China's Intellectual Property Rights: Issues and Strategies

Introduction and Definition of Intellectual Property Rights

Intellectual property (IP) is simply a claim placed on a valuable yet intangible creation. Normally, the standards set for all intellectual properties are established by individuals with high intellectual capability, such as inventors. Every individual has the right to protect a valuable creation, and Intellectual Property Rights (IPR) have become an established global standard through which this right of protection can be exercised. IPR also offers individuals the chance to manage and expand their IP based on their status as the "rights owner" of any IP.

The next question concerns what kinds of creations qualify as part of an individual's IP. All creations that are believed to be completely new inventions — or extensions of a creation that are innovative — plus any aspect of a creation that is believed to further the process of development, are considered IP. The categories of IP also differ based on the field or domain in which an individual chooses to create something. For instance, a new creation in the field of art or literature will be protected by the IPR known as copyright. Similarly, in the field of technology, a new creation will be granted the IPR of a patent that protects both the creator's rights and the rights to what was created. The IPR known as a trademark is usually assigned for the protection of a signature or logo that distinguishes a product, service, or business from others in the industry. Design rights, as highlighted in the IPR framework, are structured for the protection of the appearance, shape, colour, and structure of a product. All these categories provide the same set of rights, based on the criterion that anything created in these fields is not generic but unique, novel, and not previously owned by someone else. All creations must also, in one way or another, be designed for progression or as a representation of progression.

All rights — with the exception of copyrights, which are automatically registered — must be formally registered and approved by the government. All rights follow a specified application structure based on the domain or department to which the right belongs. This registration ensures that the rights to a creation are one's own and will not be exploited by anyone else. One important point to note is that projects an individual completes for a company, or while employed at a company, will constitute the copyrights of the company rather than the individual.

This paper focuses on the Intellectual Property Rights exercised in China. It begins with a discussion of the history and evolution of IPR in China, followed by the current issues that hamper IPR exercise or demand better implementation. The majority of the paper addresses strategic considerations that may be important to implement in the short and long run in order to improve IPR practice in the region, followed by some of the problem-solving techniques already in place. The paper ends with a summarized overview.

History and Evolution of IPR in China

Intellectual property rights first surfaced and penetrated into the People's Republic of China over three decades ago when the Chinese economy first took shape and found a structure in global society. This was the primary reason why many foreign states and governments took an interest in the Chinese economy and worked towards standardizing and implementing IP protection policies within the region at the beginning of the twenty-first century. It must be noted, however, that despite the prominent progression of IPR in China, it has had its fair share of ups, downs, and hurdles — primarily due to its rigid and established social structure. China's social structure, political administrations, economic structures, and historical stances have not always been open to change or to the idea of intellectual property, largely because of the drastic transformations that led to antagonistic environments. Despite these difficulties, IPR in China cannot be sidelined, as it is an integral part of the economic boom the country has experienced over the past three to four decades. Furthermore, if and when China strengthens its IPR, foreign investors would have increased interest in the economy, simultaneously increasing the country's growth rate.

The two primary forms of government structure that dominated ancient Chinese political philosophy are Legalism and Confucianism. The primary foundation of Chinese Legalist philosophy is that it is based on standardized principles, rules, laws, and codes implemented from the government level. Chinese Confucian philosophy, on the other hand, revolves around the rules of human norms and social structures. The one aspect that has been most dominant in Chinese societies is the preference for fulfilling all societal obligations in harmony with personal ones — with the former always taking precedence over the latter. History has shown the Chinese abandoning personal interests to fulfil social and political obligations. This is where IPR emerges as one of the most important phenomena.

When examining the importance of IPR, the state and government of China have played a pivotal role in its development over the years. The very first record of the use of trademarks dates back to 2698 BC when the earliest form of pottery surfaced in the region. Official records of trademarks were also present during the Han Dynasty (206 BC to AD 220), primarily used to offer customers a form of protection on their purchases and investments. The first form of copyright was also found in this era, when the writing and copying of certain texts was restricted by the state — partly to manage the impact and perceptions of literate individuals, but also to protect the authenticity and precision of the writings. Even though these earlier standards do not accurately depict what IPR stands for today, they provide good evidence of the recognition of intellectual rights. The difference was that most of the value for these rights was placed on society rather than on the individual. Copying and sharing of all literary and technological works was also disallowed by the state. There is little to no record of protection of inventors' rights, however, and throughout the 1800s patent laws were designed only to protect Chinese traders. It was only for a brief period during 1923–28 that Americans were also granted patents. The rule of the Guomindang party from 1928 saw the establishment of new copyright, patent, and trademark rights restricted solely to locals.

During the era of disorder that the world knew as World War II, China was heavily influenced by various Japanese occupations and elevated tensions between the Nationalist Chinese government and the Chinese Communists. In this era, under the reign of Mao Zedong, the Communists — who eventually drove out the Nationalists — abolished the established IPRs of the time and implemented the Provisional Regulations on the Protection of Invention Rights and Patent Right of 1950. Here, the rights of inventors were recognized in the form of official certificates and financial reimbursement. The use and copying of inventions and writings was still controlled by the government, however. Foreign investors and traders could also be granted patent protection in this period based on assessment decisions made by the Commission of Finance and Economics, though this did not result in more than a dozen patents being granted to foreigners during that era.

The darkest and slowest period of IPR growth in China was observed during the Great Leap Forward in 1958, as well as the Cultural Revolution of 1966–67. All previously established IPRs were completely abolished, and prior patent regulations were replaced by the "Regulations to Encourage Inventions" and the "Regulations to Encourage Improvements in Technology," under both of which the state owned the rights to all inventions. The Cultural Revolution was perhaps the biggest setback for intellectuals in China. The 1963 IPR laws were abolished, and scientists, inventors, lawyers, and members of the judiciary were condemned for not following Communist ideals. The Cultural Revolution ended with the arrest and destruction of the influence of the "Gang of Four" in 1976. From that point onwards — especially since 1978 — the Chinese were able to implement drastic reforms in their economic laws, IPR laws, and foreign relations under Deng Xiaoping. China soon began to participate in IPR ventures with international organizations, leading to three decades of complete revolutionizing of the IPRs implemented in the region from both legal and social perspectives (Gulbransen). These last three decades form the background upon which the discussion of current issues is based.

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