1. Thesis:
Technology
Transfer
and
IP
Law
in
China
Abstract
How
does
IPR
Protection
in
China
affect
foreign
technology
transfers
from
the
United
States
and
likewise,
Chinese
technology
transfers
abroad?
How
will
domestic
innovation
within
China
affect
China’s
domestic
IP
law
protection?
As
China’s
economy
has
grown
and
expanded,
the
US
has
grown
somewhat
fearful
that
China
will
surpass
it
in
international
trade
and
political
power.
To
counterbalance
this
fear,
the
US
has
begun
blocking
Chinese
high
technology
product
imports
into
the
US
domestic
market,
using
Section
337
of
the
USITC
and
Section
557
of
the
Continuing
Appropriations
Act
as
protectionist
measures
in
the
name
of
intellectual
property
right
protection
and
national
security.
Chinese
telecommunications
companies
Huawei
and
ZTE,
for
instance,
were
blocked
from
entering
the
US
for
these
reasons.
This
thesis
will
first
explore
the
Chinese
legal
system
concerning
intellectual
property
and
unfair
competition.
and
how
it
relates
to
Chinese
high
technology
trade
around
the
world.
Through
legal
case
studies
and
interviews
with
international
attorneys,
this
paper
concludes
that
although
China’s
legal
system
is
still
developing,
it
is
becoming
increasingly
more
important
as
China
enters
the
international
trade
arena.
Furthermore,
as
Chinese
domestic
innovation
continues
to
grow
and
develop,
it
will
have
no
choice
but
to
uphold
its
own
domestic
IP
regulations
in
order
to
protect
its
own
innovations.
Introduction
This
thesis
is
about
intellectual
property
law
protection
in
China
and
how
it
affects
foreign
technology
transfer
to
China
and
Chinese
technology
exports
to
other
countries
such
as
the
United
States.
I
will
focus
mainly
on
protection
of
utility
patents
within
China,
Chinese
exports
that
infringe
US
patents,
and
the
regulation
of
trade
secrets
on
an
international
scale.
My
paper
will
explore
China’s
struggle
to
establish
a
positive
international
reputation
in
Intellectual
Property
Law
enforcement
and
how
Intellectual
Property
Law
concerns
have
affected
China’s
position
in
international
trade
and
commerce.
Moreover,
I
will
also
explore
how
China
will
protect
its
own
high-­‐technology
products,
patents,
trademarks,
and
trade
secrets
in
the
world
and
how
China’s
own
blossoming
technology
industry
may
or
may
not
change
how
China
sees
and
enforces
Intellectual
Property
Law.
The
paper
will
be
broken
into
4
parts.
Section
1:
China’s
domestic
legislation
regarding
Copyrights,
Trademarks,
Patents,
Trade
Secrets,
and
Unfair
Competition.
This
section
will
also
include
a
comparison

2. of
the
official
Chinese
legal
framework
versus
the
actual
process
of
enforcing
IP
law
in
China.
Section
2:
Notable
IPR
cases
in
China
involving
trade
secrets,
patent
infringement,
and
trademarks.
This
section
will
focus
predominantly
on
trade
secrets,
patents,
and
trademark
violations,
especially
in
regards
to
technology
transfer
to
China
from
the
US.
It
will
also
cover
China’s
WTO
dispute
with
the
US.
Section
3:
US
trade
protectionism
due
to
fear
of
Chinese
exports
violating
US
Patents.
This
section
will
include
US
measures
to
prevent
Chinese
takeovers
of
US
companies
and
US
industries
and
likewise,
to
prevent
Chinese
entry
into
the
US
domestic
market.
For
instance,
US
companies
will
sue
Chinese
companies
based
on
IP
Law
infringement
in
order
to
prevent
them
from
entering
the
US
domestic
market
or
significantly
raise
the
entry
barrier
for
Chinese
companies
to
enter
the
US
domestic
market.
Section
4:
An
analysis
on
China’s
domestic
innovation
as
a
way
to
increase
IPR
protection
within
China.
Includes
an
analysis
on
Qingdao’s
Rubber
Valley,
Shanghai’s
Free
trade
zone,
and
other
local
“technology
and
innovation”
centers
around
China.
Section
1:
Chinese
IP
Laws
and
Enforcement.
The
international
opinion
of
China’s
lax
enforcement
of
IP
law
has
caused
China
a
number
of
issues
regarding
international
trade
and
technology
transfer.
Negative
perceptions
of
China’s
IP
Law
has
caused
the
US,
for
instance,
to
place
a
number
of
export
limitations
on
Chinese
goods
coming
to
the
US,
for
fear
that
the
Chinese
products
violate
US
patents.
Fear
of
trade
secret
and
patent
violation
has
also
prevented
the
US
from
exporting
certain
sensitive
technologies
to
China
such
as
satellites
and
specialized
military
weapons.
This
section
will
analyze
China’s
IP
Legal
framework
regarding
patents,
trade
secrets,
and
trademark.
According
to
many
foreign
attorneys
in
China,
the
Chinese
civil
code
is
not
the
problem;
rather,
it
is
the
enforcement
of
the
law
that
is
inadequate.
This
section
will
define
the
Chinese
legal
framework—both
on
a
domestic
level
and
on
an
international
level.
Chapter
1.
Chinese
National
Legal
Framework:
Patent,
Trademark,
Copyright,
and
Trade
Secret
Laws
The
legal
framework
for
protecting
intellectual
property
in
the
PRC
is
built
on
three
national
laws
passed
by
the
National
People's
Congress:
the
Patent
Law,
the
Trademark
Law
and
the
Copyright
Law.
Numerous
regulations,
rules,
measures
and
policies
have
been
made
by
the
NPC
Standing
Committee,
the
State
Council
and

3. various
ministries,
bureau
and
commissions.
The
circulars,
opinions
and
notices
of
the
Supreme
People's
Court
also
form
part
of
the
legal
framework.
A.
Chinese
Patent
Law
China
has
both
a
statutory
law
and
a
formal
regulation
regarding
Patents.
It’s
statutory
law
is
titled
“Patent
Law
of
the
PRC”
or 中华人民共和国专利法.The
Patent
Law
was
adopted
on
March
12,
1984,
and
came
into
effect
on
April
1,
1985.
China’s
Patent
law
has
been
amended
three
times.
The
previous
two
amendments
in
1992
and
2000,
respectively,
focused
on
importing
advanced
technologies
and
intensifying
intellectual
property
protection
for
foreign
investors.
These
amended
protections
include
a
broadening
of
available
patents
in
chemicals,
pharmaceutical
products,
and
food
and
beverages
flavorings.
It
also
extended
the
length
of
patent
protection
to
20
years.
(Hong
Xue
56)
The
third
revision
that
was
approved
by
China’s
top
legislature
on
December
29,
2008,
was
concentrated
on
enhancing
the
capability
of
independent
innovation
and
building
an
innovative
country
(Hong
Xue
56).
China
follows
a
“first
to
file”
rule
which
is
consistent
with
the
US
and
certain
European
countries.
Since
China
is
a
signatory
of
the
Patent
Cooperation
Treaty
(PCT),
the
State
Intellectual
Property
Office
(SIPO)
will
conduct
an
international
patent
search
and
preliminary
examination
of
patent
applications.
Any
foreigner,
without
the
assistance
of
a
Chinese
office,
can
prepare
the
paperwork
for
filing
but
the
filing
of
the
patent
paperwork
must
be
done
through
an
authorized
patent
agent.
Patents
are
filed
in
Beijing
at
SIPO.
The
Beijing
office
receives
all
of
the
filings
and
the
local
offices
handle
the
administrative
enforcement
of
the
patents.1
China’s
Patent
Law
has
8
chapters
including
Chapter
1:
General
Provisions
第一章 总则
Chapter
2:
Requirements
for
Grant
of
Patent
Right 第二章 授予专利权的条件
Chapter
3:
Application
for
Patent 第三章 专利的申请
Chapter
4:
Examination
and
Approval
of
Application
for
Patent 第四章 专利申请的
审查和批准
Chapter
5:
Duration,
Cessation
and
Invalidation
of
Patent
Right 第五章 专利权的
期限、终止和无效
Chapter
6:
Compulsory
License
for
Exploitation
of
Patent
Right 第六章 专利实施
的强制许可
Chapter
7:
Protection
of
Patent
Right 第七章 专利权的保护
Chapter
8:
Supplementary
Provisions 第八章 附则
Article
60
of
Chapter
7
“Protection
of
Patent”
states:
1
China
IPR
Toolkit,
supra
note
1

