Making Amends : China's New Intellectual Property Appeals Court

January 7, 2019

The U.S - China trade war is at its peak, and it looks to me that the two greatest world economies have taken the phrase "fight fire with fire" a bit too seriously. With both sides calling eye for an eye, the tariff they imposed on each other was recently reported to have covered goods worth more than $300 billion. This trade war has left people dreading a possible relapse of the turmoil caused during the great depression.

 

The United States has always expressed grave concern regarding China’s attitude towards handling affairs pertaining to  intellectual property rights - and rightly so. Following a 7 month investigation, the United States trade representative inferred that China’s intellectual property theft had been hitting the American economy hard - with an estimated damage of $225 to $600 billion annually. Adding to that, is another problem, which the US authorities like to call China’s “forced technology transfer”. They are basically referring to China’s business strategy when a foreign company wants to do bring their product in their country, where they “willingly” have to share their intellectual property with a domestic partner. So in order to get access to sell your product in Chinese markets, you would also have to transfer a part of your technology. This happens almost everywhere when manufacturing is involved, and seems fair. The problem arises when a country decides to get greedy. In china’s case, when the domestic employees got sufficiently skilled to run all operations on their own, they started their own company, while kicking the foreign company out, at their disposal. The US claims damages worth anywhere between $180 billion to $540 billion annually due to the forced technology transfer, holding China responsible for most of it.  

 

Thankfully, China has started to realize that the whole spat about imposing unjustified tariffs on each other isn’t benefiting anyone, and have finally decided to do something about it. In order to put this thing to rest, they are trying to fix the main grounds on which all the quarrel started- Intellectual property violation. As of January 1, China’s Supreme court would be taking on all the cases pertaining to intellectual property rights. This would be China’s first ever appeal court for intellectual property disputes. Prior to this decision, it was the provincial level high courts that would handle such cases. The main agenda for this movement is to bolster the IP protection law that prevails in the country and eliminate IP theft to maximum extent.

 

The move will "help prevent inconsistency of legal application and improve the quality and efficiency of trials," as said by Deputy Chief Justice Luo Dongchuan. (source)

 

We could also expect a hike in the compensation amount for IP law violation up to 5 times its present value.

 

The new Supreme court is aimed to handle cases strictly relevant to cases involving patents, new varieties of plants, the design of integrated circuit boards and computer software, and monopolies, among other things. Cases concerned with unfair competition, trademarks or commercial secrets would not be addressed by this court.

 

Besides that, there was another draft law proposed at the Standing Committee of the National People’s Congress, that reflects on allowing victims of intellectual property theft to sue for damages.

 

A major issue pointed out by foreign companies was the existence of different standards at different local courts. The national appeal could help centralize the system, that would protect foreign companies from local protectionism.

 

Luo also made it clear, that this decision to set up a new supreme court does not come as result of foreign persistence, but their own will  to strengthen their intellectual property law, which forms an integral part of the country’s development.

 

 

“China has for many years followed international regulations and international treaties to protect intellectual property rights,” he added.“So it’s not because of the demands by foreign countries that we’ve stepped up protection [efforts]. This is an integral part of our own development.” (source) 

 

Interestingly, China has always been of the opinion that it most certainly justifies its role as a member of the World Trade Organisation, and does everything in its power to protect intellectual property rights that concern foreign firms. However, most foreign companies that are currently operational in China, or have been in the past, beg to differ. Though improvements have been made in IPR protection, they are barely sufficient for a country that is now the second-largest economy of the world.

 

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