#3 Intellectual Property Rights in China

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Formally, intellectual property rights have been acknowledged and protected in China since the 1980s. In 2001, China became a member of the world trade organization. A premise of this was that China had to address some international concerns about its IPR system.

Despite of this, some concerns remain. President Trump has repeatedly called out China for theft of intellectual property. In various reports on doing business in China, such as the 2016 China Business Climate Survey Report of the American Chamber of Commerce, IPR is still seen as a challenge to doing business.

At the same time, there are signs that IPR is not the biggest issue at hand anymore. After all, Chinese companies are also getting more and more innovative and require protection. Since 2019, China filed the most patents via the World Intellectual Property Right Patent Cooperation Treaty, taking over the US. 

The German Chamber of Commerce did a survey on the biggest challenges for foreign companies active in China. They found out that Intellectual Property Rights Protection was a challenge for 30% of respondents. This was only the sixth concern, and a lot less than for example Human Resources, with 70%.

To discuss intellectual property rights in China, we’ll be speaking with Reinout van Malenstein. He is senior counsel at HFG Lawyers in Shanghai. He has been a lawyer both in China and in the Netherlands, after studying law in Utrecht and in Beijing. He is fluent in Chinese and legal Chinese. Next to his position at HFG, he is also vice chair at the European Chamber Intellectual Property Working Group, and secretary of the China team at Marques

[00:00]
Welcome to this episode of Innovation Matters, a podcast organised by the Netherlands Innovation Network. This episode, we will talk about Intellectual Property Rights and protection in China. My name is David Bekkers and I’m an innovation officer at the Dutch Consulate in Shanghai.

[00:36]
Formerly Intellectual Property Rights or IPR have been acknowledged and protected in China since the 1980s. In 2001, China become a member of the World Trade Organization and the premise of this was that China had to address some of the international concerns that still existed about its IPR system.

[00:55]
In spite of this, some concerns remain to this day, President Trump has repeatedly called out China for theft of intellectual property. And if every survey on doing business in China, such as the 2016 China Business Climate Survey report of the American Chamber of Commerce, IPR is still seen as a challenge to do business.

[01:14]
At the same time, there are signs that IPR is not the biggest issue at hand anymore, after all, Chinese companies are also getting more and more innovative and also require protection.

[01:25]
Since 2009, China has actually filed the most patents in the world via the world’s Intellectual Property Rights Patents cooperation treaty. Taking over the US. And the German Chamber of Commerce did a survey on the biggest challenges for foreign companies active in China. And they found out that intellectual property rights protection was a challenge for 30 percent of respondents. So this made it only the sixth concern and for example a lot less than human resources, which was a concern to 70 percent of all respondents.

[01:53]
To discuss Intellectual Property Rights in China, I’ll be speaking with Reinout van Malenstein. He is a senior counsel at HFG lawyers here in Shanghai, and he’s been a lawyer both in China and the Netherlands after studying law in Utrecht and in Beijing. He’s fluent in Chinese and legal Chinese and next to his position at HFG, he’s also vice chair at the European Chamber Intellectual Property Working Group and a secretary of the China team at Marques. So, Reinout, good morning.

[02:24]
Hi, David. Thanks for being here.

[02:28]
You arrived in China in 2007. I can imagine a lot has changed since that time. Can you share a little bit about what’s keeping you here?

[02:36]
Well, when I arrived in China in 2007, to be honest, most of the people I knew, they said it was kind of crazy moving to China because normally after you graduate law school, you either start becoming a lawyer or you go into a different position or you go do some further studying in the states or in England, which is very normal for people who graduate quite early. When I made the decision to go to China, people were: what is happening, China is an underdeveloped nation and there were many problems they had culturally and through the news with regard to to China.

[03:17]
But my thinking at the time was very simple. It was OK, I’m going to be a Dutch lawyer. I want to help companies with intellectual property protection in the world. China is a big source of counterfeits. We don’t have the knowledge to do much against that here in Europe because you have to get to the source of the problem. So in order to do that, my thinking was I need to be a lawyer. But then in China, so obviously not being able to speak Chinese, not having a Chinese legal background, my thinking was I moved to China, I study Chinese, I study Chinese law, then go back to the Netherlands, become a Dutch lawyer, and then eventually move back to China to do that.