4. Article
60.
Where
a
dispute
arises
as
a
result
of
the
exploitation
of
a
patent
without
the
authorization
of
the
patentee,
that
is,
the
infringement
of
the
patent
right
of
the
patentee,
it
shall
be
settled
through
consultation
by
the
parties.
Where
the
parties
are
not
willing
to
consult
with
each
other
or
where
the
consultation
fails,
the
patentee
or
any
interested
party
may
institute
legal
proceedings
in
the
people's
court,
or
request
the
administrative
authority
for
patent
affairs
to
handle
the
matter.
When
the
administrative
authority
for
patent
affairs
handling
the
matter
considers
that
the
infringement
is
established,
it
may
order
the
infringer
to
stop
the
infringing
act
immediately.
If
the
infringer
is
not
satisfied
with
the
order,
he
may,
within
15
days
from
the
date
of
receipt
of
the
notification
of
the
order,
institutes
legal
proceedings
in
the
people's
court
in
accordance
with
the
Administrative
Procedure
Law
of
the
People's
Republic
of
China.
If,
within
the
said
time
limit,
such
proceedings
are
not
instituted
and
the
order
is
not
complied
with,
the
administrative
authority
for
patent
affairs
may
approach
the
people's
court
for
compulsory
execution.
The
said
authority
handling
the
matter
may,
upon
the
request
of
the
parties,
mediate
in
the
amount
of
compensation
for
the
damage
caused
by
the
infringement
of
the
patent
right.
If
the
mediation
fails,
the
parties
may
institute
legal
proceedings
in
the
people's
court
in
accordance
with
the
Civil
Procedure
Law
of
the
People's
Republic
of
China.
Article
60
of
Chapter
7
of
the
Chinese
Patent
Law
describes
a
long
administrative
process
in
dealing
with
Patent
violations
via
mediation
before
entering
legal
proceedings
in
the
People’s
Court.
The
first
step
is
“consultation
by
the
parties”
which
means
mediation
between
the
two
disagreeing
parties.
The
second
step
is
requesting
“the
administrative
authority”
to
help
with
mediation,
halting
the
infringing
act,
and
even
mediating
an
amount
of
compensation
for
the
damages
caused
by
the
infringement
of
the
patent. If
the
patent
owner
is
unsatisfied
with
the
administrative
order,
the
third
step
is
to
institute
legal
proceedings
in
the
People’s
Court
within
15
days
of
the
date
of
receipt
of
notification
of
the
order.
All
court
proceedings
must
be
in
accordance
with
the
Administrative
Procedure
Law.
It
is
only
within
the
Chinese
judicial
court
system
that
damages
can
be
officially
awarded;
otherwise,
it
is
up
to
the
administration
authority
(i.e.
the
police)
to
sort
out
the
issue
via
“mediation.”
Unfortunately,
the
court
system
can
be
very
costly
in
time
and
in
money
so
many
people
opt
to
resolve
IP
issues
through
the
administration
route
rather
than
through
the
judicial
court
system.
As
one
attorney,
John
Tang,
explained,
it
is
up
to
each
company
or
individual
to
perform
a
cost-­‐benefit
analysis
of
the
situation.
Often
times,
the
monetary
loss
due
to
infringement
is
much
less
than
pursuing
the
issue
within
a
Chinese
court.
B.
Trademark
law
The
Trademark
Law
of
the
People's
Republic
of
China
(中 人民共和国商 法)
sets
out
general
guidelines
on
administration
of
trademarks,
protection
of
trademark
owners'
exclusive
rights
and
maintenance
of
quality
of
products
or
services
bearing
the
registered
trademarks,
"with
a
view
to
protecting
consumer
interests
and
to
promoting
the
development
of
the
socialist
commodity
economy."

5. Adhering
to
Article
4
of
the
Paris
Convention,
the
Chinese
government
passed
the
Provisional
Regulations
Governing
Application
for
Priority
Registration
of
Trademarks
in
China
to
grant
the
right
of
priority
to
trademark
applications
submitted
in
PRC
by
the
nationals
of
the
Paris
Convention
member
countries.
C.
Copyright
law
Copyright
law
in
China
is
mainly
governed
by
the
Copyright
Law
of
the
PRC
(
中华人民共和国著作权法)
and
the
Implementing
Rules
for
the
Copyright
Law
of
the
PRC
(著作权法实施条例),
the
Copyright
Law
of
the
PRC
adopted
and
promulgated
in
1990
and
the
"Implementing
Rules"
adopted
in
1991
and
revised
in
2002.
In
most
cases
the
copyright
term
is
the
life
of
the
author
plus
50
years,
but
for
cinematographic
and
photographic
works
and
works
created
by
a
company
or
organization
the
term
is
50
years
after
first
publication.
To
implement
the
Berne
Convention
and
the
Universal
Copyright
Convention,
as
well
as
bilateral
copyright
treaties
signed
between
the
PRC
and
other
foreign
countries,
the
PRC
government
passed
the
Regulations
on
Implementation
of
International
Copyright
Treaties
(1992).
These
have
given
foreign
copyright
holders
protection
for
their
rights
and
interests
in
the
PRC.
Before
the
PRC
acceded
to
the
Berne
Convention,
computer
software
was
not
treated
as
a
kind
of
literary
work
under
the
Copyright
Law.
In
May
1991,
the
State
Council
passed
the
Computer
Software
Protection
Rules.
Based
upon
these
rules,
the
Measures
for
Computer
Software
Copyright
Registration
were
formulated
by
the
then
Ministry
of
Engineering
Electronics
Industries.
These
regulations
provide
a
set
of
rules
covering
the
definitions
of
various
terms
and
the
registration,
examination
and
approval
of
computer
software
programs
in
the
PRC.
At
the
moment
both
the
Berne
Convention
and
these
two
domestic
computer
regulations
are
co-­‐effective.
However,
in
the
event
of
any
inconsistencies,
the
Berne
Convention
prevails.
The
Berne
Convention
does
not
require
copyright
registration
copyright
registration,
and
thus
protection
in
the
PRC
technically
doesn't
require
registration.
However,
registering
copyrights
for
literary
works
can
avoid,
or
at
least
simplify,
ownership
disputes.
Copyright
registration
cost
is
300
RMB.
On
the
downside,
the
copyright
registration
process
requires
the
registrant
to
disclose
detailed
information,
including
software
source
code,
which
companies
might
be
reluctant
to
share.
D.
Trade
Secret
Protection
in
China
Unlike
the
United
States,
which
has
a
unified
trade
secrets
law
(the
Uniform
Trade
Secrets
Act,
or
UTSA),
China’s
rules
defining
and
regulating
trade
secrets
are
scattered
among
a
series
of
laws
and
regulations.
The
most
important
of
these
is
the
PRC
Anti-­‐Unfair
Competition
Law
(AUCL),
which
was
released
in
1993.
The
AUCL
formally
defines
trade
secrets
in
Article
10
as
“technical
and
business
information
that
is
unknown
to
the
public,
which
can
bring
economic
value
to
the
rights
holder
that
has
applicability,
and
for
which
the
rights
holder
take
measures
to
protect
their
confidentiality.”

