CHINA Rank:27/45 Percentage of Overall Score Membership and Ratification of International Treaties 17.64 1483 Trademarks Median Regional China Trade Secrets and Market Access Index score Average Top 5 Economies Average Score Strengths and weaknesses Key Areas of Strength Key Areas of Weakness v Basic IP rights in place(with some exceptions) x Levels of IP infringement are at historic levels and growing V New and proposed patent and copyright reform extends X Interpretation of IP laws by administrative and judicial authorities is protection and strengthens enforcement at times out of sync with international standards leveling expertise and awareness of the value of IP across different x Ability to secure adequate remedies for infringement, although of government and enforcement agencies improving, remains a critical challenge V Relatively strong public reporting of IP-related seizures by customs x Substantial barriers to market access and commercialization of IP, ularly for foreign compar SCORE INDICATOR SCORE Category 1: Patents, Related Rights, and Limitations 1. Te 19. Frameworks against online sale of counterfeit goods 0.25 2. Patentability 0.5 20. Industrial design term of protection 3. Patentability of Clls 121.Exclusive rights, industrial design rights 0.2 4. Pharmaceutical-related enforcement 0 Category 4: Trade Secrets and Market Access 5. Legislative criteria and active use of compulsory licensing 22.Protection of trade secrets 6. Pharmaceutical patent term restoration 0 23. Non-barriers to market access 7. Regulatory data protection terr 0.6 24 Regulatory and administrative barriers to commercialization 8. Patent opposition 0.25 Category 5: Enforcement Category 2: Copyrights, Related Rights, and Limitations 25.Physical counterfeiting rate 9. Term of protectior 0.5326 Software piracy rates 10. Exclusive rights 0.2527. Civil and procedural remedies 11. Cooperative action against online piracy 12. Limitations and riminal standards 13. Digital rights mana 0.25 30. Effective border measures 0 114. Govermment use of licensed software 0.531. Transparency and public reporting by customs Category 3: Trademarks, Related Rights, and Limitations Category 6: Membership and Ratification of International Treaties 132 WIPO Internet Treaties 16. Limitations on use of brands 33. Singapore Treaty on the Law of Trademarks 17. Protection of well-known marks 0.534.Patent Law Treaty 0.535.Post-TRIPS FTA TOTAL: 14.83 THE ROOTS OF INNOVATION U.S. Chamber International IP Index Fifth Edition I
[ THE ROOTS OF INNOVATION U.S. Chamber International IP Index | Fifth Edition ] 100 90 80 70 60 50 40 30 20 10 China Top 5 Economies’ Average Score Rank: 27/45 Trade Secrets and Market Access Trademarks Copyrights Patents Membership and Ratification of International Treaties Enforcement Strengths and Weaknesses Key Areas of Strength Key Areas of Weakness 3 Basic IP rights in place (with some exceptions) 3 New and proposed patent and copyright reform extends protection and strengthens enforcement 3 Growing expertise and awareness of the value of IP across different levels of government and enforcement agencies 3 Relatively strong public reporting of IP-related seizures by customs authorities 7 Levels of IP infringement are at historic levels and growing 7 Interpretation of IP laws by administrative and judicial authorities is at times out of sync with international standards 7 Ability to secure adequate remedies for infringement, although improving, remains a critical challenge 7 Substantial barriers to market access and commercialization of IP, particularly for foreign companies China Median Index Score Regional Average 17.64 14.83 35 30 25 20 15 10 5 0 15.39 Percentage of Overall Score INDICATOR SCORE INDICATOR SCORE Category 1: Patents, Related Rights, and Limitations 1. Term of protection 1 19. Frameworks against online sale of counterfeit goods 0.25 2. Patentability requirements 0.5 20. Industrial design term of protection 0.4 3. Patentability of CIIs 1 21. Exclusive rights, industrial design rights 0.25 4. Pharmaceutical-related enforcement 0 Category 4: Trade Secrets and Market Access 5. Legislative criteria and active use of compulsory licensing 1 22. Protection of trade secrets 0.25 6. Pharmaceutical patent term restoration 0 23. Non-barriers to market access 0 7. Regulatory data protection term 0.6 24. Regulatory and administrative barriers to commercialization 0 8. Patent opposition 0.25 Category 5: Enforcement Category 2: Copyrights, Related Rights, and Limitations 25. Physical counterfeiting rates 0 9. Term of protection 0.53 26. Software piracy rates 0.3 10. Exclusive rights 0.25 27. Civil and procedural remedies 0.5 11. Cooperative action against online piracy 0.5 28. Pre-established damages 0.5 12. Limitations and exceptions 0.25 29. Criminal standards 0.25 13. Digital rights management 0.25 30. Effective border measures 0 14. Government use of licensed software 0.5 31. Transparency and public reporting by customs 1 Category 3: Trademarks, Related Rights, and Limitations Category 6: Membership and Ratification of International Treaties 15. Term of protection 1 32. WIPO Internet Treaties 1 16. Limitations on use of brands 1 33. Singapore Treaty on the Law of Trademarks 0.5 17. Protection of well-known marks 0.5 34. Patent Law Treaty 0 18. Exclusive rights 0.5 35. Post-TRIPS FTA 0 TOTAL: 14.83 CHINA
