Assessing Intellectual Property Compliance in Contemporary China

The World Trade Organisation TRIPS Agreement

Kristie Thomas

• Publisher: Palgrave Macmillan
• Year: 2017
• ISBN:
  9789811030727
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

Since its accession to the World Trade Organisation (WTO) in December 2001, China has been committed to full compliance with the Trade-Related Intellectual Property Rights (TRIPS) Agreement. This text considers the development of intellectual property in China, and offers an interdisciplinary analysis of China's compliance with the TRIPS Agreement using theories originating in international relations and law. It notes that despite significant efforts to amend China's substantive IP laws to prepare for WTO accession and sweeping changes to domestic legislation, a significant gap existed between the laws on paper and as enforced in practice, and that infringements to the agreement are still prevalent. The bookexamines how compliance with international rules can be promoted and encouraged in a specific jurisdiction. Making a case for a wider, more interdisciplinary and global outlook, it contends that compliance needs to align with the national interests of relevant countries and jurisdictions, as governments' economic interests support the greater enforcement of the IP laws.

© The Author(s) 2017

Kristie ThomasAssessing Intellectual Property Compliance in Contemporary ChinaPalgrave Series in Asia and Pacific Studieshttps://doi.org/10.1007/978-981-10-3072-7_1

Begin Abstract

1. Introduction

Kristie Thomas¹

(1)

Aston University, Birmingham, UK

End Abstract

1.1 The Significance of Intellectual Property in Contemporary China

With its accession to the World Trade Organisation (WTO) on 11 December 2001, China formally committed to comply fully with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) immediately and without any transition period. This commitment to comply with the stringent TRIPS standards was a major undertaking for a country in which modern intellectual property (IP) laws had only begun to be drafted in the 1980s, and thus China’s subsequent compliance with the TRIPS Agreement is of significant interest to various groups of stakeholders: the WTO itself, trading partners and rights-holders. With WTO accession now already 15 years in the past, surveying the evolution of China’s intellectual property system from this point can provide a powerful and unique perspective of both the short-term transplant of TRIPS standards into the formal substantive law and the longer-term adaptation of these standards into local enforcement practices. It is clear that China swiftly amended its legislation to transplant TRIPS-compliant rules into the domestic IP system; however, a gap was soon perceived between the substantive legislation and enforcement practices experienced by rights-holders on the ground. Furthermore, many of China’s key trading partners such as the United States (US) and the European Union (EU) still express disquiet about the effectiveness of IP enforcement on the ground, with China continuing to be the source of 80% of counterfeit goods detected at the EU’s borders (European Commission 2015).

Nevertheless, it is undeniable that significant changes have been made to the IP system in China since accession to WTO, and further improvements to the IP system are now seen as a key government priority, as encouraging entrepreneurship and innovation is seen as key to rebalancing the Chinese economy which has previously relied on manufacturing low-cost exports as a key source of growth . As costs such as labour increase, low-end manufacturing has been losing its competitiveness, and thus China needs to look elsewhere for alternative sources of economic development to sustain the remarkable rates of growth that have continued throughout the ‘reform and opening-up’ era since 1978. The People’s Republic of China’s (PRC’s) central government clearly sees investing in start-ups, high-tech companies and the service sector as the nation’s economic future, with Premier Li Keqiang claiming at the National People’s Congress (NPC) in March 2016 that 12,000 companies were founded every day in 2015. Many of these newly formed companies also benefit from substantial state benefits and handouts with the aim of inculcating a culture of ‘mass entrepreneurship’ to support future economic growth (Schuman 2016). Indeed, according to the Global Innovation Index 2016, China became a ‘top 25’ innovative economy for the first time, also becoming the first middle-income country to do so (WIPO 2016a, p. xviii) . Nevertheless, despite impressive expansion in innovative activity in China, it is evident that an effective functioning IP system is a key foundational prerequisite upon which such an innovative knowledge-based economy can be constructed. Thus, intellectual property is of great significance in contemporary China and this study seeks to assess the evolving state of IP in China primarily through the experiences of respondents based on the ground in China to measure how China’s compliance with the TRIPS Agreement has changed since WTO accession in 2001 .

This chapter will next consider the significance of international intellectual property by laying out the development of IP, from the national level in the early years of IP, to the international with the signing of the Paris and Berne Conventions in the late nineteenth century, to the global with the inclusion of international IP standards in the WTO system. Then the significance of WTO accession for China will be outlined as well as giving an overview of the key agencies involved in the IP system as well as considering the implications for the current IP system of the instrumentalist nature of the post-WTO legal system in China. The fourth section will describe the development of intellectual property in China prior to WTO accession, which occurred in four phases: during imperial China; introduction of IP laws in the early twentieth century by the Nationalist Guomindang government; the changes made after the Chinese Communist Party founded the PRC in 1949; and finally the modern IP laws passed since the ‘reform and opening-up’ period began under Deng Xiaoping in 1978. The final section will provide an outline of the research project, detailing the key research questions as well as offering an overview of the structure of the book and the content of the subsequent chapters.