6. The
law
defines
illegal
behaviors
related
to
trade
secrets,
including
direct
acquisition
of
trade
secrets
via
theft,
inducement,
coercion,
use
of
those
illegally
obtained
trade
secrets,
or
other
illegal
means.
This
definition
also
covers
use
or
sharing
of
trade
secrets
by
third
parties
not
authorized
by
the
owner.
A
third
party
is
liable
for
trade
secret
misappropriation
under
the
AUCL,
when
the
third
party
knows
or
should
have
known
that
a
given
trade
secret
that
it
obtains,
uses,
or
discloses
has
been
misappropriated.
Trade
secrets
are
defined
as
confidential
technical
or
business
information
that
are
not
known
to
the
public
and
have
economic
benefits
for
the
rights
holder.
The
legal
definition
of
trade
secrets
in
most
jurisdictions
is
written
to
cover
a
wide
variety
of
possible
information
that
may
be
important
building
blocks
of
a
company’s
current
and
future
competitiveness
and
thus
worthy
of
protection.
Examples
include,
but
are
not
limited
to,
formulas,
blueprints,
product
designs,
manufacturing
processes,
customer
lists,
sales
strategies,
and
management
techniques.
In
January
2007,
the
Supreme
People’s
Court
released
the
Interpretation
on
Certain
Issues
Related
to
the
Application
of
Law
in
Trials
of
Civil
Cases
Involving
Unfair
Competition,
which
addressed
additional
questions
related
to
trade
secret
enforcement.
This
judicial
interpretation
clarifies
how
courts
should
define
key
terms
in
the
AUCL’s
definition
of
trade
secrets,
and
states
that
some
controversial
types
of
information,
such
as
customer
lists,
are
eligible
for
protection
as
trade
secrets
in
China.
The
interpretation
also
lays
out
the
rules
governing
civil
trade
secrets
cases
in
China,
placing
the
burden
of
proof
in
these
cases
on
the
plaintiff.
To
be
successful,
the
plaintiff
must
prove
that
the
infringed
information
meets
the
definition
of
a
trade
secret;
that
the
defendant
is
using
information
that
is
substantially
similar
to
the
trade
secret;
and
that
that
information
was
obtained
illegally
by
the
defendant.
The
plaintiff
must
provide
clear
evidence
of
when
and
how
the
information
was
illegally
obtained—a
difficult
evidentiary
challenge.
Other
sections
of
the
interpretation
describe
the
rules
for
determining
damages
and
granting
permanent
injunctions
as
remedies
for
trade
secret
misappropriation.2
A
third
document,
the
State
Administration
of
Industry
and
Commerce’s
Provisions
Regarding
the
Prohibition
of
Trade
Secret
Infringement,
describes
administrative
procedures
for
handling
trade
secrets
cases.
Additional
aspects
of
trade
secret
protection
and
management
are
covered
in
other
laws
and
regulations,
including
the
Contract
Law
(technology
licenses
and
trade
secret
protection
in
contract
negotiations),
the
Labor
Contract
Law
(confidentiality-­‐related
agreements),
the
Labor
Law
(liability
for
violating
confidentiality-­‐related
agreements),
the
Company
Law
(trade
secrets
obligations
for
senior
management),
and
the
Criminal
Law
(criminal
thresholds
for
trade
secrets
cases).
2
http://www.chinabusinessreview.com/trade-­‐secret-­‐enforcement-­‐in-­‐china-­‐options-­‐and-­‐obstacles/

7. While
there
has
been
some
discussion
among
legal
professionals
about
the
benefits
of
a
unified
trade
secrets
law—
and
some
work
was
done
to
draft
a
trade
secrets
law
in
the
mid
1990s—there
has
been
no
indication
to
date
that
Chinese
authorities
will
draft
such
a
law.
Nor
is
there
any
indication
that
the
Chinese
government
is
actively
working
to
revise
the
AUCL
or
other
existing
trade
secrets-­‐
related
regulations.
E.
Other
Laws
that
Deal
with
Chinese
IPR:
Unfair
Competition
Laws
Apart
from
major
legislation
on
trademarks,
copyright
and
patents,
a
few
other
laws
and
regulations
have
been
passed
to
deal
with
intellectual
property
related
issues.
In
1986,
the
General
Principles
of
Civil
Law
was
adopted
to
protect
the
lawful
civil
rights
and
interests
of
citizens
and
legal
persons,
and
to
correctly
regulate
civil
relations.
Articles
94-­‐97
of
the
General
Principles
of
Civil
Law
deal
with
intellectual
property
rights
of
Chinese
citizens
and
legal
persons.
In
the
1990s
many
more
pieces
of
legislation
were
passed
to
perfect
the
intellectual
property
protection
system.
These
include
the
Regulations
on
Customs
Protection
of
Intellectual
Property
Rights
(1995)
and
the
Law
Against
Unfair
Competition
of
the
PRC
(1993).
The
latter
prohibited
the
passing
off
of
registered
trademarks,
infringing
trade
secrets,
the
illegal
use
of
well-­‐known
goods
or
names
of
other
people,
as
well
as
other
misleading
and
deceptive
conduct.
According
to
Article
2
of
the
Anti-­‐Unfair
Competition
Law
of
1993
of
the
PRC
,
unfair
competition
acts,
“in
this
Law,
means
activities
made
by
business
operators
who
damage
the
other’s
legal
rights
and
interests,
disturb
the
order
of
social
economy
and
violate
the
provisions
of
this
Law.”
This
is
the
legal
standard
for
judging
any
act
of
unfair
competition
in
China.
(Kariyawasam
108)
An
act
of
unfair
competition
is
defined
as
followed:
1.
It
occurs
in
the
act
of
business
or
economy
competition.
Article
2
of
the
Anti-­‐Unfair
Competition
Law
of
the
PRC
(AUCL)
defines
the
subjects
of
unfair
competition
as
“business
operators”,
which
include
legal
persons,
other
organizations
or
individuals.
This
provision
aims
to
distinguish
unfair
competition
from
civil
torts.
For
example,
the
act
of
infringing
the
reputation
of
an
enterprise
is
deemed
as
a
tort
if
there
is
no
competitive
relationship
between
the
infringer
and
infringed.
A
similar
act
would
be
classed
as
unfair
competition
only
when
it
aims
to
defame
or
crowd
out
other
competitors.
(Kariyawasam
108)
2.
All
business
operators
aim
to
compete.
Stealing
Trademarks,
business
secrets,
and
defaming
competitors
all
aim
to
compete
and
would
fall
foul
of
the
AUCL
3.
All
market
players
need
to
abide
by
the
principles
of
voluntariness,
equality,
impartiality,
honesty,
and
good
faith
and
respect
public
commercial
ethics
in
their
business
transactions.
Acts
against
these
are
considered
unfair
competition

8.
4.
An
act
of
unfair
competition
disturbs
the
social
and
economic
order.
Unfair
competition
aims
to
crowd
out
competitors,
and
it
will
damage
the
interest
of
other
competitors
and
customers,
impede
and
destroy
the
normal
market
competitive
order.
The
purpose
of
anti-­‐unfair
competition
law
is
to
encourage
and
protect
fair
competition,
prohibit
unfair
competition,
protect
the
legal
rights
and
interest
of
business
operators
and
customers,
and
safeguard
and
promote
the
healthy
development
of
the
market
economy
(Kariyawasam
109)
Chapter
2:
Laws
on
Paper
vs.
Reality
of
Enforcement.
A.
Chinese
IP
law
enforcement
system
The
formal
state
legislation
regarding
IPR
is
much
different
than
the
actual
enforcement
of
those
laws.
This
section
will
detail
the
practical
methods
business
proprietors
must
undertake
in
order
to
defend
their
intellectual
property
rights.
Civil
enforcement
of
IPR
in
China
is
a
two-­‐track
system.
The
first
is
the
administrative
track,
whereby
an
IPR
holder
enlists
the
aid
of
a
local
government
agency
office.
The
second
is
the
judicial
track,
whereby
complaints
are
filed
through
the
court
system.
Chinese
nationals
usually
use
the
administrative
track
to
solve
IP
disputes,
while
foreign
corporations
and
foreign
nationals
use
the
court
system
because
the
courts
have
the
authority
to
award
monetary
damages.
Chinese
citizens
usually
solve
IP
disputes
through
the
administrative
track,
whereby
they
enlist
the
help
of
the
local
government
agencies
to
help
investigate
and
make
a
judgment
on
their
claim.
The
local
government
officials
can
help
stop
the
infringing
practices
but
do
not
have
the
authority
to
award
monetary
damages.
If
the
IPR
holder
is
not
satisfied
with
the
outcome,
he
or
she
can
file
a
formal
complaint
through
the
court
system.
The
court
system,
while
more
formal
than
the
administrative
process,
can
be
very
expensive
and
take
many
years
to
process.
The
time
to
trial
in
a
Chinese
court
is
usually
less
than
a
year
from
the
filing
of
the
complaint.
(The
conventional
time
to
trial
in
the
United
States
is
at
least
two
years.)
However,
in
China,
a
court
case
for
patent
infringement
is
usually
delayed
to
await
the
result
of
an
invalidity
determination,
which
is
decided
by
the
State
Intellectual
Property
Office
(SIPO),
not
the
courts,
and
usually
takes
one
to
two
years.
The
upside
of
using
the
court
system
is
that
monetary
damages
may
be
awarded
to
the
winning
parties
and
there
is
a
chance
to
appeal
the
decision
if
the
outcome
is
unsatisfactory.
This
is
why
most
foreign
companies
choose
to
use
the
court
system
to
prosecute
IP
infringement.

