Toward a better IPR regime

Despite remarkable achievements, China needs tougher measures for protection of high-tech intellectual property rights

No matter which way foreign investment enterprises obtain intellectual property rights, it has always been a topic that generates heated discussions all over the world.

It is easy to understand the IPR misgivings of developed countries as they are gradually losing their competitive advantage in labor-intensive products and services. On the other hand, they have managed to retain and strengthen their competitive advantage in high-tech products and services. It is this advantage that is now being closely linked to protection of intellectual property rights.

The unscrupulous activities of some Chinese companies on the IPR front had in the past proved to be a major concern for several US and European firms. Commercial counterfeiting, copyright and industrial design infringement and other intellectual property infringement had impaired the competitive advantage enjoyed by nations like Germany in invention and innovation.

According to a survey conducted by Georg-August-University of Goettingen, in 2012, the losses incurred by German companies due to all types of IPR violations from China were between 7.6 billion euros and 11.6 billion euros.

Fiercer international competition and the rise of protectionism in the US and Europe has also led to an increase in the number of IPR lawsuits against Chinese companies in the first five months of the year.

Of the 24,544 IPR lawsuits, about 504 were foreign-related IPR cases, according to data provided by the Supreme People's Court of China.

Currently, China's intellectual property protection is still in its infancy. A number of Chinese enterprises, fully aware of the risks, still imitate or alter the original intellectual property rights of foreign companies to make it their own. In fact, such abuse of technical standards constitutes a de facto IPR infringement.

Economic pressure from developed countries has accelerated China's efforts in putting more resources into fighting counterfeiting and piracy. It is obvious that China has made undeniable achievements, but in quite a number of regions and areas, infringement still continues. The trial period for IPR cases is also not in accordance with international standards.

In most developed countries, there is no time limit for IPR disputes. But China's jurisdiction treats IPR lawsuits the same as general commercial cases. For example, lawsuits on patents, or new plant varieties authorization, have a two-month trial time limit. Such practices have often triggered doubts in the minds of foreign companies on trial quality.

To a certain extent, inadequate protection of intellectual property rights can also be seen as trade and investment barriers. Many multinational companies invest heavily in the development of new technologies and new products, and if there are risks of their technology being obtained free, they certainly would not want to invest in that country anymore.

In recent years, IPR infringement has weakened European and US companies' advantage in low production costs in the Chinese market. For high-tech investments, the situation is particularly serious, because these products can be easily imitated. For example, integrated circuit design, pharmaceuticals and automotive technology take a lot of time to design. But these patents and designs can be easily obtained by chemical analysis or other forms of industrial product structure breakdown.

The Chinese government has realized the importance of intellectual property rights, especially high-tech IPR on the overall economy. These technology intellectual property rights first transform into an economic force and then penetrate to political and diplomatic fields, thereby improving the country's comprehensive national strength.

To provide a better investment environment, China's National Development and Reform Commission, Ministry of Commerce and other government and non-governmental agencies are now establishing new platforms both at home and abroad for protecting the IPR of Chinese and foreign enterprises.

With IPR playing an increasingly significant role in social economy, Chinese enterprises also need to prioritize their IPR property strategy while participating in global competition.

They must also know how to avoid infringement disputes with foreign enterprises, as several of China's high-tech companies like ZTE, Huawei, Sany and Tencent have realized when conducting business overseas.

These companies certainly have realized that IPR is often a tool used by Western nations to engage in trade protectionism, and to deny further market access for Chinese companies.

Chinese companies that wish to have a bigger international market share, must learn to develop their own high-tech intellectual property, and use it as an investment to gain better opportunities in the international market. In the meantime, close cooperation with both Chinese and foreign governments is also needed.

Rising awareness among Chinese companies, especially IT companies, while dealing with IPR lawsuits overseas has also prompted an improvement in the overall IPR environment in China's domestic market. It is noteworthy that big companies are actively helping the judiciary in their efforts to fight copyright infringement in China.

The author is a researcher with the Beijing Intellectual Property Society.