By Hu Yinan (China Daily)
Updated: 2007-09-11 07:36

The government is to establish a litigation response contingency fund to help companies deal with intellectual property rights (IPR) disputes, the State Intellectual Property Office (SIPO) has said.

The move comes in the face of increased IPR disputes since China's accession to the WTO in 2001.

The United States International Trade Committee (ITC) has launched 12 cases against Chinese companies - involving $1.66 billion - from January to August this year, Ministry of Commerce officials said.

The number of cases and the amount of money involved showed a year-on-year increase of, respectively, 43.8 percent and 43.2 percent, Yu Benlin, deputy chief of the ministry's fair trade bureau, said.

Such investigations have jeopardized China's hi-tech industries and structural upgrades in the country's trade exports, he said.

For the fifth year in a row, China was accused of the most violations under Section 337 of the Tariff Act of 1930. By the end of last year, the US had launched 58 investigations against Chinese companies, since it joined the WTO. There were 13 cases lodged in 2006, accounting for 39.3 percent of the world's total.

SIPO deputy chief Zhang Qin said there were two reasons for this. First, some Chinese firms do not fully understand IPR protection.

Second: "We cannot rule out the fact that some transnational corporations abuse their IPR rights and attempt to snuff out the emergence of Chinese firms."

Wrong impression

Many small and medium-sized firms choose not to challenge IPR accusations in court because of time constraints, complexity and expense, Yu said.

This may have given US investigation agencies the wrong impression that IPR infringements are common among Chinese firms, Yu said.

"This situation has led to (problems) for Chinese companies and the issuance of exclusion orders by foreign companies preventing them from doing business in the US market."

Global rivals request investigations against Chinese companies to prevent them taking significant market share and force them out of the US market because of prohibitive litigation costs, Yu said.

According to the commerce ministry, Chinese companies have suffered lost opportunity costs of between $69.1 billion and $147 billion in recent years as a result of IPR disputes.

The SIPO intends to create a steering committee on corporate IPR management and a mechanism for expert assistance, helping Chinese companies with their patent strategies.

It also aims to provide research for new technologies and products, as well as drafting IPR management charters.

Additionally, it aims to evaluate company performance regarding IPR protection, establish information platforms for domestic and global patents

It will also introduce technology monitoring mechanisms to track the activities of competitors to Chinese firms.