9. There
is
no
discovery
procedure,
as
there
is
in
the
United
States,
whereby
revealing
documents
are
produced,
and
development,
sales,
and
profit
information
are
revealed
to
the
lawyers
for
the
opposing
party.
Therefore,
actual
damages
for
infringement
are
difficult
to
determine
given
the
lack
of
information
on
sales
numbers
and
profits.
Statutory
damages
are
adopted
in
most
cases.
Under
the
current
patent
and
trademark
statutes,
the
maximum
amount
is
¥1
million
($158,000).
Because
this
amount
is
relatively
insignificant
and
only
reached
in
exceptional
cases,
IPR
owners
do
not
typically
litigate
in
China
for
the
purpose
of
recovering
significant
damages.
Instead,
they
do
so
to
secure
a
court
injunction
against
further
infringement.
Unlike
the
US,
where
courts
are
independent
of
the
government;
Chinese
courts
are
intertwined
with
the
government.
Local
court
appointments
are
made
by
the
local
government
administration,
which
is
dependent
on
local
companies
for
employment
and
tax
income.
These
relationships
tie
local
businesses
to
the
courts.
In
the
United
States,
it
is
considered
inappropriate
for
a
litigant
or
a
prospective
litigant
to
get
to
know
the
judge
to
improve
their
likelihood
of
success
in
court.
In
China,
however,
conflict
of
interest
is
traditionally
not
a
concern
for
Chinese
officials.
It
seems
that
one
cannot
win
in
a
Chinese
court
unless
that
person
has
ample
connections
with
the
local
government
and/or
the
local
community
of
businesses.
B.
Cost-­‐benefit
Analysis
in
doing
business
in
China
In
an
interview
with
American
attorney,
John
Tang,
the
Managing
Partner
of
Law
Firm
Brennan
Manna
&
Diamond
LLC,
further
confirmed
the
importance
of
working
with
local
law
enforcement
to
solve
intellectual
property
law
infringement
cases.
Tang,
who
works
with
mostly
US
small
and
medium
sized
companies
looking
to
develop
and
expand
their
brand
in
the
Chinese
market,
says
that
foreign
companies
must
decide
whether
taking
their
Chinese
infringers
to
court
is
a
wise
financial
decision,
as
the
costs
often
outweigh
the
benefit.
“Many
times
small
and
medium
sized
foreign
enterprises
will
conduct
a
cost/benefit
analysis
when
deciding
if
to
pursue
legal
actions
against
infringers.
We
often
use
other
methods
of
negotiations
to
sort
out
their
infringement
issues.”
(Tang
Interview
1/12/2015)
Tang
could
not
officially
comment
whether
his
law
firm
had
established
relationships
with
the
local
police,
but
said
that
the
local
officials
could
assist
in
getting
the
infringing
behavior
to
stop,
but
could
not
award
damages
to
the
victim
as
a
court
could.
Tang
said:
“In
the
case
of
a
large
company
with
access
to
capital,
we
advise
them
to
sue
only
if
the
infringing
behavior
seriously
affects
their
market
share.
Otherwise,
the
time
and
money
it
would
cost
to
go
to
court
and
wait
for
a
ruling
is

10. often
not
the
worth
the
effort.
Even
if
the
court
decides
in
their
favor,
another
infringer
will
likely
pop
up
in
another
place
and
time.
It
is
best
that
small
and
medium
sized
enterprises
save
their
money
and
focus
on
their
business
expansion
rather
than
fight
their
infringers
in
court.”
One
case
in
which
the
client
performed
a
cost-­‐benefit
analysis
of
whether
to
pursue
legal
action
involves
a
foreign
licensor
with
a
Chinese
licensee.
This
case
involved
a
new
music-­‐based
technology
used
for
learning
to
play
the
piano.
This
particular
device
was
created
by
a
famous
pianist
from
the
UK,
who
had
set
up
his
own
company
and
was
licensing
his
product
and
his
trademark
to
a
Chinese
company
to
franchise
and
distribute
for
2
years.
After
the
Chinese
company
used
the
namesake
and
image
of
this
famous
UK
piano
player
to
advertise
their
product
for
2
years,
they
terminated
their
contract
with
him,
saying
that
his
product
was
faulty,
but
then
continued
making
and
selling
his
product
on
their
own
without
giving
him
the
property
royalties.
The
Chinese
company
infringed
his
patented
technology,
copyrighted
work,
namesake,
and
then
canceled
their
license
with
him
so
that
they
did
not
have
to
pay
him.
However,
rather
the
UK
Pianist
entrepreneur
did
not
have
enough
money
to
proceed
with
legal
fees
so
he
gave
up
pursuing
legal
action.
Yanping
Wang,
Shanghai
Partner
of
Detroit-­‐based
law
firm,
Miller
Canfield
LLC,
reinforced
the
importance
of
trying
to
settle
IP
cases
out
of
court
before
attempting
to
file
an
official
suit.
Unlike
Tang,
who
aids
small
and
medium
sized
enterprises
and
insists
that
close
relationships
with
local
authorities
are
“extremely
important,”
Ms.
Wang,
who
aids
large
foreign
enterprises,
believes
that
it
is
not
as
important
for
high-­‐level
foreign
companies
to
have
connections
with
the
police.
“Chinese
authorities
will
help
them
[foreign
entities]
in
order
to
save
face
and
set
a
positive
relationship
reputation
for
China
in
the
international
community.”
(Yanping
Wang
Interview
2/9/2015)
C.
Trademark
Pirate
Case
Studies
Before
the
Chinese
Trademark
Law
revision
of
2014,
several
“Trademark
Pirates”
took
advantage
of
the
Chinese
first-­‐to-­‐file
trademark
system,
which
left
a
loophole
for
pirates
to
file
an
application
of
well-­‐known
trademarks
that
were
already
in
use
abroad
but
not
registered
in
China.
After
successfully
registering
the
foreign
trademark
in
China,
the
trademark
pirates
would
then
attempt
to
sell
that
same
company
its
own
trademark
back
in
case
that
company
ever
wanted
to
enter
the
Chinese
domestic
market.
Ms.
Yanping
Wang
of
Miller
Canfield
was
careful
not
to
mention
any
specific
names
of
their
clients,
but
did
talk
about
several
trademark
pirate
cases
that
they
were
involved
with.

11. One
case
involved
a
famous
US
cookware
brand
named
after
a
celebrity,
which
was
targeted
by
a
trademark
pirate.
This
particular
US
cooking
brand
company
never
registered
their
name
in
China
but
was
already
manufacturing
products
in
China
bearing
that
mark.
The
trademark
pirate,
who
was
the
rightful
“owner”
of
that
mark
in
China,
called
the
Customs
Bureau
and
asked
them
to
detain
the
company’s
goods
from
being
shipped
overseas,
basically
holding
that
company’s
goods
hostage
so
that
they
could
extort
them.
The
pirate
then
allegedly
told
Miller
Canfield’s
client
that
if
they
wanted
their
products
released
from
customs,
they
would
have
to
pay
1.5
million
USD.
Yanping
Wang
said
“Unfortunately,
the
trademark
pirates
are
the
legal
owner
of
the
mark
under
Chinese
law
because
they
were
the
first
to
file.
It
is
this
loophole
that
allows
trademark
pirates
to
take
advantage
of
the
Chinese
legal
system
against
the
interest
of
the
actual
business
proprietor.”
There
was
some
speculation
that
the
trademark
pirate
and
the
customs
official
were
working
together
or
had
some
kind
of
agreement.
Once
an
individual
buys
or
files
a
trademark,
it
goes
on
record
at
the
Customs
Office.
The
owner
of
the
trademark
can
pay
the
customs
officer
to
notify
them
when
an
infringing
product
goes
through,
and,
for
a
fee,
the
Customs
officer
will
hold
the
so-­‐called
“infringing”
products
there.
The
bounds
or
legal
fee
is
around
25,000
RMB.
This
makes
it
somewhat
easy
for
trademark
pirates
to
have
the
customs
officer
working
in
their
favor.
Ms.
Wang
gave
a
thorough
account
of
the
step-­‐by-­‐step
process
in
how
Miller
Canfield
handled
this
situation:
Process
in
dealing
with
the
trademark
theft
case:
1.
First,
they
tried
to
negotiate
with
the
Pirate
as
much
as
possible
to
settle
the
matter
out
of
court.
However,
the
Trademark
Pirate,
who
was
the
technical
owner
of
the
trademark,
was
bent
on
extorting
the
client
for
a
large
sum
of
money.
2.
Miller
Canfield
then
went
to
customs
to
plea
their
case,
however
the
customs
officer
urged
them
to
settle
with
the
pirate.
There
is
speculation
that
the
customs
officer
was
working
with
the
pirate
since
it
was
beyond
his
scope
of
authority
to
tell
MC’s
client
to
settle
with
the
pirate.
3.
Meanwhile,
Miller
Canfield
appealed
the
case
to
General
Customs
and
asked
them
to
issue
a
special
ruling
allowing
the
items
to
pass
through
since
it
belongs
to
the
US
company
not
the
pirate.
The
General
Customs
office
agreed
initially
but
then
retracted
their
consent.
4.
MC
tries
to
talk
to
US
Senators
to
apply
political
pressure
but
to
no
avail.
5.
Fortunately
for
the
client,
there
was
an
error
at
the
customs
office
and
the
shipments
were
accidentally
released
and
allowed
to
ship
across
the
open
seas.
Trademark
pirating
had
become
so
common
in
China
that
even
local
law
firms
had
begun
assisting
trademark
pirates
in
searching
for
available
trademarks
and
helping
them
file
applications
in
hopes
of
getting
a
commission
from
the
extorted
profit.
Chinese
law
firms
even
got
to
the
point
where
they
would
call
and

