China
Public Security Bureau (police)/Procuratorate (prosecutors)
Under enforcement provisions of TRIPs, China must provide IP
remedies through criminal enforcement for commercial scale
piracy and counterfeiting. China’s laws and regulations stipulate that IP administrative authorities and Customs may transfer egregious IP infringement cases to police and prosecutors
(procuratorate) for initiating criminal investigation. Despite
these criminal provisions, most IP cases continued to be handled through the administrative system. Under Chinese law, individuals also have the right to prosecute criminal cases (zisu),
which has rarely been used.
Ministry of Public Security
14 DongchangAn Street
Beijing, China 100741
Tel: 86-10-6520-2114
Email: 110@mps.gov.cn
Website: http://www.mps.gov.cn (Chinese)
Regional IPR Bureau
In an attempt to coordinate local IP enforcement efforts, some
provinces and municipalities in China have established IPR bureaus or IPR committees to coordinate public awareness campaigns and, to a more limited extent, enforcement. A local IPR
bureau is generally a good source for companies seeking information on local regional enforcement mechanisms.
Judicial System
The second track companies can pursue is through civil actions
in the local People’s Court. Since 1993, China has maintained
Intellectual Property Tribunals in the Intermediate People’s
Courts and Higher People’s Courts throughout the countries.
The total volume of civil IP litigation in China is considerably
less than administrative litigation. Though small companies
may prefer to pursue the administrative route, it is expected
that the number of IP litigation cases will significantly increase
with recent changes in IP laws. Appeals of administrative IPR
determinations, such as fines, are generally made to Administrative Tribunals of the Supreme People’s Court (SPC), while the
Criminal Tribunals of the SPC are likely to hear criminal cases.
preliminary investigation on one’s own or
through a contracted professional firm,
keeping in mind that U.S. companies
should ensure compliance with Chinese
law, which restricts private investigation
to certain forms of “market research” investigations. Once the initial investigation
is complete, the company should determine if further action and possible costs
related with such actions are worth pursuing. Right holders will have the option
to initiate actions or seek redress through
either the judicial or administrative system. Foreign rights holders have had considerably less success in encouraging
criminal prosecution of IPR violations,
particularly when copyright infringements
are involved.
Once a company decides to pursue a
remedy, the Department of Commerce,
through their Washington DC or China-based offices will monitor the case, if requested to do so by the company. The U.S.
Government cannot intervene in the case;
however they can inquire about its status
or contact government officials about concerns related to the effective administration of legal remedies available to IP
holders. The Department of Commerce is
most likely to become involved in a case
where evidence indicates China is not
complying with its enforcement under the
WTO TRIPs Agreement. As with other
types of commercial disputes, the government’s efforts in assisting with IPR disputes are aimed at achieving a fair and
timely resolution in accordance with international commitments, Chinese laws
and in advancing adequate legal and judicial protection for all parties.
Conclusion
If you wish to enter the Chinese market
you must ask, “Is China worth the risk?”
The Chinese are coming to terms with
their past practices of IP theft. Towards
the end of last year the city of Los Angeles was actively working with the largest
battery producer in China to locate a
manufacturing facility in LA. During the
negotiations it was discovered that the
Chinese producer might not own the technology used to produce the novel lithium-based batteries. As a result the plans were
put on hold pending a satisfactory outcome to the ownership situation. As
China becomes a more aggressive competitor in the global market they will have
to improve on their past practices of turning a blind eye to IP theft.
My advice for anyone wishing to enter
into the Chinese market is to thoroughly
understand the risk that you are taking
not only to your financial investment but
to the very life blood of your company,
your intellectual property. Include in your
due diligence work sufficient time to
benchmark with other companies who
have preceded you into China, learn from
the many companies who have fell victim
to the loss of their technology. The Chinese government has recently enacted legislation that makes it more difficult to
patent your technology unless it has its
origin in China. Make sure you understand your IP rights before you divulge
your IP to anyone. Otherwise, you may
find that you will be competing against
your own technology. Remember, China
generally does not protect any IP unless it
is registered in China. Though there are a
few exceptions to this rule, the bottom
line is that it will always be cheaper for a
company to register its IP than to litigate,
whether it comes within any exception or
not. There is a widely believed theory that
countries start enforcing IP rights when
their more powerful domestic companies
demand enforcement because they themselves have IP worthy of protection. Such
is the situation in China today.
I remain convinced that China will
mend its ways and will realize that to be a
member of the global community has certain responsibilities. Unfortunately, China
is not at that point today. CW
