[People's Daily Overseas Edition] Protecting Intellectual Property Rights and Gainingthe Initiative in Development (No. 3 of the Series of Reports on China's New Measures for Expanding Opening-up)

May 1, 2018 People's Daily  Overseas Edition Page 05

By Li Zhen, Shi Hongqiang, Wang Ruoyi

"After nearly 40 years of development, China has achieved remarkable results in intellectual property protection and ushered in a new period of development for the cause; intellectual property rights have receivedunprecedented attention in China," said Wang Binying, the deputy director-general of the World Intellectual Property Organization (WIPO), on April 20 at the 2018 High-level Forum on China Intellectual Property Protection.

Previously, President Xi Jinping, in his keynote speech at the Opening Ceremony of Boao Forum for Asia (BFA) Annual Conference 2018, pointed out that intellectual property protection must be further strengthened. This is crucial to improving the property protection system, and also the biggest incentive to enhance the competitiveness of China's economy.

Strengthening intellectual property protection has been listed as one of the four major measures to expand opening-up. This practice once again demonstrates to the world China's firm position on and clear attitude toward further enforcingintellectual property protection. President Xi Jinping's key exposition, which has elevatedChina's intellectual property protection to a new level, will serve as the guideline for China to speed up the construction of an innovation-oriented country with powerful intellectual property rights.

Attaching importance to intellectual property rights and enhancing innovation capability

According to the data released by the World Intellectual Property Organization (WIPO), in 2017, China ranked second in the world with nearly 49,000 PCT-based international patents (those filed by the applicants through the Patent Cooperation Treaty) from its domestic applicants.

Intellectual property rights provide a solid foundation for China to develop into the world's second largest economy, and serve as amagic weapon that helpChinese enterprises gain a firm footholdin the international market.

Firstly, the focus on intellectual property rights will give a boost to the enterprises. "A patented product that I developed, a composite coating applied to the bottom, middle and surface of railway bearings, has generated a sales revenue totaling about RMB 50 million yuan for the company in the past five years. "On April 24, the 10th Invention and Entrepreneurship Award sponsored by China Association of Inventions was held in Beijing. Jiang Yong, the chief engineer of a new material company in Chengdu, won the Innovation &EntrepreneurshipAward·Innovation FigureAward. When asked to introducehis patent achievements in the interview, Jiang Yong told us about that.

In the era of knowledge economy, innovation is the lifeblood of enterprise development. Patents can bring tangible benefits to enterprises. With RMB 89.7 billion yuan invested in R&D, Huawei Technologies Co., Ltd. rankedamong the world's top three in terms of its number of international patent applications filed through the Patent Cooperation Treaty in 2017. It cameas no surprise that Huawei's net profits increased by 28.1% in 2017 and its global brand awareness rose to 86%.

An increasing number of enterprises have becomingaware of the important role of intellectual property rights in trade, investment and foreign economic and technological cooperation.

"Strengthening intellectual property protection can not only ensure the operation safety and independent R&D investment of enterprises, but also sharpentheir competitiveness in domestic and international markets," said Zhou Gang, the chairman and president of Chengdu ArGangle Technology Co., Ltd.

Shen Changyu, the director of the National Intellectual Property Administration, said, "All enterprises, whether large, medium or small, should unswervingly attach a high priority toindependent innovation, strive to develop more core technologies and products with independent intellectual property rights, and firmly seize the initiative in development."

Strengthening intellectual property protection will enhance the innovation ability and competitiveness of economy.

"Made in China used to be a synonym for simple OEM, but now most of the manufacturing enterprises have become original design manufacturers. 90% of small and medium-sized enterprises have made attempts atdesign innovation, and 60% of them regard design innovation as a routine plan. This is a remarkablechange," said Gao Chao, the founder of a domestic industrial design website.

China's economy has shifted from high-speed growth to high-quality development, and is now in the critical period oftransforming development mode and optimizing economic structure. Innovation and a favorable business environment are prerequisites for high-quality development, and both of them are central to intellectual property protection.

"Knowledge is the very core of innovation drive. Intellectual property rights are increasingly becomingthe strategic resources of national development and the core element of international competitiveness. The development of intellectual property rights is the key approach and means of innovation drive," said Zhao Lanyang, the managing director of Hina Group which has been focusing on innovation and technology for a long time.

Francis Gurry, the director generalof WIPO, said, "China is becoming a leader in global innovation and brand building. As can be seen, China attaches great importance to the establishment of intellectual property system, indicating that Chinese leaders have taken strategic actions to achieve innovation and transform economic development mode into one driven by high value-added industries. They lay high emphasis on the role of intellectual property in this strategy."

Carrying out multiple reforms to promote intellectual property protection

Along with the development of China's economy and the enhancement of its ability in innovation, it is becoming increasingly urgentto improve intellectual property protection, not only for foreign-funded enterprises, but even more so for Chinese enterprises . In 2017, the China National Intellectual Property Administration accepted 1.382 million applications for patents of invention, amongwhich the number of domestic applications accounted for over 90%, and the applications for trademarks reached 5.748 million, amongwhich the number of domestic applications accounted for over 96.36%. This is only too evidentthat those domestic market and innovation entities have been in urgent demand for intellectual property protection.

The reform must cater to the needs of the people. In recent years, the Chinese government has laid much stress on intellectual property protection and endeavored to improve the comprehensive operation efficiency of intellectual property system by deepening mechanism reform and optimizing intellectual property system from the aspects of administration, economy and jurisdiction.

