Deep & Far Newsletter 2020 ©
Mainland China IP Updates
Draft Amendment to China’s Copyright Law Gets Second Reading
In order to better balance the public interest and the protection of copyright holders, a number of changes have been made to the Copyright Law in the PRC. Improvements have been made to the definition of works, provisions prohibiting the abuse of copyright rights to affect the normal dissemination of works have been deleted, adjustments to regulations concerning legal liabilities have been made and provisions to protect the copyright of audiovisual works have been drawn up. The definition of “works” has been updated to mean intellectual achievements that are original and can be expressed in certain forms in literature, art, science and other fields. The ownership of copyright for audiovisual works is now defined by the agreement between the producer and the author unless it involves cooperative works or service works. If there is no agreement, the producer shall claim ownership, but the author has the right to exhibit his or her name and receive remuneration. The second draft leans on the existing Civil Code, Anti-Monopoly Law and other statutes to deal with copyright abuse, thus allowing the deletion of the phrase: “shall not abuse the right to affect the normal dissemination of the work”. At the same time, the new draft moderately expands the legal scope of the fair use definition.
China Ranks 14th in Latest Global Innovation Index 2020
At 14th place, China was the only middle-income economy in the top 30 for Global Innovation according to the World Intellectual Property Organization (WIPO) rankings issued on September 2. In terms of innovation input China ranked 26th position, and for innovation output it was ranked 6th. IP indicators such as patent, trademark and industrial design had China in top place, and it was in the top three for productivity growth and creative product exports. For global brand value indicators, China came in 17th position reflecting the rise in leading brands that are of local origin. Indeed, among the world’s 5,000 brands, 408 are from China and 9 of them are in the top 25. Part of China’s rise in the rankings over the last decade are due to bigger investments in research and development as well as improvements in the country’s IP system. Technology clusters in various locations and China’s ranking 3rd in higher education have played a significant role too.
CNIPA encourages use of the Madrid International Trademark Registration online
In order to smoothly resume patent application work, CNIPA has channeled local applicants to use the online Madrid System. CNIPA has published the Instructions on Online Application of Madrid International Trademark Registration, scanned domestic applicants’ paper-based applications and sent them electronically to the International Bureau of WIPO. The Trademark Examination Department has intensified management and personnel training so as to deal with examination problems and reduce the rate of re-examination. In the past six months, CNIPA received 3,875 applications for international trademark registration under the Madrid System, up 36%, with an online application rate of 93.5%. A total of 4,009 trademark registrations were examined with an average examination pendency of around two months.
How to deal with agents who apply for trademark registration in their own names in China
Overseas brand owners have often faced the problem of agents preemptively registering their trademarks without authorization. Article 15(1) of the PRC Trademark Law provides that unauthorized registration by an agent is prohibited when the brand owner raises opposition. This ensures respect of the good faith principle and reduces the phenomena of illegal trademark occupancy. The definition of an agency relationship has been defined by the PRC authorities as trademark agent, representative, general/sole distributor, general/sole agent or distribution agent and clarifies the scope of the law. The regulations have been updated over the years to close loopholes and emphasize the need for authorization by the brand owner in order for a registration to be legally binding. According to Article 33 of PRC Trademark Law, any holder of prior rights may, within 3 months from the date of publication of approval, apply to oppose a trademark application which has reached the preliminarily approved and published stage. The Trademark Office will then approve or disapprove the trademark registration. If the trademark is approved, the opponent then has the option of applying for invalidation. Within 5 years of registration, a brand owner can apply to CNIPA to declare invalidation according to Article 45(2) of the same law. For those businesspeople who would like to introduce their trademark to the Chinese market in the form of goods or services, it is a smart idea to make a plan in advance for all possible trademarks that might be in play and register them all as soon as possible. After hiring an agent, it is important to keep a record of all contracts and correspondence in case of any disputes in the future. Forewarned is forearmed.
China International Fair for Trade in Services (CIFTIS)
Enhancing IP protection in the service sector was the focus of six days of meetings and seminars in Beijing this September. In order to revitalize the global trade in services, decisions were made to beef up IP protection. Concepts like an alternative dispute resolution mechanism and an international IP protection service were discussed. Numerous locally based enterprises and multinationals gave positive feedback, reasoning that a more innovation-laden service trade with proper IP protection will generate renewed dynamism for the world economy. As Chinese companies continue to go global, more attention needs to be directed to establishing professional industry-led mediation organizations for IP disputes. Industry associations and chambers of commerce made valuable contributions to the discussions. The Capital IP Services Association released a list of recommended international IP service institutions in Beijing for companies to consult. CNIPA also established branches of the National Overseas IP Dispute Response and Guidance Center in Beijing, Jiangsu and Guangdong Provinces to provide multi-level support for IP protection. By enhancing macro policy coordination, stepping up IP protection and accelerating international cooperation in the digital sector, a major driver of the future digital and sharing economy can be encouraged.
Beijing: China’s Unicorn City
According to PricewaterhouseCoopers (PwC), Beijing has 43% of China’s total number of unicorn companies. A unicorn is a term coined by the venture capital industry to describe a privately held start-up company valued at over a billion dollars. In Beijing, there are 82 companies that meet the definition, including cryptocurrency mining hardware producer Bitmain, chipmaker Cambricon, and artificial intelligence company Sensetime. Part of the reason for such a cluster in Beijing is that it is also a center for angel investors and other investment institutions as well as a city of excellence in software and information services. Beijing currently is ranked the fourth biggest technology area in the world with a strong focus on cloud computing, big data, artificial intelligence, software and information services. The World Intellectual Property Organization (WIPO) estimates the city invests around 6% of its GDP into research and development. To ensure a smooth path for further development, intellectual property rights protection has been increased by the passing of relevant laws. Strengthening IPR has had a positive effect on foreign high-tech investments in Beijing at around an estimated total of 9 billion dollars in 2019. Multinationals like Apple, Tesla, Merck and Mercedes-Benz all have R & D centers in Beijing. Officials forecast that an IPR protection system will be completed by 2022 that will address historic drawbacks such as long cycles in case handling, difficulty in providing proof of rights infringements, high costs and low compensation. Other plans include strengthening the judicial guarantee of commercial trial, improving arbitration and mediation channels and guiding the establishment of a technical support alliance for the inspection of IP infringement. In 2019, China finally overtook the U.S. to become the world’s largest source of international patent applications. The recent measures being taken show that IPR in China is modernizing fast amid a process of internationalization.
China and E.U. sign Agreement on GI ProtectionThe China National Intellectual Property Administration (CNIPA) signed the Agreement on Geographical Indications Protection and Cooperation with the E.U. on September 14th, 2020. Approximately 100 GI products from each party will be included in the initial stages rising to 275 in the next several years. This is the first time that China and the E.U. have agreed to recognize each other’s GIs on a large scale. Previously, recognition was piecemeal and only covered agricultural and alcohol items. Now, non-agricultural items such as Xuan Paper and Shu Brocade will be granted GI protection. GI protection will help producers stand out in the market as they will be allowed to bear the official GI symbol of the host party in the foreign market. In fact, this is the first time that the E.U. has allowed foreign GI holders to use its official symbols. As of August 2020, China had approved 2,385 GI products of which 61 were of foreign origin. These numbers are expected to rise significantly after the agreement.