Intellectual Property Rights in China: How Can the Actions of Intellectual Property Courts Inform Foreign Investors

Due to high demand, in 2017 the People’s Republic approved the creation of similar Intellectual Property (IP) courts. Was this a signal to international corporations of Chinese intent to punish IP infringements liberalization?

A step to curb protectionist complaints launched at the Intellectual Property Rights administration of biased, and overworked, IP courts.

With an ever-increasing economic footprint, international investors have flocked to Asia, with more capital flowing into China than ever before. One obstacle always at the forefront of every foreign investor’s mind when considering business in China has been, “What will I have to give up: intellectual property, ownership, government censorship and control?” More recently we’ve seen a government that has adopted some capitalistic principles and even begun to recognize the intellectual property rights of foreign firms. The question at hand, however, is: will they uphold the rights of foreigners doing business in China.

Grievances with government oversight and influence have become a part of doing business in the People’s Republic. Most recently, we learned of Google accommodating the Chinese Government by restricting, or filtering, the platform’s search results, and website accessibility. Diving into the more granular components to operating within China as a foreign business we look at what the company can expect once they begin to take actions to protect their assets through Patents, Trademarks, and Copyrights. In the past, firms have complained that the enforcement of IP infringements is rarely fruitful and communal governments often times rule against the businesses. Additional complaints relate to the accessibility of evidence to prove their cases, which can be difficult to gather and present to the regional courts.

Intellectual Property Rights Court

IP claims are handled by the Intellectual Property Rights (IPR) courts and are represented in the different regions across China. Yet, as business and industry have grown across China so has the number of IP legal cases brought up for review by the courts. This influx has subsequently necessitated the development of additional IP courts, and begs the question of whether or not this is representative of progress.

In a 2014 study published by the International Review of Law & Economics titled, “Judicial Local Protectionism in China” researchers found a direct relationship between the location of the court and that of the plaintiffs with courts siding more often with local plaintiffs. Protectionism, as this sort of geographic bias is referred to, has plagued foreign investors in their search for justice and recompense.

More recently, a report presented by the Supreme Justice of the People’s Court supporting the effectiveness of newly minted IPR courts showed a 40% increase in the number of IP cases being heard and ruled on. The Supreme Justice’s report showed a clear progression for foreign investors. Though not quelling all concerns related to protectionism in local courts, this does signal progress for foreign businesses.

The developments of the Chinese government do in fact tell a story of a system understanding the consequences of protectionism and thwarting foreign investors from entering the Chinese markets. Yet despite the improvements made to the IP courts, we still need evidence of prosecutorial independence wherein the (IP) rights of foreign firms are recognized and protected.

Jeremy Tortorice

Works Cited

Cheryl XiaoningLongaJunWang; “Judicial local protectionism in China: An empirical study of IP cases”; International Review of Law and Economics, Volume 42, June 2015, Pages 48-59

Weightman, William; “China’s Progress on Intellectual Property Rights (Yes, Really)” 2018. The Diplomat; https://thediplomat.com/2018/01/chinas-progress-on-intellectual-property-rights-yes-really/E

Xie, Echo; “China made rulings on 40% more IP cases in 2018” South China Morning Post. https://www.scmp.com/news/china/politics/article/3001407/jump-number-intellectual-property-cases-handled-chinas-courts