on-year increase of 40.79% and 44.02% respectively. The specific statistics are shown in the table below.
 
In 2019, the local people's courts across China received a total of 16,134 new administrative cases of first-instance concerning intellectual property rights, and concluded 17,938 cases, an increase of 19.11% and 89.74% year-on-year respectively. Among the newly received cases, 1,661 were patent cases with an increase of 8.14%.
 
From the perspective of administrative enforcement of law, administrative authorities at all levels further enhanced law enforcement, improved the effectiveness of administrative enforcement of law, and launched various special campaigns in 2019 including “Iron Fist”. For example, nearly 39,000 administrative adjudication case concerning patent infringement disputes were handled in 2019 with an increase of 13.7% year-on-year;31,900 trademark infringement and counterfeiting cases were investigated, an increase of 2.24% year-on-year; 51,600 batches of import and export goods accused of infringement were seized, an increase of 9.32%...
 
With the development of Chinese economy, the improvement of the trial level of Chinese courts in IP litigation cases and the increase in compensation amount, more and more transnational enterprises have chosen China as their litigation venue, using intellectual property rights such as Chinese patents as a powerful weapon for rights protection and commercial negotiations.
 
China’s intellectual property industry, like Chinese economy, is in a period of historical transformation. We can foresee that China’s intellectual property rights are realizing the transition from quantity-oriented to quality-oriented, from application-oriented to implementation-oriented, and China is also gradually transforming from a country with massive intellectual property applications to a powerhouse of intellectual property.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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