Eric Langer
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Some companies in the biopharmaceutical industry have considered and discarded their China strategy because they fear that
intellectual property in China is unprotectable. This perception was recently bolstered by the formal World Trade Organization
(WTO) complaint lodged this month by the USagainst China for counterfeit goods. Despite such actions, most analysts would
agree that Chinese intellectual property laws and enforcement practices are changing rapidly. Companies not keeping abreast
of changing policies may miss a significant opportunity.
Many foreign companies have demonstrated growing confidence in the Chinese Intellectual Property Rights (IPR) systems by filing
patents in China. Large biopharmaceutical companies are setting up R&D facilities in Shanghai and Beijing, including Novo
Nordisk, Roche, Eli Lilly, and Pfizer. The recent entry of China into the WTO and the rise of China's economy have pushed
the protection and enforcement of IPR to the front burner for China's authorities, who plan to become major international
technology trading partners.1
Yet, despite these rapid changes and improvements in IPR, 80% of US companies recently surveyed by AmCham-China2 have indicated China's IPR protection is "less than effective." Michael Wise of Perkins Coie outlines the background of
IPR protection in China in his chapter in Advances in Biopharmaceutical Technology in China.1
Others see long-term opportunities. "China is on the verge of becoming a major technology and IP generator, creating a wave
of patents likely to wash over the US and Europe's shores in the next decade," says Ian Harvey, chairman of the Intellectual
Property Institute in London. "This is the result of China's recognition of the fundamental importance of IP to economic growth."
Harvey believes this shift has largely been missed by foreign observers.
BRIEF HISTORY OF INTELLECTUAL PROPERTY
According to Wise, intellectual property rights protection in modern China has had a history of little more than 25 years.
The IPR history for pharmaceuticals is even shorter. China's current legal IPR framework began in the 1980s; however, in that
short time, China has made impressive strides in protecting and enforcing IPR. By comparison, the United States has had a
tradition of protecting intellectual property rights for over 200 years.
IPR PROTECTION AND ENFORCEMENT IN CHINA
China joined the World Intellectual Property Organization in June 1980 and began to enact laws toward the building of a modern
Chinese IPR protection and enforcement system. In the same year, the Chinese Patent Office was established. In 1998 the name
was changed to State Intellectual Property Office. The patent law of the People's Republic of China (PRC) was adopted in 1984
and the copyright law was enacted in 1990. In 1993 the law of the PRC against unfair competition was enacted, which provided
a statutory basis for the protection of trade secrets. Before these laws were enacted, IPR protection in China was minimal.
Although some scholars believe that legalized IPR protection started in China in 1882 when Emperor Guangxu of the Qiing Dynasty
granted the first "patent," it was only in 1992 that the PRC patent law was amended to extend patent protection to drugs.
ENFORCEMENT
Enforcement of IPR continues to be a major issue between China and the West today. China's central government is aware of
the need to improve IPR protection and enforcement, but change cannot occur immediately in a country that has had such a limited
history in IPR.
Enforcement of IPR in China may involve either the courts or the administrative authorities. Court actions take more time
and money, but they can award damages, whereas administrative authorities can issue fines and award damages based on a successful
mediation. While the number of cases filed in Chinese courts involving IPR disputes has increased rapidly in recent years,
administrative actions remain the preferred venue in many cases. Patent disputes are handled by intellectual property offices.
Trademark disputes are handled by the industrial and commercial bureaus. Copyright disputes are handled by copyright bureaus.
Customs can investigate and seize imported infringing goods. Because IPR violations in China may also result in criminal penalties,
police departments are actively involved in IPR related crimes.