[04:09]
And I’ve been here for for many years now. And that is exactly what I’m doing, helping companies protect their rights in China, which is completely possible, unlike what you read in in most of the international newspapers. And that is what’s keeping me here. And also through my various other positions for rights holders organizations, for the European Chamber, for marques, for the China IPR helpdesk. Also advocacy and making the environment even better for European companies here in China.

[04:45]
OK, thanks. So, yeah, you’ve already touched upon it a little bit, but yeah, maybe we can go into that a little bit more on sort of the the main differences between the legal system in China and for example, in the Netherlands. But I would say in Europe and maybe the U.S. in the broader sense to start out with. Could you elaborate on that a little more?

[05:11]
Well, some of the main differences are if you really look at the spirit of the law, what we have in the Netherlands, the trias politica, separation of powers and Montesquieu, that system obviously in China works in a different way where the party has a lot more to say. At the same time, the system here works well for companies. If you really look at how you want to protect your rights and how you want to get your rights, but you have to be very smart about it and how to use it.

[05:47]
And unfortunately, with European companies, with Dutch companies, often they use their own Dutch and European legal thinking in China. And as a result of that, they make mistakes and they can’t get their their rights protected here. So that is one of the major differences, I would say, between the laws on intellectual property.

[06:13]
The laws are… It’s it’s hard to say if they’re similar or different. There’s a lot of similarities. But there’s also at certain spots a lot of differences.

[06:25]
I’d say at the moment one of the biggest challenges in Chinese law, and this is more of a recent phenomenon, is that you see in a lot of Chinese laws words like ‘national security’, ‘national interests’ coming back into the law and without the definition of that.

[06:53]
What we see in the Netherlands and with the legal system is, there’s just much more interpretation about what does the law mean?

[07:05]
Also, like you have this different legal thinking principle. So you have the law and you have the courts. You have the legal doctrine, by academics, etc. and that together puts forward how the legal system works. Now, funnily enough, both the Dutch system and the China system are civil, all systems that are not completely full law systems. In the sense that the difference between common law and civil law is that common law looks at how law further develops itself through precedent and earlier court cases.

[07:49]
The Netherlands is actually a hybrid system in which court cases are actually very important at the same time as the local laws, because it interprets the law and it sets precedents based upon what the court said that you can, as a lawyer, use in courts in China. This is also the case.

[08:07]
So it’s when you look at differences and similarities. There are differences. There are similarities. But I’d say the biggest differences between the two systems is the difference between the separation of powers, also the to name a big difference. Also the thought of the president in the Constitution. That would be something that in the Netherlands would be quite unimaginable to have the thought of Mark Rutte to be put into the constitution. So there there are big differences. But what I believe is very important to focus on for now is is more how can you take advantage of the law? Because China does have, especially with Intellectual Property Rights system, a workable system.

[08:58]
Yeah, I think it’s very interesting what you already mentioned. So, yeah, the fact that you can still find protection in China if you do it in the right way, if you prepare well. Because I mean, we at the consulate, we deal a lot with companies coming in to China for the first time. And yeah, there are a lot of conceptions about the legal system in China and of course, a lot of worries about being able to protect yourself. So perhaps there are some misconceptions there that exist with the foreign companies coming into China. Can you give some more examples of maybe some clients you’ve had or some common misconceptions you see or ways in which foreign companies coming into China are not prepared wellor things they forget.

[09:48]
There’s many things, that is a very good topic to explore a little bit more about. Like, obviously, what you don’t know might seem exotic. What you don’t know might seem scary. At the same time, if I’m talking about exotic, for example, people often think that guanxi, relationships, is very important in China. And it’s true. It is very important in China, but it’s especially important for Chinese people, because as a foreigner, by nature, you do not really benefit from the complicated Chinese system of guanxi. So if people say in China, let’s not do a contract because we rely on guanxi, and that’s a Chinese culture which might sound very exotic for a Dutch or European businessman, and they might be encouraged to do that. Mind you, that’s a huge trap because no one in China is bound by these guanxi forms of cooperation to foreigners. So that is one big thing that often goes wrong.

[10:55]
Then the second thing that goes often wrong is the contract itself. You can write the most amazing contract. However, in contracts, what is obviously very important is the clause that says which law is applicable? Is that going to be Dutch law? Is that going to be Swiss law? Is that going to be Chinese law? And that clause will have a major effect on your dealings with any Chinese business partner, because let’s assume the Chinese company is Huawei probably having assets all over the world in case your contract goes sour. You can have Dutch law applicable already in the contract. You go to the courts in The Hague. Huawei maybe has done something not correct so you can access their assets because they would have assets probably in the Netherlands and then you can take the money from that in case, like the judge in The Hague gives you a win.

