New IP enforcement guidelines take aim at e-commerce, semiconductor sectors

2 min read
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China’s top decision-making bodies on Sunday set out goals to improve the country’s beleaguered intellectual property (IP) enforcement channels, promising alternatives to overloaded courts so that victims can resolve issues more quickly and cheaply. 

Why it matters: These “guiding opinions” (in Chinese) will act as a blueprint for further regulations.

Details: Issued by China’s highest decision-making organs, the Central Committee and the State Council, the document increases fines for IP infringement and sets out goals to eliminate frequent infringement by 2022.

  • The “guiding opinions” promise meaningful improvements with existing challenges in the process including “difficulties in providing evidence, long processing times, high costs, and low payouts.”
  • IP centers providing one-stop dispute resolution services will be set up in competitive industry clusters, such as artificial intelligence (AI), blockchain, internet of things (IoT), e-commerce, and clean energy.
  • Persistent issues such as bad-faith trademark applications and “abnormal” patent filings will face heightened scrutiny. 
  • IP cases including plant varieties, integrated circuits, sports broadcasting, and cross-border e-commerce were specifically mentioned. E-commerce platforms are to create systems for rapid resolution of utility and design patent infringement.
  • Local governments and Party committees are to increase funds allocated for IP resolution, and IP is to be included in their key performance indicators (KPIs).

Context: China recently revised both its Patent Law and Trademark Law, raising maximum and minimum damage awards for infringement. 

  • Some commentators argue that many patents are poor quality and do not deserve even the minimum payout. 
  • An engineering graduate told TechNode on Sunday that he filed eight useless patents for a five-point boost in his application to become a Shanghai resident. 
  • County-level IP offices are supposed to provide quick relief, but critics have said they are ineffectual when faced with highly technical cases and rarely do more than refer victims to court.
  • “Lag in advancing cases is more of a concern to businesses than payouts,” a person who works in IP in China for a foreign government told TechNode on Monday. “The burden of filing claims can be very heavy for smaller companies, and even push them out of the marketplace. New internet courts may do more for enforcement than increasing punitive damages, through streamlining procedures and not requiring claimants to be there in person.”
  • China has set up IP tribunals at the provincial level to avoid bias and protectionism for infringers who are major local taxpayers.
  • Big e-commerce players like Alibaba are leveraging advanced computing and big data. For instance, merchants with a history of accurate claims enjoy lower evidentiary requirements for future takedown requests, according to Alibaba’s 2018 IPR Protection Annual Report.