12. provoke
foreign
companies
by
notifying
them
that
their
trademark
had
been
bought
in
China
to
try
to
negotiate
a
“trademark
ransom”
with
them.
D.
Trademark
Law
Revision
Fortunately,
however,
the
most
recent
Chinese
Trademark
Law
revision
that
came
into
effect
on
May
1,
2014,
now
specifically
states
under
Article
15:
“trademarks
that
are
registered
by
an
agent
who
registers
a
trademark
of
a
person
he
represents
without
authorization
from
them
shall
be
rejected.”
This
prevents
agents,
including
corrupt
Chinese
attorneys,
from
registering
another
person’s
trademark
in
the
hopes
of
extorting
that
person
or
company.
Also,
the
new
revision
clearly
states
that
people
with
“business
relationships
and
contracts
with
people
who
have
an
unregistered
trademark
in
use
will
have
their
trademark
registration
rejected.”
This
prevents
business
partners
from
cheating
on
one
another
by
registering
a
mark
without
the
other
partner
knowing.
One
example
of
a
previous
incident
of
this
is
Miller
Canfield’s
client
in
2008,
which
involved
a
US
product
supplier
who
was
involved
with
purchasing
products
from
a
Chinese
company.
The
owner
of
this
particular
Chinese
company
was
a
female
politician
in
China
with
high
ranking.
In
bad
faith,
she
registered
the
US
company’s
trademark
within
China
and
then
refused
to
return
it.
The
situation
remains
unresolved
and
the
US
company
can
no
longer
legally
use
their
own
mark
within
China.
Article 15 Where any agent or representative registers, in its or his own name, the
trademark of a person for whom it or he acts as the agent or representative without
authorization therefrom, and the latter raises opposition, the trademark shall be
rejected for registration and prohibited from use.
Where Trademark applied for identical goods or similar goods, identical with or
similar to the other people’s practical used but unregistered trademark, and the
applicant has contract, business contact or any other relationship out of preceding
clause with the other people and know the exits of the other people’s trademark, the
opposition is raised by the other people, the trademark shall be rejected for
registration
The
new
revision
now
also
protects
well-­‐known
trademarks
that
are
in
use
abroad
but
not
registered
in
China.
Under
Article
13,
an
owner
of
a
trademark
can
“apply
for
the
protection
of
well-­‐known
trademark”
and
“trademarks
that
are
an
imitation
or
a
translation
of
another
person’s
trademark
not
registered
in
China,
will
be
rejected
for
registration
and
prohibited
from
use.”
3
Article 13 Those trademarks well known by the relevant public, when the owner
thinks his right is infringed, in accordance with this Law, he can apply for the
protection of a well-known trademark.
Where a trademark in respect of which the application for registration is filed for use
for identical or similar goods is a reproduction, imitation or translation of another
person's trademark not registered in China and likely to cause confusion; it shall be
3
http://english.cnipr.com/iplaws/201311/t20131104_179171.html

13. rejected for registration and prohibited from use.
Where a trademark in respect of which the application for registration is filed for use
for non-identical or dissimilar goods is a reproduction, imitation or translation of the
well-known mark of another person that has been registered in China, misleads the
public and is likely to create prejudice to the interests of the well-known mark
registrant, it shall be rejected for registration and prohibited from use.
There
is
a
clause
in
the
trademark
law
that
says
that
the
trademark
must
be
in
use,
however,
this
also
applies
to
online
businesses
as
well,
meaning
that
pirates
can
offer
their
products
on
an
online
“shop”
on
Taobao
or
JD.com
or
any
other
online
retailer
in
order
to
get
around
this
requirement.
Section
2:
Notable
IPR
cases
in
Mainland
China
Chapter
1:
Chinese
Patent,
Trademark,
Copyright,
and
Trade
Secret
Cases
Overview
A.
Patent
Cases
In
2006,
the
Chinese
subsidiary
of
the
French
company
Schneider
Electric
SA
was
sued
by
the
Chinese
company,
Chint
Group
Corp.,
for
patent
infringement
in
the
Intermediate
Court
located
in
Chint’s
home
city.
Chint
claimed
that
Schneider
Electric
had
infringed
on
Chint’s
utility
model
patent
relating
to
circuit
breakers.
In
its
defense,
Schneider
filed
a
patent
invalidation
petition
with
SIPO.
In
April
2007,
SIPO
affirmed
the
validity
of
the
Chint
utility
model
patent.
The
Intermediate
Court
then
moved
forward
with
the
infringement
case
and
insisted
that
Schneider
produce
certain
tax
information
to
determine
the
company’s
sales
and
profits
on
the
alleged
infringing
products.
The
infringement
trial
was
held,
and
in
September
2007
the
court
found
Schneider
was
infringing
China’s
patent.
The
court
issued
an
injunction
against
Schneider
and
awarded
$49.2
million
in
damages
to
Chint.
While
on
appeal,
Schneider
and
Chint
settled.
B.
Trademark
Cases
Two
similar
trademark
cases
are
notable
for
their
different
outcomes.
The
first
concerns
Yi
Jianlian,
a
famous
basketball
star
in
China.
A
Chinese
sports
products
company
registered
the
trademark
“Yi
Jianlian”
even
though
there
was
no
business
relationship
between
Yi
and
the
company.
The
PRC
Trademark
Law
says
that
no
trademark
shall
prejudice
another
person’s
existing
prior
rights
in
a
trade
name
or
the
right
to
exploit
their
own
famous
name.
Yi
filed
a
cancellation
action
with
State
Administration
for
Industry
and
Commerce
(SAIC)
and
provided

14. substantial
evidence
to
establish
his
popularity
in
China
before
the
filing
date
of
the
trademark.
On
that
basis,
SAIC
ruled
that
Yi
owned
name
rights,
and
canceled
the
company’s
trademark.
However,
when
former
National
Basketball
Association
superstar
Michael
Jordan
took
a
similar
matter
to
court
in
China,
he
lost.
In
1998
and
1999,
Qiaodan
Sports,
a
Chinese
maker
of
sports
products,
filed
trademark
applications
for
“qiaodan,”
which
is
widely
recognized
in
China
as
the
translation
for
“Jordan.”
Qiaodan
Sports
used
“qiaodan”
as
its
products
trademark.
A
market
survey
conducted
in
Shanghai
showed
that
90
percent
of
the
400
Chinese
citizens
polled
believed
“qiaodan”
was
Jordan’s
brand.
Jordan
sued
Qiaodan
Sports
for
name
right
infringement
in
the
People’s
Court
of
Beijing.
Despite
the
undeniable
fact
that
Jordan
is
world-­‐renowned,
the
court
held
that
“Jordan”
is
a
common
surname
in
the
United
States
and
therefore
not
sufficiently
unique
to
create
exclusive
recognition
for
Jordan
to
own
the
name
right
to
“qiaodan.”Jordan’s
lawyers
have
re-­‐filed
their
name
right
infringement
case,
now
in
a
different
court,
in
Shanghai.
C.
Copyrights
Copyright
infringement
is
the
most
notorious
of
China’s
IPR
issues.
Private
party
enforcement
of
copyright
protections
has
not
been
effective,
either
because
favorable
judgments
have
not
been
forthcoming,
or
because
infringers
keep
eluding
punishment.
The
United
States
and
other
countries
even
brought
a
World
Trade
Organization
dispute
over
this
matter
in
2007.
It
seems
that
foreign
business
copyright
holders
have
only
achieved
significant
enforcement
results
when
working
in
conjunction
with
Chinese
law
enforcement
agencies
as
part
of
Chinese
trade
relations
programs.
D.
Trade
Secret
Domestic
Trade
Secret
Cases:
Ceramics
Institute
of
Guangdong
Fotao
Group,
Inc.
v.
Jinchang
Ceramics
Gong
Bang
Factory
This
trade
secret
case
involves
a
dispute
over
a
production
technique
called
‘Cold
Isostatic
Press
(CIP)
Technique
for
the
Production
of
Nanocomposite
Ceramic
Rods’,
which
the
courts
referred
to
as
‘CIP
Technique’.
The
technique
was
pioneered
and
perfected
by
the
Fotao
Institute,
and,
after
an
evaluation
by
the
Guangdong
Science
and
Technology
Commission,
was
deemed
a
“national
technology
secret”
from
29
December
1987
with
a
term
protection
of
15
years.
4
In
1992,
it
came
to
the
knowledge
of
Fotao
Institiute
that
Jinchang
Factory
made
use
of
basically
the
same
4
http://www.pkulaw.cn/fulltext_form.aspx?Gid=117507295&EncodingName=