Spotlight on the National IP Environment Past Editions versus Current Scores Trademarks, Related Rights, and Limitations Chinas overall score in relation to the total possible score has 17. Ability of trademark owners to protect their trademarks: remained the same at 42%(with a score of 14.83 out of 35 in the requisites for protection; and 18. Legal measures fifth edition). China did see a rise in score in relation to available available that provide necessary exclusive rights to damages for IP infringement as a result of a 2016 Judicial redress unauthorized uses of trademarks: High-profile nterpretation outlining enhanced damage calculations for decisions in 2016 show interest by Chinas highest court to patent infringement. China also receives points from certain new ddress key challenges in the registration of trademarks indicators added in the fifth edition, particularly for the relatively Most recently, China's Supreme Peoples Court found that strong level of transparency and public reporting by customs a Chinese sporting goods chain, Qiaodan Sports, filed the authorities on trade-related IP infringement. However, crucial Chinese-language version of Michael Jordans name in bad gaps in the areas of industrial design protection and barriers to faith. The decision recognized the"high reputation"of commercialization of i assets hold China back from a further rise Michael Jordan in China, taking into consideration evidence in score as a result of the 5 new indicators previously refused by the lower court. The Supreme Peoples Court also rejected the lower courts"definitive association General Note standard and replaced it with a broader"stable association" In 2016, the Chinese government issued a wide-ranging action standard. In cases for global brands Apple and Facebook, plan on IP, the State Council's Opinions on Accelerating the the Beijing High Court determined that the brands Establishment of a Strong IPR Country. The plan reiterated well-known status did not apply in relation to opposing proposals and ongoing efforts to enhance IP cooperation, registrations of similar marks because the applications fo promote growth of IP-intensive industries, and remove barriers these marks were filed, in the courts view before the brands to leveraging IP outside China, as well as improve the availability had achieved notoriety in China. However, in the Facebook of remedies for IP infringement and issue further guidance on IP case, the court ultimately rejected the opposed mark, given that the individual attempting to register it displayed signs of bad faith conduct Patents, Related Rights, and Limitations 21. Legal measures available that provide necessary 2. Patentability requirements: In 2016, the State Intellectual exclusive rights to redress the unauthorized use of Property Office(SIPO)issued proposed amendments to its industrial design rights: Chinese patent law provides atent examination guidelines. The amendments aim to for general exclusive rights for design patent holders. address existing uncertainty in SIPO guidance and practice However the standards for deter bility for design around the ability to submit post-filing experimental data protection are considered to be fairly low(the law provid in order to fulfill sufficiency of disclosure requirements, ited criteria for obtaining design protection and no particularly in relation to life sciences patents. The guidance substantive review takes place), leading to many low-value confirms that post-filing data is permitted if it supports a patents and a high rate of invalidations. According to local technical effect previously disclosed in the application. In legal experts, this trend has also led to a growing incidence ddition, the amendments also clarify that business methods of design patent trolls and additional costs and uncertainty and computer-implemented inventions involving software for multinational technology companies may be considered patentable subject matter as long as they produce a technical effect and other patentability criteria are met. Depending on their final form and implementation, these amendments could help strengthen the patenting environment in China 4. Pharmaceutical-related patent enforcement and resolution mechanism; and 7. Regulatory data protection term: The latest draft amendments to the Drug Registration Regulations removed provisions on patent enforcement and regulatory data protection(RDP). Patent enforcement and RDP are essential components in creating a regulatory system that promotes innovation. Without a patent enforcement system that includes an effective early dispute resolution mechanism(also known as patent linkage), it is unclear how marketing approvals for drugs will be handled before a patent expires Readthefullstudyatwww.uschamber.com/ipindex]
[ Read the full study at www.uschamber.com/ipindex ] Past Editions versus Current Scores China’s overall score in relation to the total possible score has remained the same at 42% (with a score of 14.83 out of 35 in the fifth edition). China did see a rise in score in relation to available damages for IP infringement as a result of a 2016 Judicial Interpretation outlining enhanced damage calculations for patent infringement. China also receives points from certain new indicators added in the fifth edition, particularly for the relatively strong level of transparency and public reporting by customs authorities on trade-related IP infringement. However, crucial gaps in the areas of industrial design protection and barriers to commercialization of IP assets hold China back from a further rise in score as a result of the 5 new indicators. General Note In 2016, the Chinese government issued a wide-ranging action plan on IP, the State Council’s Opinions on Accelerating the Establishment of a Strong IPR Country. The plan reiterated proposals and ongoing efforts to enhance IP cooperation, promote growth of IP-intensive industries, and remove barriers to leveraging IP outside