The Problem of IPR Infringement in China and Recommendations for Improvement
Intellectual Property (I.P.) can be considered among the most valuable corporate assets, contributing to the establishment of companies' competitive advantages. In the light of the globalization of economy, IPR has become an increasingly important issue for multinational companies (MNCs) operating in China. Unfortunately, despite the great potential of the Chinese market, MNCs have to face various difficulties in protecting their IPR in China. The aim of this essay is to analyze the problem of IPR infringement in China and to provide some recommendations for its improvement.
2. Analysis of the Problem
In order to have a better understanding of this problem, it is necessary to take a closer look at three key aspects, namely the legal system & IP protection in China, the administrative system & IP protection in China and the judicial system & IP protection in China.
– II.1 The Legal System & IP Protection in China
The Chinese legal system is based on four levels of hierarchy including the Constitution, laws, regulations and ordinances. As far as IPR is concerned, high-level laws such as the Constitution and laws should take precedence over lower-level normative documents such as regulations and ordinances. In other words, if there is any inconsistency between laws and normative documents at different levels, laws shall prevail. However, it should be noted that although Constitution and laws are at the top of hierarchy, they are not always observed or obeyed in practice due to various reasons including but not limited to corruption, lack of awareness, etc.
As for IP protection, Article 9 of Chinese Constitution stipulates that “The State shall protect citizens’ lawful ownership and possession of private property and other legitimate civil rights and interests”. In addition, according to Article 10, “The State shall encourage enterprises and individuals to make scientific and technological innovations”. These two articles lay down a good foundation for IPR protection in China in theory. However, it should be noted that these articles are general provisions without specific measures or details on how to implement them in practice. In other words, there is still a long way to go for China to turn these constitutional principles into actionable tasks so as to ensure IPR protection in practice.
Besides the Constitution, trademark law is another key legislation related to IPR protection in China…
– II.2 The Administrative System & IP Protection in China
…The key administrative department responsible for IPR protection in China is the National Intellectual Property Administration (CNIPA), which was established in 2014 through the merger of the State Administration of Industry and Commerce (SAIC) and the State Intellectual Property Office (SIPO). The mission of CNIPA is to protect intellectual property rights, to administer trademark and patent registration, and to promote intellectual property awareness…
– II.3 The Judicial System & IP Protection in China
…The judicial system is also an important part of IPR protection mechanism in China. There are three types of courts dealing with IPR cases, namely the people’s court, the intellectual property court and the administrative court. The people’s court is the highest level court which has the power to hear all types of cases including those related to IPR. The intellectual property court was set up specifically to deal with IPR cases so as to improve the efficiency of IPR protection. The administrative court has the power to hear cases against administrative acts or decisions related to IPR…
3. Causes of IPR Infringement in China
Based on the analysis of the legal system & IP protection in China, the administrative system & IP protection in China and the judicial system & IP protection in China, it can be concluded that there are three main reasons leading to IPR infringement in China, namely lack of understanding & awareness of IPR, inadequate legislative framework & enforcement mechanism, and lack of public & government support for IPR protection mechanism.
– III.1 Lack of Understanding & Awareness of IPR
One of the root causes leading to IPR infringement in China is lack of understanding & awareness of IPR among Chinese people, especially those who are engaged in business activities. Oftentimes, they are not aware of the existence of IPR or they have a very limited understanding about what it is. As a result, they unintentionally infringe other people’s IPR without knowing it or without intending to do so…
– III.2 Inadequate Legislative Framework & Enforcement Mechanism
Another important factor contributing to IPR infringement in China is the inadequate legislative framework & enforcement mechanism. Although there are some laws and regulations related to IPR protection, they are often not specific enough or not properly enforced…
– III.3 Lack of Public & Government Support for IPR Protection Mechanism
In addition, lack of public & government support for IPR protection mechanism is also one of the key reasons leading to IPR infringement in China. Since most people do not have a good understanding about IPR, they are often reluctant to support measures taken by the government or businesses to protect IPR…
4. Consequences of IPR Infringement in China
Based on the analysis above, it can be seen that IPR infringement in China has negative impacts on both MNCs operating in China and on China’s economy & its reputation in the international community.
– IV.1 Negative Impacts on MNCs’ Business in China
Firstly, IPR infringement has negative impacts on MNCs’ business activities in China. Due to the rampant occurrence of IPR infringement, MNCs often suffer huge losses as a result of their products being counterfeited or their technologies being stolen. This not only reduces their profits but also undermine their competitiveness in the market…
– IV.2 Negative Impacts on China’s Economy & its Reputation in the International Community
Secondly, IPR infringement also has negative impacts on China’s economy & its reputation in the international community. IPR infringement often leads to foreign companies withdrawing their investments from China. This not only reduces the inflow of foreign investment but also decreases tax revenue and creates job losses…
5. Recommendations for Improving IPR Protection in China
Based on the analysis above, it can be seen that IPR infringement is a serious problem in China which has negative impacts on both domestic and foreign businesses. In order to solve this problem, it is necessary to take measures to improve IPR protection in China from both legal and non-legal perspectives.
– V.1 Improve the Legislative Framework & Enforcement Mechanism
From a legal perspective, one of the key measures that need to be taken is to improve the legislative framework & enforcement mechanism related to IPR protection. This can be done by enacting more specific and concrete laws and regulations related to IPR protection…
– V.2 Enhance Understanding
From a non-legal perspective, another important measure that need to be taken is to enhance understanding about IPR among Chinese people…
In conclusion, IPR infringement is a serious problem in China which has negative impacts on both domestic and foreign businesses. In order to solve this problem, it is necessary to take measures to improve IPR protection in China from both legal and non-legal perspectives.