15. technology,
machinery,
and
equipment,
as
the
plaintiff’s
factory,
to
produce
rods.
The
reason
was
that
the
defendant
had
hired
2
workers
who
had
been
formerly
employed
by
Fotao
Institute,
Ou
Yongchao
and
Ou
Guoxiang,
who
had
then
revealed
Fotao’s
technology
secrets
to
the
defendant.
The
plaintiff
therefore
asked
the
court
to
order
that
Jinchang
immediately
stop
the
infringing
act,
compensate
the
plaintiff
for
the
economic
loss
suffered,
and
make
a
public
apology.
(Lin
238)
The
court
unanimously
concluded
that
the
plaintiff’s
(Fotao)
technique
was
indeed
a
trade
secret
as
well
as
a
national
secret.
It
also
concluded
that
the
defendant
(Jinchang)
had
stolen
the
trade
secret
of
the
plaintiff
in
an
unfair
way
and
had
infringed
on
the
rights
of
the
plaintiff.
According
to
the
judgment:
“Jinchang
Factory’s
infringement
of
Fotao
Institute’s
know-­‐how
constituted
unfair
competition,
according
to
Article
10
of
the
Unfair
Competition
Law
of
the
PRC.
According
to
Article
20
of
the
Unfair
Competition
Law
and
Article
118
of
the
General
Principles
of
the
Civil
Law,
Jinchang
Factory
would
immediately
need
to
stop
the
infringement,
respond
in
damages,
make
apologies,
and
bear
the
legal
cost
of
the
case
(Lin
255).
Jinchang
Factory
was
made
to
compensate
the
Fotao
Institute
with
RMB
264,019
for
its
losses
in
addition
to
bearing
an
additional
cost
of
RMB
30,530
for
the
acceptance
fees
and
attachment
fees,
a
total
of
RMB
294,549.
Jinchang
Factory
also
had
to
cease
using
the
“cold
wait
and
static
pressed
fine
ceramic
roller”
technique
as
well
as
make
a
public
apology
to
Fotao
Institute
in
the
newspaper
(Lin
256).
US-­‐China
Trade
Secret
cases
United
States
v.
Liew
Court
Name:
United
States
District
Court
for
the
Northern
District
of
California
Man
sentenced
for
theft
of
Trade
Secrets
from
DuPont
Walter
Liew
was
sentenced
to
15
years
in
prison,
and
fined
$28
million
following
his
conviction
under
the
Economic
Espionage
Act.
The
conviction
arose
from
the
theft
of
trade
secrets
from
DuPont,
particularly
information
and
documents
pertaining
to
the
production
process
of
a
white
pigment,
titanium
dioxide
(TiO2).
The
pigment
is
what
DuPont
uses
to
achieve
its
whitest
whites
in
everything
from
cars
to
paper.
Judge
White,
writing
in
the
Northern
District
of
California
on
a
post-­‐conviction
motion
for
acquittal,
explained
that
the
evidence
demonstrating
the
intent
to
injure
Dupont,
and
intent
to
benefit
a
foreign
government
was
sufficient
for
a
rational
juror
to
find
Liew
guilty.
It
was
also
noted
that
the
money
was
tracked
to
various
accounts
in
Singapore
and
China,
but
could
not
be
recovered.
United
States
v.
Chung
Court
Name:
United
States
Court
of
Appeals
for
the
Ninth
Circuit
9th
Circuit:
No
Competitors
Needed
for
Trade
Secrets
to
Exist
Under
the
EEA

16. United
States
v.
Chung,
659
F.3d
815,
826
(9th
Cir.
2011)
Docket
No.
10-­‐50074
Federal
Court
of
Appeals
for
the
9th
Circuit
Decided:
September
26,
2011,
Judge
Susan
P.
Graber
In
a
2011
opinion,
the
Court
of
Appeals
for
the
Ninth
Circuit
affirmed
the
first
trial
court
conviction
under
the
Economic
Espionage
Act.
Notably,
the
appellate
court
in
United
States
v.
Dongfan
Chung
addressed
the
independent
economic
value
requirement
under
18
U.S.C
§1839(3)(B)
as
either
actual
or
potential.
In
line
with
the
statutory
language,
the
Court
asserted
that
the
owner
of
secret
information
did
not
need
to
have
actual
competitors
in
order
to
rightfully
protect
its
economic
value.
In
US
v.
Chung,
the
defendant
Dongfan
“Greg”
Chung,
a
former
engineer
for
the
US-­‐
contractor
Boeing,
was
found
in
possession
of
over
300,000
Boeing
documents,
including
six
documents
containing
Boeing
trade
secrets.
On
appeal
of
his
conviction,
Chun
argued
insufficient
evidence
as
to
the
existence
of
any
Boeing
trade
secrets
within
the
documents
he
possessed.
The
court
looked
specifically
at
four
Boeing
documents
relating
to
a
NASA
space-­‐shuttle
antenna.
Judge
Graber
found
that
Boeing
maintained
the
secrecy
of
the
particular
Boeing
information
and
enacted
reasonable
protective
measures
to
maintain
secrecy.
Most
notably,
the
Court
endeavored
in
an
extensive
analysis
of
he
economic
value
required
for
such
information
to
be
trade
secrets.
While
the
EEA’s
definition
of
trade
secret
is
grounded
upon
the
standard
outlined
in
the
Uniform
Trade
Secrets
Act
(UTSA),
the
text
of
§1839(3)(B)
further
defines
the
economic
value
of
trade
secret
information
as
either
actual
or
potential,
and
does
not
mention
the
existence
of
competitors.
The
court
reasons
that
such
information
“could
assist
a
competitor
in
understanding
how
Boeing
approaches
problem-­‐solving
and
in
figuring
out
how
best
to
bid
on
a
similar
project
in
the
future,
for
example,
by
underbidding
Boeing
on
tasks
at
which
Boeing
appears
least
efficient.”
Thus
the
Court
held
Boeing’s
secret
information
independently
valuable
not
for
Boeing’s
potential
use,
but
for
use
of
such
information
by
any
potential
Boeing
competitor.
Thus
the
Ninth
Circuit
held
that
under
the
EEA,
companies
do
not
need
actual
competitors
in
order
to
derive
economic
value
from
maintaining
the
secrecy
of
certain
information.5
Chapter
2:
Efforts
to
Improve
the
Chinese
Court
System
Amidst
international
and
domestic
criticism,
China
is
seeking
to
reform
and
improve
its
legal
system
pertaining
to
Intellectual
Property
Rights
Protection.
Such
efforts
include
establishing
three
special
IPR
courts
in
Shanghai,
Guangdong,
and
5
http://tsi.brooklaw.edu/category/legal-­‐basis-­‐trade-­‐secret-­‐claims/economic-­‐espionage-­‐act