[12:00]
However, if you’re dealing with most other Chinese companies that are not the Chinese huge companies with assets all over the world, it is very different because if you would have a contract with Dutch law applicable, you go to the courts in The Hague with the Chinese party. But guess what? The Chinese party is not coming. So what you get in Dutch is called a ‘verstek vonnis’ in which the courts will render its judgments anyways based upon the facts and the evidence they have. And you might win the case and then try to get that judgment enforced in China. Chances of you succeeding are very, very, very low. So my story is, if a Chinese company has assets in, for example, the Netherlands, yes, Dutch law is a good way to go forward.

[12:49]
If they don’t and you really want to win your case and you want to get your money or compensation or whatever needs to be either Chinese law or some arbitration, maybe in Hong Kong or maybe in Singapore, but otherwise you will not be able to get what you are entitled to.

[13:10]
And I mean, given that you’re for example, let’s imagine that we have to, you know, build a case or at least build a contract in China. What are some other things that you can take in mind? And especially, I would say for IPR. So, for example, copyrights or patents, what would you say are important things that companies need to think about?

[13:31]
This is a great question. Again, and to be honest with you, what is very important are non-disclosure agreements. And because if you talk about doing business with someone, entrepreneurs are so eager to tell a Chinese company what makes them better than any other European or American or whatever, company and companies don’t realize that anything they have that gives them a competitive edge are actually regarded as trade secrets. And a trade secret might eventually also be something that could end up being a patent. If you, for example, you’re thinking about like our situation now with COVID and you think about a situation with all these vaccine makers. If you are an entrepreneur and you think you have discovered a way to make a new vaccine and you have not applied for a patent yet for that, and you’re discussing with a potential Chinese company to produce, let’s say, this vaccine for you and you’re sharing the formula, then you would be giving away for free their trade secrets. And once you disclose the trade secrets, it cannot be protected anymore as a patent. So it’s very important for entrepreneurs to have these nondisclosure agreements signed before you discuss anything relevant with Chinese parties.

[14:53]
And if the Chinese party then said like, oh, but we don’t work like that because guanxi relationships is very different now then you’re walking into a trap, because Chinese very much honor contracts. There’s so many litigation cases every day in China between Chinese companies. Only a small part is between Chinese companies and foreign companies. So it’s an illusion to think that Chinese companies are peaceful and they don’t litigate amongst themselves.

[15:19]
Thanks! So maybe a little bit more about that, because I guess this would also be the case partly in other countries, right? So the patent system works around around the world. Is there anything particular about the Chinese patent system or about the trade law system in China that you need to be wary of in China?

[15:42]
Most important is registration of patents, registration of trademarks and registration of design patents. So in the European system, we have the same rights. We have patents rights and we have Trademark rights next to copyrights. But if it’s not registered, so those trade rights in Europe are like the big ones now in China, they put the design rights system under the Patent law, which creates this huge problem for most European companies, more than 99 percent of all European companies that have this current problem.

[16:27]
And there are probably not aware that they have this current problem, which is the moment in Europe you write an article about your design or you take a picture of the design of your products. And let’s say you invited a new microphone for your for your Zoom meetings. That works better than other American firms, but that has a really cool new design. And you show that in a magazine or you go on a Zoom meeting, having that new design with some potential investors or with a new station or whatever by showing it without having applied for protection for the microphone in China. First, you lose the right to get that design patent protection in China.

[17:18]
And that is different because in the EU you get automatic protection for years at the moment you publicize your design. And so that is one of those major differences between the two systems.

[17:32]
And then to get all these Intellectual Property Rights, another big misconception that Dutch and European people have is that they think that a European Trademark and a European or like local European, could be Dutch, could be German, Patent is going to help them in China.

[17:54]
It isn’t only if you have national registrations in China that that can help them. And also with regard to copyright, I said earlier that in Europe that actually all around the world, copyright exists. The moments you create a work so you don’t have to think about it. J.K. Rowling and Harry Potter have copyright. Every one of us has copyright. So if I grab my phone and I take a photo or I take a selfie, I have the copyright on that.

[18:26]
That also means that a lot of companies, they have copyright on their websites, they have copyright on their product packaging, they have a copyright on their product catalog, all the text, all those photos, or if these companies made it themselves, they are automatically protected by copyright in accordance with the Bern Convention, a very old convention that most countries in the world, except for North Korea and some other countries, signed. So very handy.

