China’s Intellectual Property Regime for Innovation: Risks to Business and National Development

246 Pages·2019·4.547 MB·English

by  Dan Prud’homme, Taolue Zhang

Dan Prud’homme · Taolue Zhang
China’s
Intellectual
Property Regime
for Innovation
Risks to Business and National
Development
’
China s Intellectual Property Regime for Innovation
’
Dan Prud homme Taolue Zhang
(cid:129)
’
China s Intellectual Property
Regime for Innovation
Risks to Business and National Development
123
Dan Prud’homme Taolue Zhang
EMLVBusiness School LawSchoolof TongjiUniversity
LéonarddeVinciPôle Universitaire Shanghai, China
Paris, France
ISBN978-3-030-10403-0 ISBN978-3-030-10404-7 (eBook)
https://doi.org/10.1007/978-3-030-10404-7
LibraryofCongressControlNumber:2019934525
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Preface
Countries in the middle-income stage of development require a smart approach to
their intellectual property (IP) regime that effectively stimulates genuine techno-
logical innovation, not just imitation. This strategic shift can allow a latecomer
nationtoavoidbeingperpetuallystuckinthemiddle-incomestageofdevelopment
unable to transition to higher income levels (a situation called the “middle-income
trap”) and to catch up with forerunners. China, which is currently an upper
middle-incomecountry,isgrapplingwithhowtobestmakethistransition.Overthe
last decade, China has embarked on a state-led “indigenous innovation” and
intertwinedIPdevelopment strategy.However,despitethisnewstrategicapproach
to catch up, China has not yet landed among the ranks of high-income economies
and the country’s IP regime has increasingly found itself under fire by foreign
governments, firms, and other stakeholders.
Amidst this backdrop, this book provides a timely and up-to-date evaluation
of the risks that China’s IP regime poses to innovation. Our central finding is that
China’s IP regime for innovation has improved notably over time, and therefore is
moreconducivetoinnovationthanmanybelieve,but itstillposesarangeofrisks.
The presence of these risks may, to varying degrees, negatively influence the
innovation activities of both foreign and domestic firms, as well as other actors
participating in the innovation process. In turn, this poses a larger set of risks to
China’s national development. However, with sufficient buy-in from the state, we
donotbelievethatthesefactorswillprohibitanumberofsmartreformsfrombeing
made to improve the ability of China’s IP regime to foster innovation and
entrepreneurship.
ThisbookisbaseduponareportcommissionedtotheauthorsbytheWorldBank
in 2017. The authors are indebted to Hoon Sahib Soh of the World Bank for his
supportfortheproject,aswellashisvaluablecommentsonearlydraftversionsofthis
manuscript.WealsomuchappreciatethesupportthatJustinHilloftheWorldBank
lentto theproject.PartsoftheworkproducedbyTaolueZhangforthisbookwere
additionally funded by China’s National Planning Office of Philosophy and Social
v
vi Preface
Science (I5BFX170) and China’s Ministry of Education (14YJC820077). The
authorsarealsogratefultoFengmeiPengforcollectingsomedataforthebook’s IP
enforcementchapterandtoYaoyaoJiangforherhelpformattingthemanuscript.
Paris, France Dan Prud’homme
Shanghai, China Taolue Zhang
Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Strategic IP Policy for China’s Current Stage
of Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Survey Data About Foreign and Chinese Firms’ Perceptions
of China’s Current IP Regime . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Challenges to Reforming China’s IP Regime . . . . . . . . . . . . . . 8
1.4 Method and Materials Used for This Book. . . . . . . . . . . . . . . . 11
1.5 Roadmap of the Book. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2 Statutory IP Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1 Evolution of China’s Core IP Laws and Regulations. . . . . . . . . 21
2.2 IP Laws Still Deserving Reform . . . . . . . . . . . . . . . . . . . . . . . 25
2.2.1 First Priority Challenges for Innovation. . . . . . . . . . . . . 26
2.2.2 Second Priority Challenges for Innovation. . . . . . . . . . . 34
2.3 Regulations and Other Measures . . . . . . . . . . . . . . . . . . . . . . . 38
2.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3 Chinese Patenting Trends and the Role of the State . . . . . . . . . . . . 43
3.1 Chinese Patenting Trends: An Overview . . . . . . . . . . . . . . . . . 43
3.1.1 Domestic Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.1.2 Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.1.3 Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.1.4 Patent Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
3.2 Factors Contributing to China’s Patenting Surge,
Including the Role of the Chinese State . . . . . . . . . . . . . . . . . . 61
3.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
vii
viii Contents
4 IP Measures for Transmission and Exploitation of Technological
Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.1 Firms’ Patent Commercialization and Technology Transfer:
Major Trends and Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
4.2 University Technology Commercialization and Transfer:
Major Trends and Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
4.3 Other Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
