Intellectual Property Rights,
A Key Concern Among International Businesses

By staff reporter LUO YUANJUN

Guangzhou destroys a haul of 13 million smuggled and pirated discs..

In recent years, China made tremendous efforts in its fight to protect intellectual property rights (IPR) and crackdown on copyright infringements. In 2004 alone, more than 85 million pirated commodities were confiscated; 653 people were jailed for IPR infringements, and the Supreme People’s Court lowered the threshold to file a lawsuit against IPR violations from US $24,000 to US $6,000. Vice Premier Wu Yi says the Chinese government did much to speed up coordination between different government departments, enhance law enforcement and carried out a number of special IPR protection programs, making remarkable progress.

Statistics show that between 2000 and 2004 the people’s courts at various levels completed 1,710 first-instance IPR violation criminal cases. There has been a sharp increase in IPR settlements in the three years since 2001, when China joined the WTO. The Supreme People’s Court has vowed to mete out more severe punishment for IPR offenders. Those caught trading more than 5,000 pirated discs will receive sentences of up to seven years’ imprisonment. What’s more, Chinese courts now recognize online piracy as copyright infringement.

Since 2001, China has revamped its IPR laws according to its WTO commitments. Now, a complete legal system designed to protect IPR rights has taken shape.

Despite all these achievements, the battle has not yet been won. One of the most pressing tasks is winning public support for IPR protection. As a new concept in China, many people have only a vague notion of IPR, never mind the importance of IPR protection, so the government’s overall goal is much more difficult to achieve. Increasing public awareness is key to success, and that’s why, when drafting its IPR strategy in 2004, east China’s Jiangsu Province declared it would “ensure that 50 percent of the population understood IPR within five years.”

In the week before World Intellectual Property Rights Day on April 26, thirteen departments, including the State Council Information Office, staged successful publicity activities around the country, aiming to educate the public about IPR.

Another area that needs improvement is law enforcement. Cooperation and communication between various government departments and institutes is often less-than-perfect. Motivated by local protectionism, some officials block the filing of IPR cases, and weaken the punishments for violators. The Supreme People’s Court and the Supreme People’s Procuratorate recently took measures aimed at increasing IPR violators’ punishments and expediting IPR cases, thus stepping up IPR protection in China.

A Chinese customs officials report IPR violations at a working conference of IPR protection.

Developed nations have a variety of political, economic and diplomatic tools that they use against developing countries with poor IPR protection records. Every year, the Office of the United States Trade Representative (USTR) delivers a comprehensive report to the US congress on the protection of U.S. IPR in over 100 countries around the world. In 1991, China was listed among the countries with the poorest IPR protection records.

In fact, profits obtained from piracy are often very low, much lower than the losses experienced by the patent manufacturers. But rampant piracy does dampen innovation, and will eventually hinder an industry’s growth. Chinese enterprises are paying a high price for lacking their own IPR. For instance, a Chinese DVD manufacturer must hand over patent royalties of more than US $20 per unit sold.

Statistics show that counterfeit or shoddy products knocked some US $30 billion off the value of China’s economy in 2004 alone. Without a sound IPR system, China cannot ensure that its manufacturing and high-tech industries are innovative, or foster their own respected brand names. This means Chinese-made tech products are less competitive in the international market. When the national IPR system catches up with international standards, Chinese enterprises will have fertile soil on which to cultivate their own famous brands and develop their own technologies.

China completed the framework for its IPR system in the 1980s. Then, in November 1990, a Draft Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement) was reached during the Uruguay Round of GATT negotiations, marking the birth of new international criteria for IPR protection. China played an active role in the negotiations, and helped make sure the agreement was concluded.

In the following years, China did much to bring its IPR protection more in line with international standards. Recounting his 20 years’ cooperation with China, the late director general of the World Intellectual Property Organization, Dr. Arpad Bogsch, said the country was making progress at an unprecedented speed in the history of intellectual property rights protection.

Last September, the Chinese government embarked on a nationwide one-year campaign to improve IPR protection. It began with an examination of the most serious and most common IPR violations, based on the owners’ complaints. Emphasis was placed on 15 provincial-level administrative areas, including Beijing, Shanghai, Zhejiang and Guangdong. The capital’s Xiushui Street, a notorious spot for counterfeit clothing hawkers, was the first to be raided.

This move is the most extensive one since the founding of the National Working Group on Intellectual Property Rights Protection in May 2004. Headed by Vice Premier Wu Yi, this group coordinates 12 ministries and departments, including the Ministry of Public Security, the Ministry of Commerce, the General Administration of Press and Publication, the General Administration of Customs and the State Intellectual Property Office. It is responsible for coordinating IPR protection work around the nation, and supervising how major IPR cases are handled.