[18:54]
However, China does have a copyright registration system. Some people say that that goes against the Bern Convention. Some people say it’s actually very handy. I say it is quite handy because what it does is if you register your copyright, it turns around the burden of proof. So if you have this copyright certificate in China, the other party all of a sudden has to prove that you’re not the copyright holder. So obviously, China also recognizes the Bern convention and says, OK, you have the copyright because you created it. But show me first that you created it. And that can be very different, difficult to do here in China to prove that, because if you get proof from the Netherlands, you need to get it legalized, notarized for China. Chinese judge might not take it or Alibaba or other e-commerce platforms for notice and take down, they might not take it. So it’s better to just register these rights for China now.

[19:53]
OK, maybe just a few minutes that we can go on with this. So is there anything special that we can say about contracts when it comes to companies that have a lot of IPR. Any advice you would give them that specifically in China?

[20:11]
As far as for me, what I’m doing a lot and we started this this this talk about huge differences between the Chinese legal system and the Dutch legal system. One of the things I mentioned was that I see national interests.

[20:34]
Coming back as one of the points that is important to China and important, to Chinese law and together with Chinese national security. Now, actually, there’s a trade war still going on between the USA and China, and just before the trade war started, China actually put a new pilot law into effect, which basically says that if you put your IP into China, and that could also be like a Dutch company putting it in to the Chinese company, which is 100 percent Dutch owned, but in accordance with Chinese law, that’s still a Chinese company. Then if you ever want to put that IP back to, let’s say, the Netherlands or anywhere in the world based upon Chinese national interests or national security, the Chinese Ministry of Commerce might block that transfer from happening.

[21:42]
So you could be talking about a company like Philips that has an R&D lab here in in Shanghai. Something they invent here in the R&D lab here might not be automatically transferable to other countries. Is that correct?

[21:57]
Or it could be like the company itself in the Netherlands looking to developing IP. And I want to especially focus on the latter thing, because if they develop it, let’s say in in Europe or anywhere else in the world and transfer it to China, by the IP becoming Chinese, there might be problems later for getting it back.

[22:21]
So what you need then for companies to do and that’s something I’ve been very busy with for a lot of like high tech clients especially and other multinationals, is to make the right licensing contracts in accordance with Chinese law to effectively operate the IP in China, but not making the IP Chinese. Yeah, so you can use it here. You can do a lot of things with it. But you will not be blocked the moment an American company says, hey, I want to buy your IP or get also a license on your IP, you cannot be blocked at that moment by by MOFCOM, in this case, the Chinese Ministry of Commerce. Yes. So that is that is something that is important to do.

[23:10]
And obviously, there’s also nothing wrong with bringing it here. But for me, what is important in all the cases that I do is to inform clients, listen, these are the risks and this is a business decision. I can give you all the pros and cons. At the end of the day. How do you want your IP? Do you want it very safe or do you want it with some risk? And obviously most lawyers are risk adverse. So it’s my preferred strategy. Would it be risk adverse and keep it freely tradable?

[23:43]
Because we as the Dutch, we’re a nation that believes in free trade and not much restrictions. So I think… Or not I think, I strongly believe that this is something where context-wise Dutch companies have a lot of work to do and can take a lot of profit from in the upcoming years if they do it well.

[24:07]
Yeah. OK, well thanks. Great that we could talk a little bit about some of the, you know, the nitty gritty or at least some of the details of that companies can run into when they want to enter the Chinese market. Maybe for that time we have left. I think it would be good to also talk a little bit about what’s going on in terms of changes in the system here. So you yourself are an IP expert at the China IPR Help Desk of the European Commission already for a number of years. So this helpdesk supports European, Small and Medium-Sized Enterprises with questions they have on IPR. They also provide information and reports. You’re also the vice chair for the European Chamber of Commerce, the intellectual property working group there. And you also work as a secretary of the China team at Marques. So all of this is, I think I can describe it a little bit as lobby work with the Chinese government. So can you share a little bit about what kind of topics are being flagged in this discussion with the with the Chinese government and how that is progressing?

[25:15]
So with the European Chamber, for example, every year we launch our position paper in which we write also on intellectual property rights, all the points of interest of the members of the European Chamber, which are like the big, smaller European companies active here in China.