4.4 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5 New/Experimental IP-Related Measures . . . . . . . . . . . . . . . . . . . . . 93
5.1 Technology-Reactionary Experiments. . . . . . . . . . . . . . . . . . . . 94
5.1.1 Graphical User Interface (GUI). . . . . . . . . . . . . . . . . . . 94
5.1.2 Software and Business Method Patents (BMP) . . . . . . . 95
5.1.3 Expedited Patent Examination for Select Industries . . . . 96
5.1.4 E-Commerce Regulation. . . . . . . . . . . . . . . . . . . . . . . . 96
5.1.5 Data Storage and Protection . . . . . . . . . . . . . . . . . . . . . 99
5.1.6 Regulation of the Sharing Economy . . . . . . . . . . . . . . . 101
5.2 Other Experiments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
5.2.1 Protection of Pharmaceutical and Chemical
Test Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
5.2.2 Employee Invention Remuneration and Reward
Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
5.2.3 IP Demonstration Cities . . . . . . . . . . . . . . . . . . . . . . . . 106
5.2.4 Blacklists for IP Infringers . . . . . . . . . . . . . . . . . . . . . . 107
5.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
6 Administration of IP Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
6.1 Snapshot of IP Administration in China . . . . . . . . . . . . . . . . . . 115
6.2 Main Administration Challenges at Different IP Offices. . . . . . . 120
6.2.1 Processing Times. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
6.2.2 Quality of Examination . . . . . . . . . . . . . . . . . . . . . . . . 123
6.2.3 Efficiency and Quality of the Invalidation Process . . . . . 127
6.2.4 Coordination Between Central-Level Bureaus
and Provincial and Local Bureaus in Making IP
Strategies and Administering IP Rights . . . . . . . . . . . . . 129
6.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
7 IP Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
7.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
7.2 Efficiency and Effectiveness of the Courts . . . . . . . . . . . . . . . . 140
Contents ix
7.2.1 General Structure of the IP Court System . . . . . . . . . . . 140
7.2.2 Challenges and Ongoing Judicial Reforms. . . . . . . . . . . 143
7.2.3 Statistical Analysis of Efficiency and Effectiveness
of Sample IP Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
7.2.4 Cases Involving Foreign Parties and the Problem
of Protectionism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
7.3 Efficiency and Effectiveness of Criminal Enforcement. . . . . . . . 170
7.4 Efficiency and Effectiveness of Customs. . . . . . . . . . . . . . . . . . 175
7.5 Efficiency and Effectiveness of Local IP Offices
in Administrative Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . 179
7.6 Efficiency and Effectiveness of Arbitration and Mediation. . . . . 187
7.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
8 Implications for Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
8.1 Risk Management Tools for Managing IP in China . . . . . . . . . 197
8.1.1 Identification of Risks from the IP Regime . . . . . . . . . . 197
8.1.2 Analyzing Risks from the IP Regime . . . . . . . . . . . . . . 200
8.1.3 Prioritizing and Planning for Risks
from the IP Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
8.1.4 Managing and M&E of Risks from the IP Regime. . . . . 205
8.2 General Best Practices for Managing IP in China . . . . . . . . . . . 206
8.2.1 Craft and Implement a Corporate IP Strategy
in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
8.2.2 Understand the IP Law and Policy Landscape . . . . . . . . 207
8.2.3 Adopt Preventive Measures to Protect IP. . . . . . . . . . . . 207
8.2.4 Confront IP Infringement When Discovered . . . . . . . . . 211
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
9 Implications for Policymakers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
9.1 Recommendations to Improve Substantive IP Laws . . . . . . . . . 215
9.2 Recommendations to Improve Patent Quality . . . . . . . . . . . . . . 217
9.3 Recommendations to Improve Measures for Transmission
and Exploitation of Technological Knowledge . . . . . . . . . . . . . 218
9.4 Recommendations to Improve New/Experimental IP-Related
Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
9.5 Recommendations to Improve IP Administration . . . . . . . . . . . 220
9.6 Recommendations to Improve IP Enforcement . . . . . . . . . . . . . 221
10 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
10.1 Core IP Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
10.2 Patenting Trends and the Role of the State. . . . . . . . . . . . . . . . 225
10.3 IP Measures for Transmission and Exploitation
of Technological Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . 226
x Contents
10.4 New/Experimental IP-Related Measures . . . . . . . . . . . . . . . . . . 227
10.5 Administration of IP Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 227
10.6 IP Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
10.7 The Way Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Annex A: IP Lawsuit Damages Awarded in Different Regions
in China . .... .... ..... .... .... .... .... .... ..... .... 231
Annex B: IP Administrative Enforcement by Local Governmental
Agents... .... .... ..... .... .... .... .... .... ..... .... 235