The Central Party reached the decision to establish the State Administration for Market Regulation and re-establish the China National Intellectual Property Administration on the 3rd Plenary Session of the 19th Central Committee of the Communist Party of China. The reform is designedto crack the hard nuts of separate management and repeated enforcement in patents, trademarks and geographical indications of origin, so asto perfect the management system for intellectual property rights. Shen Changyu noted that this, longitudinally, will help build a full chain ofcreation, utilization, protection, management and service of intellectual property rights, and acceleratethe modernization of administration system and administrativecapacity of intellectual property rights. Besides, horizontally, this will give fuller play to the portfolio effect of patents, trademarks and geographical indications of origin, providing stronger support for innovation-driven development and opening-up.

Small and medium-sized scientific and technical enterprises have long suffered insufficient fixed assets and difficulty in financing, and to address such problems, China have put numerous efforts in promoting the pledge financing of intellectual property rights, guidingnewly-established enterprises to opt for innovation-drivendevelopment and accelerating the effective integration of technology with finance and industries. "The annual amount of pledge financing for intellectual property rights is expected to reach RMB 180 billion yuan by the year of 2020", as is statedin the National Intellectual Property Right Protection and Use Plan for the "13th Five-Year Plan" Period issued by the State Council.

"The loan can be used for the research and development of the next product; it can’t have been more timely." It never occurred to Qu Hong, the president of Nanjing Chunrong Technology Co., Ltd., that an energy-saving patent for the data center of amachine room couldgetthe company a loan of RMB 4 million yuan loan without property mortgage or the help of a bonding company. "It used to bedifficult for small and micro scientific and technological enterprises to get loans from the bank. But now things have changed, and innovation is greatly encouraged. Patents can even be used directly as the pledge for loans, and thisbrings hope for such enterprises."

Meanwhile, the reform of judicial system for intellectual property rights has been pushed ahead, and numerous innovations of the operation system and litigation system for judiciary power of intellectual property rights have come into being in response to the new characteristicsof judicial undertaking of intellectual property rights in the new era.

As is noted in theIssues on Strengthening the Intellectual Property Judicial Reform and Innovation published in 2017, the construction of court system for intellectual property rights will be strengthened and a national-levelappeal hearing mechanism forcasesinvolving intellectual property rights will be launched. With regard to this, the hearing and management of cases involving intellectual property rights arebecoming more specialized in trial and more centralized in jurisdiction.

He Jingjun, associate professor ofthe School of Politics and Public Administration, Southwest University of Political Science and Law, remarkedthat the establishment of a national-levelappeal hearing mechanismwould not only avoid regional protectionism, but alsosolve the problem of different and even conflicting regional standards, making the trial of cases more fair and better encouraging and protecting technical innovation.

Treat both domestic and foreign cases with an equal, open and just attitude

"We are deeply impressed by Shanghai Intellectual Property Court's unbiased respect for the intellectual property rights of multinational corporations and its determination to protect intellectual property rights by establishing a specialized intellectual property court in China." In this March, Shanghai Intellectual Property Court received a letter of thanks from Kellen Williams, the vice president of SAP AG.

Previously, SAP AG had filed two lawsuits to Shanghai Intellectual Property Court after they found that several domestic training institutions used its copyrighted software and training materials in their business operations without permission. After the court heard the cases, they orderedthe two defendants to compensate SAP AG for economic losses and reasonable expenses of RMB 1.18 million yuan and RMB 1.55 million yuan respectively.

China has always insistedon taking an equal and just attitude in intellectual property protection for both domestic and foreign enterprises, andthis is just oneexample. The equal legal protection of both Chinese and foreign innovation entities has received unanimous praise from domestic and foreign enterprises, attractingmore foreign investors to China. Asis shown bythe statistics of 2017, the number of newly-established foreign-invested enterprises in China reached 35,600, increasing by 27.8% on a year-on-year basis; the foreign capital actually used reached RMB 877.56 billion yuan, with a year-on-year increase of 7.9% and a stable growth.

"I really appreciate the endeavors that Chinese government has made in constructing an intellectual property protection system and strengtheningintellectual property protection. The improved environment for intellectual property protection can attract more investorsboth from home and abroad." Mark Snyder, senior vice president of Qualcomm, said that more and more foreign companies recognizeChina's institutional environment of intellectual property rights, and choose to resolve disputes involvingintellectual property rights in China because they believe that Chinese courts are capable ofhandlingtrickydisputes.

At the same time, China also hopes that foreign governments could enhance the protection of Chinese intellectual property rights. Zou Wen, senior consultant of AnJie Law Firm holds that it is important and necessary to urge foreign governments to strengthen the protection ofChinese intellectual property rights. With more and more Chinese enterprises setting up controlled companies overseas, China should not onlyprotect foreign-funded enterprises at home, but also urge foreign governments to protect the legitimate intellectual property rights of Chinese enterprises based on the principle of reciprocity.

In order to help Chinese enterprises overseasbetter obtain and safeguard legal rights, China National Intellectual Property Administration has signed the "Patent Prosecution Highway" (PPH) agreement with the patent examination institutions of 23 countries all over the world. PPH cooperation network has already taken shape. Mutual aid fund for Chinese enterprises to safeguard intellectual property rights overseasis to be built up to provide financial support for enterprises to safeguard their legal rights overseas; professional information platforms of overseas intellectual property rights areto be set up to provide reference for enterprises that want to "go out".

China has also beenconstantlypromotinginternational exchanges and cooperation on intellectual property rights for the purpose of establishing more open, inclusive, balanced and effective international rules on intellectual property rights, enabling people all over the world to benefit from innovations & inventions, achievingmutual benefits and win-win, and boosting common development.

Wang Binying said that China and World Intellectual Property Organization has forged a stronger partnership in recent years. China actively participates in the work of all professional committees of the World Intellectual Property Organization, playing a more and more indispensable role in policy dialogues.