I. Laws and Regulations

On March 1, Zhang Mao, Head of SAIC said that it is clearly provided in Trademark Law that well-known trademarks belong to legal concepts instead of honorary sign of products, so they cannot be used for company promotion.

At the third round intensive interview at the “Ministers’ passage” of the two sessions, SAIC head Zhang Mao said trademark application pendency has been reduced  from 9 months to 8 months in 2017 and will be reduced to 6 months this year. Zhang Mao noted that technical advancement will be further utilized to push forward the facilitation of trademark registration and to simplify the procedure of trademark registration.

Issued by the General Office of the State Council, the Measures on the Transfer of Intellectual Property Rights to Foreign Parties (Pilot) (dated March 18 and published March 29, 2018, with immediate effect) tightens scrutiny over the transfer of intellectual property rights (IPR) to foreign parties on national security or public interest grounds. According to the Measures, a security assessment is required before the proposed transfer of IPR to foreign parties if the transfer involves patents, exclusive rights to integrated circuit layout designs, computer software copyrights or new plant varieties (including the right to apply for IPR registration) through the export of technology and/or acquisition of an onshore enterprise by a foreign party.

The introduction of a punitive damages system for intellectual property rights violation has won huge acclaim among industry insiders after Premier Li Keqiang proposed the move in his Government Work Report for the year, delivered on March 5. Such punitive damages would involve compensation that exceeds the plaintiff's actual loss, creating a greater deterrence against such violations. It is the first time such a system has been mentioned in the Government Work Report, which called for strengthened IP protection. "We will see that the strong protection of property rights and the fluid flow of production enable a significant increase in market dynamism and public creativity," Premier Li said in his report.

The recently unveiled guidelines for improving the trial procedures of intellectual property rights (IPR) cases in China have great realistic significance and far-reaching historic influence, a Chinese official told a press conference on Feb.28. The guidelines will comprehensively advance the modernization of the IPR case trial system and capabilities, added Tao Kaiyuan, vice-president of the Supreme People's Court (SPC). The guidelines are the first landmark guidance released by the General Office of the Communist Party of China (CPC) Central Committee and the General Office of the State Council for IPR case trail.

According to the Work Plan of the State Council on Legislation in 2018 released, the draft revision of Patent Law will be submitted to the Standing Committee of National People’s Congress for deliberation. SIPO of China has launched the fourth all-around amendment of Patent Law since the second half of 2014. Based on extensively solicited opinions, the draft revision of Patent Law was formed and submitted to the State Council in July 2015 for review by the Legislative Affairs Office of the State Council. In December 2015, the Office began to seek public input on the draft revision and carry out study and argumentation work in this regard. The current Regulations on Patent Commissioning was promulgated by the State Council in 1991. The amendment work about the Regulations has been put in the Work Plan of the State Council on Legislation for consecutive 5 years from 2012 to 2016. In order to avoid the decoupling of relevant reform measures and the current laws and regulations, the State Council speeds up the amendment progress of the Regulations.

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II. Government Policies

According to the work report of Shenzhen NPC Standing Committee released by Qiu Hai, Head of NPC Standing Committee of Shenzhen Municipality on January 18, 2018, the local NPC Standing Committee will push forward the building of “a law-based model city of China” in 2018. It is learned that Shenzhen strives to take the lead in establishing the toughest system of IPR protection across the nation and build a national model zone with tight IPR protection and global influence, so as to improve the indigenous innovation in Shenzhen Special Economic Zone and build Shenzhen into a modernized international innovative city.

Recently, Tianjin released the Implementation Opinions on Improving the System of IPR Protection. The staff of Tianjin IP Office said that the opinions aim to promote strong patent protection by rolling out 21 key measures and organizing campaigns like the crackdown on IPR infringement and counterfeiting and the market purification during the New Year and the Spring Festival.

On January 22, it was learned from Urumqi Municipal Administration for Industry and Commerce that, the capital city would push forward the cancellation of administrative recognition of famous trademarks and renowned trademarks, and vigorously explore the resources of geographical indications including specialty agricultural products, handicrafts and national specialty products to make breakthrough in this regard before the end of this year. Meanwhile, trademark and brand internationalization will be actively promoted. It is learned that the recognition of famous trademarks has been implemented in Xinjiang for 17 years. Now, Urumqi has 79,546 valid trademark registrations, accounting for 0.46% of the national total and 22% of Xinjiang’s total, among which 161 are about famous trademarks, 160 are renowned trademarks and 10 are well-known trademarks.

