The Federalist Society

Intellectual Property Protection in China

Intellectual Property Practice Group Newsletter - Volume 1, Issue 1, Fall 1996

December 1, 1996

Randall R. Rader

China recognized the significance of intellectual property as early as the Tang Dynasty (A.D. 617-906]. This recognition took the form of strict protection for some books, symbols, and products associated with the emperor. Although some scholars consider these ancient rules a seminal source of copyright law, these restrictions on unauthorized reproduction in fact offered little, if any, overall legal protection for intellectual property. Instead the dynasty sought to promote imperial control and power, not to "promote the progress of science and the useful arts," to borrow the Madisonian phrase from the United States Constitution. Regardless of the objectives and effectiveness of these ancient Chinese legal regimes, no link remains between China's modern intellectual property institutions and the Tang Dynasty.

In recent history, China's lagging intellectual property protection has obstructed its efforts to profit from participation in the international marketplace. As recently as the early 1990s, the United States government charged the Peoples Republic of China (PRC) with wholesale infringement of American intellectual property. In fact, as the press amply reported, the U.S. Trade Representative followed these allegations with trade actions against the PRC. These actions, in turn, led to bilateral agreements whereby the PRC agreed to improve enforcement of its intellectual property laws.

These well-known recent events have obscured China's efforts, beginning in the early 1980s, to improve its protections for intellectual property. No doubt driven by recognition that these improvements must precede serious participation in the international market, the PRC sought membership in the World Intellectual Property Organization [WIPO) in March 1980, and WIPO accepted the PRC as a member state a few months later. A few years later, in 1983, China's first modern trademark law took effect. Its first modern patent law took effect in 1985, followed by a copyright law in 1987. With further improvements to those laws, often due to international pressure, China acceded to the Berne Convention for the Protection of Literary and Artistic Works in 1992 and the Patent Cooperation Treaty in 1994.

This progress received its highest tribute from Dr. Arpad Bogsch, Director General of WIPO. In his words, "China had accomplished all this at a speed unmatched in the history of intellectual property protection." Indeed this progress shows China's resolve to take full advantage of its potential as both an international consumer and producer of intellectual property.

With workable laws in place, China faces the serious challenge of learning to enforce these laws in a culture with little tradition of private property or exclusive rights. At best, Chinese enforcement of intellectual property rights remains uneven. The central Chinese government currently permits local jurisdictions to make relatively independent decisions about protection of economic rights. Local officials and courts in Shanghai or Quang Chu, for instance, show an enthusiasm and commitment of resources unparalleled in other regions of the PRC. Sadly other local jurisdictions exhibit a narrow perspective of the potential gain from intellectual property protections. As a result, these other jurisdictions commit little to the enforcement of the new Chinese laws. Until all regions exhibit a uniform commitment to intellectual property protection, infringers will always find safe havens where they can hone their illegal skills for renewed assaults on the Shanghai market, not to mention the rest of China. Thus, China may continue to harbor infringers in regions without the foresight of Shanghai.

Beyond the absence of uniform efforts to enforce legal protections, China also suffers from its relatively recent conversion to intellectual property orthodoxy. For instance, even in jurisdictions with Shanghai's healthy enforcement perspective, the judges, police, and prosecutors lack the training and resources to match the infringers. The Chinese courts, particularly in Shanghai, are receiving an increasing number of intellectual property lawsuits. These suits primarily feature a sole Chinese patent holder seeking the courts' protection against another tiny sole proprietor using illegal means to get a start in the Chinese market. Meantime the streets of Beijing and Shanghai are teeming with counterfeit audiotapes and pirated CDs. The large, well-organized infringers receive little resistance. The Chinese prosecutors and courts are often just at the stage of learning the law, and are, therefore, unprepared to enforce it against powerful infringers.

The real source of the obstacle to enforcement of international standards for intellectual property springs from the absence of a broad understanding within the Chinese legal community of the basic concepts of individual private property and the right to exclude. Without a broad understanding of private property as an individual right beyond the mere pragmatism of economic regulation, China as a whole and its individual regions as well are reluctant to commit the full resources necessary to effective enforcement. At present, China lacks a cultural and historical basis for widespread acceptance of property concepts.

American enterprises are striving to help supply the knowledge and appreciation which must underpin intellectual property enforcement. In addition to the businesses with offices in the PRC, American educators are also seeking cooperative ventures with Chinese educational institutions to assist China's determination to join the world intellectual property community as a full partner. For instance, a team of U.S. intellectual property scholars from George Washington University, the University of Washington, and especially the Asia-Pacific Legal Institute have already established joint educational agreements with Chinese institutions.

These cooperative efforts are yielding results. Beijing University recently opened a School of Intellectual Property Rights. Many of China's most talented young lawyers are seeking entrance. This educational effort has reached out to the Chinese courts and law enforcement officials as well with American educators demonstrating both the philosophical reasons and the methodology for enforcing patent, copyright, and trademark laws.

Before China captures the full vision of intellectual property law enforcement, China as a whole must understand the benefits of incentives for innovation and creation, and indeed the benefits of private property itself. In this respect, the future lies both with the acquisition of property, which teaches better than anything else the significance of property rights, and with education. From the standpoint of education, cooperative ventures like the Asia-Pacific Legal Institute, serve a vital role.

From the perspective of history, China has always been a world leader in science and the arts. With time and education, China's current leaders — both local and national — are grasping that their desire to recapture their historical leadership in the modem world requires intellectual property protections. Thus, with time, China will no doubt commit more resources to achieving international standards in intellectual property enforcement.

*The Honorable Randall R. Rader sits on the United States Court of Appeals for the Federal Circuit. He has traveled to China three times in the last two years. Judge Rader has been named an honorary professor at Shanghai University and he has taught American intellectual property law at both Shanghai University and Beijing University.


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