China’s economic development is following the initiatives of the Central government in the form of five-year projects. IP owners are encouraged to check and further analyse the recent draft published in April of this year to see what is planned for the coming years. Knowledge of these plans will help to set the check points for one’s own IP strategy and plans. It is certainly of interest to analyse what changes have been made over previous plans and what that would entail.
Intellectual property has taken a key role in the development of technological progress in China’s big economy. China’s IP system is gradually changing, with each plan having various focus points. In the new plan, two major focus points are evident:
- An emphasis on strengthening enforcement to maximise the benefits of intellectual property, as they are not currently utilised to the fullest extent.
- A determination to protect intellectual property rights linked to key high-technology fields where China wishes to build strength or further excel.
These two focus areas are further detailed below.
As we have previously reported, the enforcement system of the patent law has been strengthened with the recent 4th amendment. This includes valuable rights for the pharmaceutical sector. The implementation of the new Five-Year Plan will further emphasise the use of the newly-created, punitive compensation system for infringement of patents and will increase the damage compensation. Exposure to multiples of up to five times the otherwise calculated damages are likely to become a more commonly seen scenario. Evidence preservation means for calculating damage compensation will be improved.
Improvements to the judicial and administrative branches of the law enforcement system of intellectual property rights were announced, together with work on the effectiveness of the arbitration and mediation system. Notarisation requirements were also mentioned as being within the scope of the reform. It can be expected that the next five years will bring a more detailed and standardised IP protection regime of the administrative departments and the judiciary. Besides the abovementioned tools to act against infringers, it will be crucial to check in detail what else will be designed to improve IP enforcement. The details may determine the balance between plaintiff and accused infringers in the infringement proceedings and hopefully will provide a less complex (e.g., fewer notarisation/legalisation requirements) and predictable (e.g. avoiding surprising inconsistencies in the practices and decisions) proceedings according to accepted guidelines.
In this regard, it may be mentioned that all the upcoming improvements, which apparently also apply to foreign IP owners in China, are expected to be accompanied by new support for Chinese companies going global. Handling of overseas IP disputes will be guided with support from the Chinese government, through new platforms such as the National Guidance Center for Handling Overseas Intellectual Property Disputes with ten local sub-centers. There is also an intention to provide intensive training.
This demonstrates that knowledge on the IP system will be crucial for IP creation and enforcement strategies for IP owners entering into the Chinese system as well as for Chinese looking abroad, as pitfalls may exist for both.
IP that will be specifically supported as high-technology related
The new Five-Year Plan has a clear focus on high-technology fields, of which the following are specifically mentioned: quantum information, photonics and micro-nanoelectronics, network communications, artificial intelligence, biomedicine and modern energy systems. While there is a focus on becoming a leader, or at least becoming fully self-reliant in these technology sectors, the IP related to these technologies will likely see the most benefits in the future law reforms and practice changes. It can, for instance, be assumed that patentability exclusions and patentability hurdles (e.g. for business methods or software per se) will be further softened or lowered to allow the drafting of claims that cover these fields.
All applicants in the high-tech sector will benefit from these improvements. Therefore, patent applications that face challenges nowadays may become acceptable in the next five years. It could be worthwhile to pursue inventions in those areas where the environment is pro-patentee. It will be important to watch for practice changes to see which claim formats are supported by the China National Intellectual Property Administration (CNIPA) patent office. According to a media interview with Shen Changyu (CNIPA Director), there is currently ongoing research on how to deal with the question of whether works and inventions completed by AI can generate new IP rights. Interesting questions may be posed and answered.
China’s special focus will be on information technology including big data, biotechnology, new energy, new materials, high-end equipment, new energy vehicles, green environmental protection, aerospace and marine equipment.
IP that will not be supported or may even be rejected as irregular
Whilst these high-tech fields will be supported, there is another important initiative that focuses on the quality of IP. This initiative is implemented through the promotion of “ownership of high-value invention patents per 10,000 population” in the new Five-Year Plan index, which replaces the old targets of “ownership of invention patents per 10,000 population” in previous plans. As part of the quality initiative, we have seen the drafting of a completely new legislation to prevent irregular patent applications, including revisions of the “Measures on Regulating Patent Application Behaviors”.
The recent discussion on the laws following this generally highly desirable purpose has, however, raised concerns by the IP owners Association, on whether the new measures could also be overreaching and may negatively affect IP strategies which have been commonly used to pursue legitimate goals of the innovator (e.g., filing multiple divisionals to obtain the optimal protection for all the best inventive features). This should be carefully watched so as to not stumble into the scope of these regulations that should – according to its original purpose – prevent misuse of the IP system.
Please do not hesitate to contact us if you would like to reach out to discuss any recent developments in China.