17. Beijing
as
well
as
appointing
a
judge
who
with
a
specialty
in
Intellectual
Property
Law
to
the
Supreme
People’s
Court.
A.
IPR
Tribunals
and
3
Special
IP
Courts
in
Beijing,
Shanghai,
and
Guangdong
Since
the
very
first
IP
tribunal
was
established
in
a
Beijing
court
in
1993,
IP
tribunals
have
been
established
at
the
Supreme
People’s
Court,
32
high
people’s
courts,
more
than
400
intermediate
people’s
courts
and
more
than
100
designated
basic
people’s
courts
throughout
China.
There
are
currently
about
3,000
specialized
IP
judges
in
China.
However,
in
the
Chinese
court
system,
IP
civil
cases,
such
as
infringement
cases,
are
heard
in
IP
tribunals;
IP
administrative
cases,
such
as
appeals
against
the
Patent
Re-­‐
examination
Board’s
decisions,
are
heard
in
administrative
tribunals.
IP
criminal
cases
are
heard
in
criminal
tribunals.
Hence
there
lacks
a
consistency
in
the
IP
court
system
due
to
the
different
IP
cases
being
tried
in
3
different
types
of
courts.
Currently,
seven
high
people’s
courts,
74
intermediate
people’s
courts
and
80
basic
people’s
courts
have
been
running
a
pilot
program
that
brings
together
judges
from
all
three
tribunals
in
their
respective
courts
to
form
a
collegiate
bench
in
the
IP
tribunal
for
an
IP
civil
case
that
involves
civil
or
criminal
action.
In
August
of
2014,
the
Supreme
People's
Court
(SPC),
China’s
top
legislature,
selected
Beijing,
Shanghai
and
Guangdong
as
the
first
places
to
establish
these
specialized
IPR
courts. Under
a
judicial
interpretation
issued
by
the
SPC,
the
three
new
courts
are
to
handle
civil
and
administrative
disputes
involving
intellectual
property,
especially
technical
disputes.
25
judges
were
appointed
to
the
IPR
court
in
Beijing,
which
is
conveniently
located
in
the
Haidian
district
where
a
number
of
technology
giants
and
colleges
will
stand
to
benefit
from
its
establishment.
The
court
in
Guangdong
will
be
based
in
Guangzhou,
the
provincial
capital.
Intermediate
people's
courts,
which
heard
technical
intellectual
property
rights
cases
previously,
will
no
longer
handle
related
disputes
after
the
three
new
courts
start
work.
Although
these
3
specialized
IPR
courts
are
meant
to
streamline
and
better
coordinate
the
IPR
court
prosecution
system,
there
are
still
a
number
of
issues.
For
one,
there
is
a
varied
level
of
expertise
across
different
courts
regarding
patents,
integrated
circuit
layout
designs,
new
plant
varieties,
and
software.
Inconsistent
standards
are
being
adopted
in
different
courts,
there
is
evidence
of
local
protectionism
in
some
courts,
and
there
are
multiple
rounds
of
litigation.

18. According
to
the
Standing
Committee
of
the
National
People’s
Congress’s
resolution,
the
specialized
IP
courts
have
jurisdiction
over
the
first
instance
of
IP
civil
cases
and
the
first
instance
of
IP
administrative
cases
regarding
patents,
new
plant
varieties
and
integrated
circuit
layout
designs,
as
well
as
technical
knowhow.
Specifically,
the
specialized
IP
court
in
Beijing
has
jurisdiction
over
the
first
instance
of
administrative
lawsuits
that
are
appeals
against
decisions
of
administrative
departments
under
the
State
Council,
such
as
the
State
Intellectual
Property
Office
and
the
Patent
Re-­‐examination
Board,
regarding
the
grant
or
validity
of
IP
rights.
The
three
specialized
IP
courts
have
territorial
jurisdiction
across
regions
in
China,
and
in
the
first
three
years
after
their
establishment
this
cross-­‐region
territorial
jurisdiction
may
first
be
achieved
in
the
respective
province
or
municipality
under
the
central
government
where
a
specialized
IP
court
is
located.
The
specialized
IP
courts
also
hear
appeals
against
decisions
in
trademark
and
copyright
civil
or
administrative
lawsuits
made
by
the
first
instance
basic
people’s
court
in
the
municipality
where
the
respective
IP
court
is
located.
Appeals
against
decisions
made
by
specialized
IP
courts
are
heard
by
the
high
people’s
court
where
the
respective
specialized
IP
court
is
located.
The
specialized
IP
courts
will
be
supervised
by
the
Supreme
People’s
Court,
the
high
people’s
court
where
the
respective
specialized
IP
court
is
located
and
also
by
the
Procuratorate,
the
national
agency
responsible
for
prosecution
and
investigation.
The
president
of
each
specialized
IP
court
is
appointed
by
the
local
People’s
Congress
where
the
respective
specialized
IP
court
is
located.
The
vice
president
of
the
specialized
IP
court,
chiefs
of
tribunals
and
adjudicating
judges,
and
members
of
adjudicating
committees
will
be
named
by
the
president
of
the
respective
specialized
IP
court
and
appointed
by
the
local
People’s
Congress.
The
specialized
IP
court
reports
to
the
Standing
Committee
of
the
local
People’s
Congress
where
the
respective
specialized
IP
court
is
located.
The
Supreme
People’s
Court
reports
on
the
implementation
of
the
IP
courts
to
the
National
People’s
Congress
after
three
years.
Establishing
three
specialized
IP
courts
is
just
a
small
step
towards
the
reform
of
the
IP
litigation
system.
There
is
still
no
national
patent
appeal
court
like
the
Court
of
Appeals
for
the
Federal
Circuit
in
the
US.
Chen
Jinchuan,
chief
judge
of
the
intellectual
property
tribunal
under
Beijing
High
People's
Court,
said
most
judges
without
technical
backgrounds
have
difficulty
in
handling
some
professional
IPR
disputes,
such
as
those
related
to
biology,
medicine
and
chemistry.
To
resolve
this
issue,
the
SPC
is
recruiting
technical
assistants
for
the
three
courts
to
help
identify
technological
facts
and
provide
professional
advice.
The
SPC
is
now
preparing
a
judicial
interpretation
that
will
cover
the
selection
of
these

19. technical
assistants
and
their
duties,
in
hopes
that
it
will
improve
the
efficiency
of
hearing
such
cases.
Zhang
Sihan,
a
professor
at
the
National
Judges
College,
said
it
is
practical
to
set
up
IPR
courts
in
Beijing,
Shanghai
and
Guangdong,
"but
it
is
not
necessary
to
establish
more
in
all
provinces".
Guangdong
courts
handle
about
25
percent
of
the
nation's
IPR
civil
cases
every
year
and
the
average
number
of
patent
disputes
in
the
province
annually
has
reached
3,400.
Zhang
said
the
new
courts
are
acting
as
trailblazers
and
a
decision
on
extending
such
courts
to
other
areas
will
depend
on
whether
these
three
"pioneers"
operate
well.6
Chapter
3:
Chinese
Involvement
with
International
Conventions
In
1980,
the
PRC
became
a
member
of
the
World
Intellectual
Property
Organization
(WIPO).
It
has
patterned
its
IPR
laws
on
the
Berne
Convention
for
the
Protection
of
Literary
and
Artistic
Works
and
the
Agreement
on
Trade-­‐Related
Aspects
of
Intellectual
Property
Rights
(TRIPS).
The
PRC
acceded
to
the
Paris
Convention
for
the
Protection
of
Industrial
Property
on
14
November
1984
and
became
an
official
member
on
19
March
1985.
The
PRC
also
acceded
to
the
Madrid
Agreement
for
the
International
Registration
of
Trademarks
in
June
1989.
In
January
1992,
the
PRC
entered
into
a
Memorandum
of
Understanding
with
the
United
States
government
to
provide
copyright
protection
for
all
American
"works"
and
for
other
foreign
works.
Several
bilateral
negotiations
have
been
conducted
between
the
two
governments.
At
some
point,
trade
sanctions
were
threatened
by
both
governments
over
IPRs
issues.
At
the
conclusion
of
negotiations
in
1995,
the
Sino-­‐US
Agreement
on
Intellectual
Property
Rights
was
signed.
In
June
1996,
the
two
governments
entered
into
another
agreement
protecting
American
intellectual
property
in
the
PRC.
Generally,
once
the
PRC
has
acceded
to
an
international
treaty,
the
People's
Courts
can
quote
the
provisions
of
the
treaty
directly
in
deciding
an
intellectual
property
infringement
case,
without
reference
to
a
Chinese
domestic
law
by
which
the
treaty
provision
is
incorporated.
A.
US
China
WTO
dispute
The
US
has
historically
held
the
view
that
China
is
especially
lax
with
regards
to
its
enforcement
of
Intellectual
Property
rights.
Even
before
China
joined
the
WTO,
the
US
put
tremendous
pressure
on
China
in
the
form
of
threats
of
trade
sanctions
and
opposition
to
its
entry
to
the
WTO
in
order
to
force
China
to
strengthen
its
intellectual
property
protection
and
enforcement.
6
http://www.chinadaily.com.cn/china/2014-­‐11/04/content_18862403.htm