On January 9, it was learned from the briefing of the 1st World Customs Conference (WCO) on Cross-border E-commerce that, the General Administration of Customs of China (GACC) was taking the lead to formulate the Framework of Standards on Cross-border E-commerce. It will become the first guidance document of WCO on the regulation of cross-border e-commerce, contributing “Chinese Wisdom” to cross-border e-commerce for sustainable development.

On the morning of March 1, the State Council Information Office held a press conference to invite Zhang Mao, Head of the State Administration for Industry and Commerce (SAIC) to introduce the work on deepening the reform in the commercial system and answer the questions from the reporters. Zhang Mao said, the reform in the commercial system has achieved noticeable progress ever since. So far, China’s market players of various kinds have totaled 99.6 million. In 2018, SAIC will continue to deepen the reform in commercial system by comprehensively launching “the separation of certification and license” to reduce administrative approvals subsequently and shorten the time to start a business, hence promoting the full electronic registration of enterprises and the application of electronic business license, accelerating the reform of management of corporate name registrations, further simplifying the market withdraw system and improving the facilitation of corporate registration. According to the statistics of World Bank, China’s global ranking in terms of business environment was up 18 places from 2013 to 78 in 2017 after years of efforts, among which China rose by 65 positions regarding the market access (convenience of starting an enterprise).

Chinese Premier Li Keqiang highlighted at China Development Forum 2018 that the strategic plan of “Made in China 2025” is pushed forward in an open-minded environment, treating domestic and foreign enterprises in the same way. We will not mandatorily require foreign enterprises transfer technologies. Instead, we will strengthen IPR protection and crack down on IPR infringement. More competitive and brilliant international enterprises are welcome to seek cooperation in China, so as to jointly create and share development opportunities.

According to Chinese government’s work report, it is required to strengthen IPR protection and apply punitive damages against IPR infringement, which is first proposed in such a high-level report. Property system is the cornerstone of socialist market economy. Strengthened IPR protection has achieved remarkable results in the past five years. In terms of patent administrative enforcement alone, 190,000 cases have been handled, with an annual increase of 40%. However, the Chinese Academy of Social Sciences reveals the average damage of patent infringement in China is 79,600 yuan, while the amount in some other countries records 29.4 million yuan. Coordination among different departments, improvement of work efficiency and aggravated damage will be become the focus of the next step.

The service product Copyright Financing, focusing on the integration of copyright pledge and cultural financing, has achieved positive market recognition. Based on the cooperation with financial institutions, the service product increases success rate of copyright collateral financing, reduces loaning risk for financial institutions and ensures the integration of actual demands of copyright industry with financing services.

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III. Law Enforcement

On January 10, it was learned from Tianjin Intellectual Property Office that, the local police successfully cracked a case about pass-off of trademarks registered by Tianjin Pipe Corporation, with a value of about 600 million yuan involved and 10 suspects being caught, which vigorously protected the legitimate rights and interests of enterprises.

On January 9 when checking the luggage of an outbound car at the road port in Manzhouli, Manzhouli customs discovered and seized 573 pairs of sports shoes infringing upon the exclusive rights of trademarks including “Nike”, “Skechers”, “Reebok” and “SALOMON”. This case is the largest one cracked by the customs in Manzhouli at the port over the past five years. In recent years, the customs in Manzhouli took multiple measures to enhance IPR protection by launching a series of campaigns for IPR protection and against counterfeiting, establishing the fast response mechanism to fight against infringement acts involving export goods, strengthening the application of means against risks, conducting the analysis of import and export big data and offering the early-warning parameters and deployment recommendation. Boxes and bags, garment, shoes and hats are considered as the key goods for supervision and examination. Meanwhile, active efforts are made to launch the law-related promotion work and education.

Recently, it was learned that by the end of November, 2017, 456 cases of trademark infringement had been handled and those involved in trademark infringement had been all included in the blacklist of enterprise credits for punishment in accordance with the laws.

“From now on, the IPR holders will be under effective protection against infringement,” an official of Sichuan IP Office said. It is said that Sichuan IP Office, Sichuan Provincial Administration for Industry and Commerce, Sichuan Copyright Administration and Chengdu Customs jointly released the Work Plan on Improving the Investigation and Punishment System of IPR Infringement. With the measures like IPR complaint fast response system to be taken, the IPR-related administrative law enforcement capabilities have been improved and the innovation-driven development has secured strong guarantee. As introduced, the Plan will be promoted starting from 2018.

On the morning of March 1, Tianjin No.3 Intermediate People’s Court and Tianjin IP Court were established. Tao Kaiyuan, Deputy Head of the Supreme People’s Court and Zhao Fei, Member of Tianjin CPC Municipal Standing Committee and Secretary of Tianjin Political and Judiciary Commission jointly unveiled the plate for Tianjin IP Court.