1.2 The Significance of International Intellectual Property

1.2.1 Definitions and Context

According to the World Intellectual Property Organisation (WIPO), intellectual property “refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce ” (WIPO 2005). This is similar to the definition used by the WTO, which states that “Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time” (World Trade Organisation 2005a). These definitions emphasise the origins of intellectual property in the mind of the creator or inventor . It is clear that intellectual property can include various categories of rights, apart from the traditional protection for copyright, trademark and patent. Indeed the TRIPS Agreement is exhaustive in its approach to the IP rights covered by the Agreement. TRIPS Article 1(2) provides that “for the purposes of this Agreement, the term ‘intellectual property’ refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II” (World Trade Organisation 1994). Therefore, the TRIPS Agreement covers a total of seven areas of intellectual property :

• Copyright and related rights (Part II(1));
• Trademarks (Part II(2));
• Geographical indications (Part II(3));
• Industrial designs (Part II(4));
• Patents (Part II(5));
• Layout designs (Topographies) of integrated circuits (Part II(6));
• Protection of undisclosed information (Part II(7)).

Consequently, for the sake of brevity, intellectual property or IP shall be referred to throughout this book, but it should be borne in mind that the definition of intellectual property that is used is the broad definition above, as used in the TRIPS Agreement.

In order to appreciate the significance of the TRIPS Agreement in terms of international intellectual property protection, it is necessary to first understand the origins of intellectual property rights. Intellectual property protection began around the time of widespread industrialisation across Europe, although the recognition of marks of ownership clearly existed long before this period. Indeed, one of the first known references to intellectual property protection dates from 500 BC when chefs were granted year-long monopolies for creating culinary delights in the Greek colony of Sybaris (Moore 2001, p. 9). However, a recognised system of intellectual property protection was not formally introduced until much later. Patents came into existence in Venice around 1500 and had spread to most of the main European powers by 1550 (Ostergard 2003,p. 12). The first formal patent system in Venice was highly significant as “for the first time a legal and institutional form of intellectual property rights established the ownership of knowledge and was explicitly utilized to promote innovation” (May and Sell 2006, p. 58). The origins of copyright, on the other hand, trace to the establishment of printing; copyright emerged from a concern to control this new technology. This concern led to the world’s first copyright act, the Statute of Anne in 1710, entitled “An Act for the Encouragement of Learning, by vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned” (Goldstein 2001, p. 5). Furthermore, early legislative developments in Britain in the seventeenth and eighteenth centuries covering intellectual property are frequently seen as the dawn of modern intellectual property law (May and Sell 2006, p. 73).

Various countries enacted intellectual property laws over the next century, but it was not until the late nineteenth century that international intellectual property protection was considered necessary. This need “became evident when foreign exhibitors refused to attend the International Exhibition of Inventions in Vienna in 1873 because they were afraid their ideas would be stolen and exploited commercially in other countries” (WIPO 2006). This led to the Paris Convention for the Protection of Industrial Property in 1883, which was the first international agreement to deal with IP rights (WIPO 2016b). This was followed by the Berne Convention for the Protection of Literary and Artistic Works of 1886, which dealt specifically with creative works such as books, plays and music (WIPO 2016c). ¹ These two international conventions originally had few signatories, but included a secretariat from the outset. The Paris Convention had 14 initial member countries when it came into force in 1884 (WIPO 2004, p. 241) and the Berne Convention had eight original members in 1887. The respective secretariats merged in 1893 and eventually became the World Intellectual Property Organisation (WIPO) in 1967, which then became part of the United Nations (UN) system of specialised agencies in 1974 (WIPO 2004, p. 5).

Hence, intellectual property has a long history of protection at an international level, but the WIPO-administered system was widely criticised as insufficient as IP began to grow in importance in the 1970s and 1980s. Thus, it was proposed that intellectual property protection be incorporated into the existing multilateral trading system under the General Agreement on Tariffs and Trade (GATT) 1947. Therefore, the development of intellectual property protection could be said to have three distinct phases: national, from the fifteenth to the late nineteenth century; international, from the passing of the Paris and Berne Conventions in the 1880s until the final decades of the twentieth century; and global, from the inclusion of IP in the multilateral trading system with the establishment of the TRIPS framework in 1994. As a result, the TRIPS Agreement can be seen as highly significant from the perspective of the historical evolution of IP protection as it began a new phase of development—that of global protection.

Although the Paris and Berne Conventions were significant a...

Table of contents

• Cover
• Front Matter
• 1. Introduction
• Part 1. How to Assess Compliance with the TRIPS Agreement: Concepts and Methods
• Part 2. Assessing Compliance with the TRIPS Agreement in China
• Erratum to: Assessing Intellectual Property Compliance in Contemporary China
• Back Matter