China, as well as improve the availability of remedies for IP infringement and issue further guidance on IP and competition. Patents, Related Rights, and Limitations 2. Patentability requirements: In 2016, the State Intellectual Property Office (SIPO) issued proposed amendments to its patent examination guidelines. The amendments aim to address existing uncertainty in SIPO guidance and practice around the ability to submit post-filing experimental data in order to fulfill sufficiency of disclosure requirements, particularly in relation to life sciences patents. The guidance confirms that post-filing data is permitted if it supports a technical effect previously disclosed in the application. In addition, the amendments also clarify that business methods and computer-implemented inventions involving software may be considered patentable subject matter as long as they produce a technical effect and other patentability criteria are met. Depending on their final form and implementation, these amendments could help strengthen the patenting environment in China. 4. Pharmaceutical-related patent enforcement and resolution mechanism; and 7. Regulatory data protection term: The latest draft amendments to the Drug Registration Regulations removed provisions on patent enforcement and regulatory data protection (RDP). Patent enforcement and RDP are essential components in creating a regulatory system that promotes innovation. Without a patent enforcement system that includes an effective early dispute resolution mechanism (also known as patent linkage), it is unclear how marketing approvals for drugs will be handled before a patent expires. Trademarks, Related Rights, and Limitations 17. Ability of trademark owners to protect their trademarks: requisites for protection; and 18. Legal measures available that provide necessary exclusive rights to redress unauthorized uses of trademarks: High-profile decisions in 2016 show interest by China’s highest court to address key challenges in the registration of trademarks. Most recently, China’s Supreme People’s Court found that a Chinese sporting goods chain, Qiaodan Sports, filed the Chinese-language version of Michael Jordan’s name in bad faith. The decision recognized the “high reputation” of Michael Jordan in China, taking into consideration evidence previously refused by the lower court. The Supreme People’s Court also rejected the lower courts’ “definitive association” standard and replaced it with a broader “stable association” standard. In cases for global brands Apple and Facebook, the Beijing High Court determined that the brands’ well-known status did not apply in relation to opposing registrations of similar marks because the applications for these marks were filed, in the court’s view, before the brands had achieved notoriety in China. However, in the Facebook case, the court ultimately rejected the opposed mark, given that the individual attempting to register it displayed signs of bad faith conduct. 21. Legal measures available that provide necessary exclusive rights to redress the unauthorized use of industrial design rights: Chinese patent law provides for general exclusive rights for design patent holders. However, the standards for determining eligibility for design protection are considered to be fairly low (the law provides limited criteria for obtaining design protection and no substantive review takes place), leading to many low-value patents and a high rate of invalidations. According to local legal experts, this trend has also led to a growing incidence of design patent trolls and additional costs and uncertainty for multinational technology companies. Spotlight on the National IP Environment
Trade Secrets and market Access Enforcement 23. Barriers to market access: Revisions to the High and New 27. Civil and procedural remedies; and 28 Preestablished Technology Enterprise regime issued in 2016 raise the damages and/or mechanisms for determining the criteria for IP ownership for companies seeking to qualify amount of damages generated by infringement: The for a reduction in corporate income tax on the basis of R&D draft patent amendments issued by SIPO and under review conducted in China. Under the revised rules, in order to in 2016 would increase statutory damages significantly from benefit from a reduced corporate tax rate(15% instead of RMB10000-RMB1 million to rmb100. 000-RMB5 million 25%), companies must locally own, rather than license, IP (about USD750, 000). In relation to damages, the Judicial nd the IP must be related to the company's core products Interpretation on patent infringement shifts the burden of and services. The heighted requirements for the transfer of proof to infringers and allows the release of evidence from present higher transaction costs and barriers to accessing infringers in order to promote a more accurate calculation the market, particularly for multinational companie of damages, resulting in score of o 25 for indicator 28. Local statistics generated from court cases since 2014 24. Regulatory and administrative barriers to the indicate that currently, on average, damages awarded commercialization of IP assets: Technology companies are about RMb80, 000, which is considered too low to face a growing number of regulatory and procedural ompensate patent holders adequately. At the same time, to licensing in China that impede technology flows and the draft patent amendments would expand administrative R&D cooperation. In general, licensing agreements must enforcement of patents, including extending the authority receive government approval. In addition, technology afforded to local IP offices(such as the