Significant moves to protect the IP – China 2021

Significant moves to protect the IP – China 2021

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In recent years, the Chinese government has become aware of the huge potential of foreign technology companies entering China and introducing their products to the domestic market. This issue is clearly addressed in the 2025 Plan. As part of the Thirteenth and Fourteenth Five-Year Plans, China aims to move away from being the “world’s factory”, i.e., a producer of cheap, low-tech goods whose production is facilitated by low labor costs and supply chain advantages. The plan aims to improve the manufacturing capabilities of Chinese industries, moving from labor-intensive workshops to technology-intensive power. 

 

To achieve these goals, China understands that it must encourage the entry of foreign technology, and to do so, it is necessary to extend protection to these foreign companies to avoid the fear of theft of their technology and to significantly change the stigma created. In this article, we will review the latest measures taken by China in recent years to extend privacy protection and safeguard the intellectual property of foreign companies. 

 

The law 

In recent years, this regulation has been assimilated and even tightened by industries defined by law as sensitive such as the automotive and medical industries. The spirit of the things that appear in the various legislative amendments directly indicates the legislator’s intention and support for the enforcement and strengthening of policies in all matters. 

March 15, 2019: Approval of the Comprehensive Intellectual Property Foreign Investment Act – Key sections include : 

Section 42 of the Foreign Investment Law: Act provides that “the State shall protect the intellectual property rights of foreign investors and foreign-invested enterprises, protect the rights and legitimate interests of intellectual property holders and related rights holders, and consider strict legal obligations regarding intellectual property infringement according to law.” 

 

Article 22 states that “The State shall encourage technical cooperation based on voluntary principles and commercial rules in the foreign investment process. “The conditions of technical cooperation shall be determined in equal consultation between the investing parties by the principle of capital. Management agencies and their teams may not use organizational means to transfer technology by force. “ 

 

In addition, the Chinese government has issued Section 23 of the Foreign Investment Law, which contains a duty of confidentiality under the law. The facility covers foreign companies under different business statuses. Chinese administrative organs and their employees keep secret all business secrets of foreign investors and foreign-invested organizations that have been exposed in the course of their duties. In other words, administrative and governmental bodies involved in the processes of registration, supervision, enforcement, etc. have a duty of confidentiality. Sometimes foreign companies are afraid to pass on information even to government organizations, this section directly addresses these concerns. 

 

In September 2020, the court mentions clear definitions of Secret violation of trade. 

Last year, the Supreme People’s Court issued strict conditions for the application of the law in cases concerning the granting and approval of patent licenses. The regulations came into force on September 12, 2020. The provisions provide clarification on important issues in civil litigation relating to trade secret infringement, including and expanding certainty on, among others, the following issues: 

  • The range of trade secrets: details of professional and commercial information such as creativity, management, sales, finance, plans, examples, offering materials, customer information, data, etc. 
  • Confidentiality – what should be considered as public identification? 
  • And what are sufficient means to maintain confidentiality, such as encryption, reducing accessibility, controlling exposure, etc
 

Compensation

Under the 2019 Unfair Competition Amendment, compensation for the use of trade secrets has been increased to a statutory compensation of 5 million yuan, up to five times the compensation amount of punitive damages. The interpretation further strengthens the existing law so that, in calculating compensation, the court calculates the profits obtained from the use of the trade secret, as well as adding reasonable royalties. 

The interpretation also adds the extension of jurisdiction to courts in China – courts in lower jurisdictions will also be able to hear cases and this will be determined based on where the infringement took place or where the defendant resides. In addition, the interpretation added full protection and immunity for those who report trade secret violations to judicial or government authorities. 

 

Protection and enforcement of intellectual property rights in 2020

the national intellectual property system processed more than 42,000 administrative decisions on patent infringement disputes. The social satisfaction score for intellectual property protection exceeded 80 points for the first time and reached 80.05 points. 

 

Protection and enforcement also extend to the field of pharma and medical devices. This is to protect the commercial and technological status of foreign and domestic patent holders alike. The National Medical Products Administration and the National Intellectual Property Administration of China have published 16 articles that guide patent-pending patent information, clarify the registration steps, and provide a patent declaration system for general and new applicants. Precise regulation of the commercial status of generic and innovative drugs will lead to a state of strict compliance with regulations. 

 

On October 17, 2020, at the 22nd session of the Standing Committee of the 13th National People’s Congress, the decision to amend the Patent Law was reviewed and approved. One of the most interesting highlights of the amended “Patent Law” is the amendment to the drug-related provisions, including Section 42 adds a new provision extending the patent protection period. The high increase in the number of patent registrations, 530,000 patents for inventions in 2020 an increase of 20 percent from 2019, also supports strengthening protection and public confidence in enforcing activities that violate the various rights. 

 

 

In conclusion, 

The Chinese government will continue to issue other laws and regulations that will completely regulate the position of government ministries, commercial corporations, and organizations regarding the control of intellectual property protection of both foreign and domestic companies. Hopefully, these changes will change the old perception of China and strengthen foreign confidence in local enforcement. 

 

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