In 2017, Beijing Food and Drug Administration (BFDA) looked into a total of 12,600 law-breaking cases, with fines totaling 230 million yuan. Such tight crackdown on illegal food and drug involved acts aims to punish or deter those law breakers and purify the market. On March 13, 2018, Beijing Food and Drug Administration worked with Beijing Public Security Bureau to carry out environment-friendly disposal of the fake food and drug goods at Doudian in Fangshan District, mainly including unmarked labels, expired, counterfeit and substandard food and drugs. Over 1,000 bottles of fake liquor and over 60,000 boxes of fake drugs worth over 700,000 yuan were destroyed.

The top court is considering setting up a high court specializing in handling intellectual property disputes as the country takes bigger steps to protect IP rights, a senior judge said. The Supreme People's Court is also studying how to hear IP lawsuits more efficiently and will make public detailed procedures soon, Song Xiaoming, chief judge of the top court's IP Tribunal, told China Daily. The nation currently has three IP courts, all at intermediate level, in Beijing, Shanghai and Guangdong. While delivering a work report on Friday to the National People's Congress, Zhou Qiang, president of the top court, also said a plan to improve procedures on handling IP lawsuits is in the pipeline.

It is learned from the Supreme People’s Procuratorate that in 2017, the public procurators nationwide performed its function to make continuous efforts on anti-counterfeiting. 8,671 cases of goods counterfeiting were indicted, involving 14,342 suspects.

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IV. Events and Campaigns

On January 3rd, 2017, China Photographers Association and Images Copyright Society of China jointly held a workshop to seek input from the photographic community on the revised draft of Copyright Law. The workshop aims to fully seek comments from the photographic community on the revision of Copyright Law, reflects the demands and appeals of photographers with the national competent authorities so that the revised Copyright Law can accurately reflect and effectively protect the rights and interests of all photographers.

On March 1, Shen Changyu, SIPO Commissioner of China met the Argentine delegation led by Dámaso A. Pardo, Head of Argentine Industrial Property Office and Diego Ramiro Guelar, Argentine Ambassador to China. Shen introduced the updates of China’s IPR work and expected joint efforts to further expand the bilateral cooperation and achieve more cooperation results. Dámaso A. Pardo commended the achievements made by SIPO of China in recent years and hoped to learn from China’s successful experience, strengthen bilateral cooperation and transform more patents into real productivity. Both sides also exchanged opinions and ideas on talent training, data exchange, cloud review system and patent prosecution highway (PPH). After the meeting, the two sides signed Joint Statement of Intention between SIPO of China and IPO of Argentina on PPH Cooperation.

In the course of integrated development, the coordination mechanism of IPR protection in Yangtze River Delta is also improving. In 2009, Suzhou, Shanghai and Zhejiang signed the Agreement of Cooperation Framework on IPR Development and Protection in Yangtze River Delta. According to the agreement, the press conference about IPR development and protection in Yangtze River Delta will be held alternatively in these three places during the week of “April 26 IPR Promotion” every year, demonstrating the IPR cooperation in the Yangtze River Delta and becoming one of the major brand events for the integration of Yangtze River Delta.

The State Intellectual Property Office of China (SIPO) and the German Patent and Trade Mark Office (DPMA) jointly decided to extend the SIPO-DPMA Patent Prosecution Highway (PPH) pilot program for another three years from January 23, 2018 to January 22, 2021, with the relevant requirements and processes of the submission of PPH application of both offices unchanged. According to the Joint Statement on the Patent Prosecution Highway (PPH) between the State Intellectual Property Office of China and the German Patent and Trade Mark Office, the SIPO-DPMA PPH pilot program was launched on January 23, 2012 for two years. This PPH pilot program had been extended twice on January 23, 2014 and January 23, 2016 and expired on January 22, 2018.

On 26 March 2018, the Heads of INPI, ROSPATENT, CGPDTM, SIPO and CIPC (hereinafter referred to as the "BRICS IPOs") met in Chengdu, China, at the 10th Heads Meeting of BRICS IP Offices. The Heads of BRICS IPOs jointly reviewed the sustained progress made within last six years through BRICS IP cooperation, and explored ways to further strengthen IP cooperation among BRICS countries.

On March 2, the State Intellectual Property Office (SIPO) held a press briefing in Beijing. SIPO Deputy Commissioner He Zhimin briefed the audience on the information about China's valid invention patents to take effect in Cambodia. He said that processing applications of China's valid invention patents to take effect in Cambodia would be launched soon; it was a milestone of China-Cambodia intellectual property cooperation, a breakthrough in intellectual property cooperation under the Belt and Road Initiative, and a historic achievement of China's intellectual property career against the background of being guided by the Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, implementing the guiding principles from the 19th National Congress of the CPC and its various decisions and arrangements, and building China into a strong intellectual property country.