20. In
2007
the
US
brought
up
a
case
against
China
at
the
WTO
that
said
that
China’s
method
of
enforcement
did
not
meet
the
requirements
of
the
Berne
convention.
In
2009,
the
WTO
upheld
the
US’s
arguments.
On
10
April
2007,
the
United
States
requested
consultations
with
China
concerning
certain
measures
pertaining
to
the
protection
and
enforcement
of
intellectual
property
rights
in
China.
The
four
matters
on
which
the
United
States
requests
consultations
were:
The
thresholds
that
must
be
met
in
order
for
certain
acts
of
trademark
counterfeiting
and
copyright
piracy
to
be
subject
to
criminal
procedures
and
penalties;
• Goods
that
infringe
intellectual
property
rights
that
are
confiscated
by
Chinese
customs
authorities,
in
particular
the
disposal
of
such
goods
following
removal
of
their
infringing
features;
• The
scope
of
coverage
of
criminal
procedures
and
penalties
for
unauthorized
reproduction
or
unauthorized
distribution
of
copyrighted
works;
and
• The
denial
of
copyright
and
related
rights
protection
and
enforcement
to
creative
works
of
authorship,
sound
recordings
and
performances
that
have
not
been
authorized
for
publication
or
distribution
within
China.
At
it’s
meeting
on
25
September
2007,
the
Dispute
Settlement
Body
(DSB)
established
a
panel.
Argentina,
the
European
Communities,
Japan,
Mexico
and
Chinese
Taipei
reserved
their
third-­‐party
rights.
Subsequently,
Australia,
Brazil,
Canada,
India,
Korea,
Thailand
and
Turkey
reserved
their
third-­‐party
rights.
The
panel
concluded
that,
to
the
extent
that
the
Copyright
Law
and
the
Customs
measures
as
such
are
inconsistent
with
the
TRIPS
Agreement,
they
nullify
or
impair
benefits
accruing
to
the
United
States
under
that
Agreement,
and
recommended
that
China
bring
the
Copyright
Law
and
the
Customs
measures
into
conformity
with
its
obligations
under
the
TRIPS
Agreement.
On
29
June
2009,
China
and
the
United
States
informed
the
DSB
that
they
had
agreed
that
the
reasonable
period
of
time
for
China
to
implement
the
DSB
recommendations
and
rulings
should
be
12
months
from
the
adoption
of
the
report.
Section
3:
Chinese
Domestic
Innovation:
A
Way
To
Boost
IPR
Regime

21.
Chapter
1:
Chinese
products
lack
innovation
patents,
rather
they
license
core
tech
from
other
countries
ex.
Samsung.
In
2007,
a
Chinese
newspaper
Beijing
Youth
Daily
reported
that
99
percent
of
Chinese
Companies
did
not
apply
for
patents
because
of
the
lack
of
core
technology.
At
the
time,
Chinese-­‐made
mobile
phones
and
computers
needed
to
pay
20-­‐30
percent
of
their
retail
price
just
for
the
licensing
of
patented
technologies
(Cheung
74).
(Beijing
Youth
Daily,
28
April
2007)
Although
the
situation
has
improved
a
lot
since
then,
Chinese-­‐made
technologies
still
largely
lack
their
own
core
technology
and
continue
to
license
technologies
from
other
foreign
companies.
One
example
is
China
smartphone
maker,
Xiaomi,
who
is
currently
being
sued
and
prevented
from
entering
foreign
markets
due
to
its
lack
of
intellectual
property,
mainly
patents.
Ericsson
AB
has
recently
sued
Xiaomi
in
India,
Xiaomi’s
biggest
overseas
market,
saying
the
smartphone
maker
hadn’t
licensed
inventions
by
Ericsson
that
enable
wireless
devices
to
connect
to
networks.
Ericsson
holds
essential
patents
for
2G,
3G
and
4G
mobile
wireless
technology,
which
means
any
seller
of
products
compliant
with
those
standards
must
secure
licenses.
Xiaomi
suspended
all
India
sales
to
comply
with
the
Dec.
8,
2014
Delhi
High
Court
ruling
in
Ericsson’s
lawsuit.
A
Xiaomi
appeal
on
Dec.
16,
2014
led
to
a
partial
lifting
of
the
ban,
for
devices
using
Qualcomm
Inc.
chips.
According
to
Xiaomi’s
India
website,
the
Mi3
and
Redmi
1S
use
Qualcomm
chips,
while
the
Redmi
Note
device
uses
a
MediaTek
Inc.
processor.
Qualcomm
has
also
been
quoted
saying
that
Xiaomi
has
a
license
agreement
for
3G
multimode
units;
however,
the
details
of
the
agreement
cannot
be
disclosed.
Low
research
costs
in
China
has
helped
Xiaomi
go
from
a
startup
to
the
world’s
No.
3
smartphone
vendor
within
four
years
of
its
founding.
Virtually
all
those
sales
were
in
China,
where
weak
domestic
enforcement
of
intellectual-­‐property
rights
meant
Xiaomi
was
“much
more
protected,”
Shah
said.
This
lawsuit,
however,
threatens
Xiaomi’s
international
expansion
and
puts
Xiaomi’s
strategy
of
selling
devices
for
near-­‐cost
at
risk,
as
it
will
have
to
increase
its
spending
on
research
and
licensing
to
avoid
legal
battles.
Although
Xiaomi
is
also
working
to
expand
its
patent
technology
portfolio
globally—
filing
600
patent
applications
in
2013
and
another
1,000
applications
in
2014,
it
still
is
still
a
very
young
company
and
lags
behind
its
competitors.
Entering
an
overseas
market
with
a
limited
patent
portfolio
can
be
a
“calculated
risk,”
since
competitors
will
target
those
companies
for
IP
law
suits
to
keep
them
out
of
the
market.
Neil

22. Shah,
a
Mumbai-­‐based
research
director
for
devices
at
Counterpoint
Research
said:
“Patent
companies
in
other
countries
will
now
go
after
Xiaomi
in
other
markets
and
use
the
India
market
as
the
example.”
“Expansion
into
countries
with
strict
intellectual
property
laws,
such
as
the
U.S.
or
Japan,
has
long
been
a
challenge
for
most
Chinese
smartphone
brands,
including
Xiaomi,”
said
Neil
Mawston,
executive
director
of
researcher
Strategy
Analytics.“Xiaomi
will
find
its
rapid
smartphone
growth
at
home
in
China
is
much
harder
to
replicate
abroad.”7
For
now,
Xiaomi
will
still
have
to
license
many
of
its
core
technology
patents.
However,
unfortunately
from
them,
many
foreign enterprises that own core
technologies charge high patent licensing fees to Chinese domestic ICT (Information and
Communications and Technology Market) Industry. (Hong Xue 41).
Chapter
2:
Innovation
areas
that
are
funded
or
supported
by
the
Chinese
Government
Chinese
domestic
IPR
will
improve
as
its
own
domestic
innovation
grows,
as
it
will
have
reasons
to
protect
its
own
IPR
from
infringement.
The
Chinese
government
is
eager
to
develop
its
own
research
and
further
delve
into
areas
such
as
‘independent
innovation.’
Chinese
domestic
innovation
faces
the
further
threat
of
intellectual
property
theft.
Competitors
in
China
are
becoming
more
technologically
advanced
and
legally
sophisticated,
so
that
IP
disputes
are
already
moving
away
from
simple
counterfeiting
or
copying
towards
more
sophisticated
methods
of
infringement.
This
makes
obtaining
effective
and
robust
patent
rights
in
China
even
more
important.
(Cheung
74)
In
an
interview
with
Professor
Michael
Pendleton,
the
Associate
Director
of
the
School
of
Law
at
the
Chinese
University
in
Hong
Kong,
he
states:
“The
Chinese
government
has
already
revised
many
IPR
laws:
patents,
copyrights
and
signed
on
to
many
international
agreements
through
bilateral
and
multilateral
means.
However,
it
is
like
putting
on
new
clothes
without
really
understanding
what
are
the
meanings
of
the
legal
system
and
the
rules
of
law.
They
will
take
literally
what
fits
and
revise.
China
is
gradually
developing
its
own
intellectual
property
and
needs
a
system
to
protect
it.
It
is
about
self-­‐interest
in
having
laws
to
protect
its
own
IP.”(Cheung
94)
Pendleton
has
worked
with
Professor
Zheng
Chensi
who
was
the
previous
head
of
the
Intellectual
Property
Rights
Bureau
in
China.
7
http://www.bloomberg.com/news/articles/2014-12-22/xiaomi-finds-patent-problem-in-chase-of-samsung-apple