ability to investigate export regulations involve discriminatory conditions and impose patent infringement penalties). Legal experts for foreign licensors, including indemnification of Chinese raise concerns that this may heighten existing uncertainty es against third-party infringement and transfer of about the respective roles of administrative departments ownership of future improvements on a licensed technology and courts and undermine effective enforcement to the licensee (whereas a Chinese iP owner is able to negotiate different terms). In the context of standards- etting, there is also a trend toward greater administrative involvement in determining patent licensing terms and the ability to secure relief from infringement. The Anti-Monopoly Commission is preparing Anti-Monopoly Guidelines on the Abuse of Intellectual Property Rights, based on input from the three antimonopoly enforcement agencies. Draft Guidelines released by the individual enforcement agencies in 2016 raised serious concerns among industry regar provisions that would impose antimonopoly sanctions on refusals to license and excessive pricing. In addition, draft patent amendments would allow for automatic licensing of Standard Essential Patents(SEPs)where a patent was not disclosed as part of participation in a national standard etting process(although royalties would be negotiated eparately). In the meantime, the new Judicial Interpretation on patent infringement allows a court to not issue injunctions in cases of infringement where it determines the atent holder has not followed fair reasonable discriminatory(FRAND) license terms, and inadequate detail provided concerning how this would be determined, leaving greater room for reverse patent hold up THE ROOTS OF INNOVATION U.S. Chamber International IP Index Fifth Edition I
[ THE ROOTS OF INNOVATION U.S. Chamber International IP Index | Fifth Edition ] Trade Secrets and Market Access 23. Barriers to market access: Revisions to the High and New Technology Enterprise regime issued in 2016 raise the criteria for IP ownership for companies seeking to qualify for a reduction in corporate income tax on the basis of R&D conducted in China. Under the revised rules, in order to benefit from a reduced corporate tax rate (15% instead of 25%), companies must locally own, rather than license, IP and the IP must be related to the company’s core products and services. The heighted requirements for the transfer of IP present higher transaction costs and barriers to accessing the market, particularly for multinational companies. 24. Regulatory and administrative barriers to the commercialization of IP assets: Technology companies face a growing number of regulatory and procedural barriers to licensing in China that impede technology flows and R&D cooperation. In general, licensing agreements must receive government approval. In addition, technology import/export regulations involve discriminatory conditions for foreign licensors, including indemnification of Chinese licensees against third-party infringement and transfer of ownership of future improvements on a licensed technology to the licensee (whereas a Chinese IP owner is able to negotiate different terms). In the context of standardssetting, there is also a trend toward greater administrative involvement in determining patent licensing terms and the ability to secure relief from infringement. The Anti-Monopoly Commission is preparing Anti-Monopoly Guidelines on the Abuse of Intellectual Property Rights, based on input from the three antimonopoly enforcement agencies. Draft Guidelines released by the individual enforcement agencies in 2016 raised serious concerns among industry regarding provisions that would impose antimonopoly sanctions on refusals to license and excessive pricing. In addition, draft patent amendments would allow for automatic licensing of Standard Essential Patents (SEPs) where a patent was not disclosed as part of participation in a national standardsetting process (although royalties would be negotiated separately). In the meantime, the new Judicial Interpretation on patent infringement allows a court to not issue injunctions in cases of infringement where it determines the patent holder has not followed fair, reasonable, and nondiscriminatory (FRAND) license terms, and inadequate detail is provided concerning how this would be determined, leaving greater room for reverse patent hold up. Enforcement 27. Civil and procedural remedies; and 28. Preestablished damages and/or mechanisms for determining the amount of damages generated by infringement: The draft patent amendments issued by SIPO and under review in 2016 would increase statutory damages significantly from RMB10,000–RMB1 million to RMB100,000–RMB5 million (about USD750,000). In relation to damages, the Judicial Interpretation on patent infringement shifts the burden of proof to infringers and allows the release of evidence from infringers in order to promote a more accurate calculation of damages, resulting in a rise in score of 0.25 for indicator 28. Local statistics generated from court cases since 2014 indicate that currently, on average, damages awarded are about RMB80,000, which is considered too low to compensate patent holders adequately. At the same time, the draft patent amendments would expand administrative enforcement of patents, including extending the authority afforded to local IP offices (such as the ability to investigate and impose patent infringement penalties). Legal experts raise concerns that this may heighten existing uncertainty about the respective roles of administrative departments and courts and undermine effective enforcement