On March 26, the 10th Meeting of BRICS Heads of IP Offices was held in Chengdu, Sichuan Province. Shen Changyu, SIPO Commissioner attended and presided over the meeting. Luiz Otávio Pimentel, President of INPI of Brazil, Grigory Ivliev, Director General of Russian Federal Service for IP, Om Prakash Gupta, Director of the Office of the Controller General of Patents, Designs and Trademarks and Rory Voller, Head of Companies and IP Commission of South Africa attended the meeting and delivered remarks. Wang Binying, Deputy Director General of WIPO was invited to deliver remarks at the opening ceremony. He Zhimin, Deputy Head of SIPO introduced the achievements of BRICS on IPR cooperation.

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V. Data and Statistics

Recently, U.S. Chamber Global Innovation Policy Center (GIPC) released the 2018 International IP Index, which indicated that China ranked 25th among the 50 economies with the score of 19.08, up two positions as compared to the ranking in 2017. The report believed that China is achieving substantial progress in building the IPR environment oriented towards the 21stcentury. In particular, first, the reform in patents and copyrights enhanced its protection and law enforcement results; second, the governments and law enforcement organs of various levels attached more importance to IPR; third, the awareness of research institutions and individuals in IPR protection and their capability in utilizing them had been enhanced. The report also pointed out that China still has weakness in building its IPR environment, including barriers in IPR market access and commercialization.

In 2017, the market of Chinese digital music has valued at over 100 million yuan. According to the estimation of QUEST MOBILE, the market will increase by 201.5% as of 2020, mainly resulting from strengthened copyright management, increasing payment willingness and rapid development of online music APPs.

Over the past five years, Chinese courts at different levels concluded 683,000 IP cases, and prosecution proceedings were launched against 120,000 suspects accused of IP crimes, 2.1 folds over the past five years, according to the reports delivered respectively by Zhou Qiang, President of Supreme People's Court (SPC) and Cao Jianming, Procurator General of Supreme People's Procuratorate (SPP) during the 13th NPC on March 9.

Chinese companies obtained 11,241 more U.S. patents in 2017, up 28%, making China, for the very first time, a top five country in the department of owning U.S. patents. The number of U.S. patents obtained by Chinese companies increased by ten-fold in the last decade, according to statistics issued by a U.S. research institute. "What Chinese companies have done in securing patents is impressive," said Sun Guorui, professor of Law School of Beihang University. "China has been spotted many times in a number of world's influential innovation lists, and it reflected that China has made significant achievements in implementing its innovation-driven development strategy and building China into an IP power house." Among the 320,000 patents granted by the United States Patent and Trademark Office in 2017, 3.5% of which were obtained by Chinese companies. The local U.S. companies claimed ownership to 148,139, accounting for 46% of the total. The rest of the top five countries were Japan (50,600), South Korea (20,970) and Germany (15,771). "For all the remarkable gains Chinese companies have made in this regard, the statistic show that there still exists a big gap between China and the rest of the elite group, particularly Japan and Korea. The fierce market competition has proved that patent is power, and Chinese companies still have a long and hard journey to go before they can catch up with their counterparts. "said Sun.

Recently, the SIPO released the domestic invention patents and the relevant ranking of enterprises in 2017. Data showed that China had 1.382 million invention patent applications, increasing by 14.2% year on year. 420,000 invention patents have been granted, among which domestic grants reached 327,000, increasing by  8.2%. The momentum of patent sector can be found both in terms of numbers and quality.  “In 2017, enterprises accounted for 63.3% and 66.4% of the national invention patent applications and grants, up by 1.6 and 0.9 percentage points from that in 2016,” said Bi Nan, Director-General of Planning and Development Department, SIPO. Bi Nan said, since the 18th CPC National Congress, SIPO proposed the ideology that “quality prevails and volume deploys” and launched the program of patent quality improvement, with focus on the full chain of patent work, including key parts of patent application, agency, review, protection and application. A series of targeted measures will be formulated to improve the patent quality. The benefits of patent application are to be enhanced so as to create good patent protection environment and improve the implementation of high-quality and high-value patents.  “Nowadays, foreign invention patents granted by SIPO is higher than domestic invention patents in five sectors of optics, medical technology, engines, audio-visual technology and transportation,” Bi Nan said that, in terms of over 10-year invention patent ownership, China still lags behind in 29 technical fields and needs to continue nurturing high-value core patents in this regard.

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