[25:40]
Now, that position paper is divided into various sections. So we have a Patent section. We have a Trademark section, we have a trade secret section, we have a copyright section, and we have also an e-commerce section. And then within all those areas, we line out the big problems that we as European rights holders and companies believe are challenges for our businesses. So e-commerce, for example, is a very hot topic anywhere in the world, especially during these COVID times, because more and more things will be without being somewhere physically.

[26:23]
So on e-commerce, for example, we’re really trying currently also to make social media platforms, where you see a lot of counterfeits happening, to be mentioned as official e-commerce platforms, because…

[26:40]
So which platforms would those be?

[26:44]
This is a sensitive topic. So let’s say social media platforms. Just in general, let’s say all social media platforms, they would benefit from calling themself telecommunications services. That creates a platform to talk privately. Yeah, but then again, we see a lot of fake products being offered on those websites. And if you’re not an e-commerce platform in accordance with Chinese e-commerce law, then you don’t really have the liability to stop infringements from happening on your platform.

[27:21]
So that’s why we are trying to to get these social media platforms also effectively put forward as an e-commerce platform on the Trademark site, for example.

[27:36]
And we see that a lot of procedures are being delayed. That’s at the moment. Because China has speeded up the examination of Trademark, which obviously is a good thing, but at the same time, they did not speed up the time for oppositions of Trademark, etc.. So if you are a Dutch company, you want to register your Trademark, oftentimes because the country is so big, there are so many Chinese companies, there are already a lot of Trademark registered that might be very similar or the same to your Trademark. So in order to register your Trademark, you first need to get rid of those trademarks.

[28:28]
So at the same time, China is a first to file country, which means whoever registers the Trademark first gets it. So we have the problem that you want to register for your Trademark as soon as possible. But you also have the problem that in order for the Trademark to be granted registration, you need to get rid of those other trademarks in the way. Now, the time for registration is very quick in China, say seven to eight months, but the time to get rid of those other trademarks that are underway takes more than a year or longer.

[28:58]
And then you have to also take into account that the time for those trademarks to go through appeals, etc, etc.. So long story short, if there is no mechanism of passing docs, that Trademark application until it’s been dealt with all the other trademarks in the way, companies are just spending a lot of money and time to get something which is very, very frustrating.

[29:27]
But I can imagine it’s also for Chinese companies themselves that that is a problem.

[29:32]
One 100 percent. And I would say that at the European chamber, and also at Marques, we really try to come up with solutions for problems in the law that we see for European companies. But that’s effectively what you just also said, is a burden for Chinese companies and also a burden for the Chinese system as a whole. So we just trying to make it better for all parties involved.

[29:59]
And you have seen improvement in this over the last few years that you’ve been involved in this?

[30:03]
Well, it’s actually really good that we are talking about, you know, creating such a trademark mechanism, because this is a new problem that I put on the map just earlier this year. And it’s good to talk about these nitty gritty problems because, mind you, China only started having an IP system that can be taken a little bit serious since 2001. Before that, it was not really in the eyes of the Western world and our system.

[30:34]
And then if you look at Patent law, only since 2008, the Patent law started becoming workable. So you’re talking only 12 years ago because before that, the Patent law was looking into novelty, so the principle of newness, only in China. That’s meaning that companies here would apply for patents that were already registered by Siemens or other companies around the world, and then get that Patents for China because China looked only at like whether this was new to China.

[31:06]
So China has come from very, very far. And now in 2021, there’s a new patent law which will make the system better for Dutch and European companies. And we’re getting more into the nitty gritty phase, except maybe for two things that I would like to mention. One we already talked about, which is national security and national interest, which is a topic that really needs to be defined.

[31:39]
And the other thing is the antimonopoly law, what we call competition law in Europe. Normally Intellectual Property Rights an exception to the antimonopoly law, the competition law, in the sense that you get a monopoly and we all play this board game Monopoly as kids. And most people really like to have a monopoly on the streets. That’s also how intellectual property works. You get a monopoly because for Patents you be giving like some knowledge to society.You get that limited protection for maximum 20 years. So in 20 years time, everyone can use that knowledge and build on for that. But we see recently that in laws we see a lot of things pointing towards the Chinese competition law, having more to say about whether or not you abuse your IPR rights.

[32:35]
And that might be a problem for a lot of companies in the future. So that is something that I would advise a lot of, especially multinationals to start looking into.

[32:45]
Yeah, OK, OK. The first one, the national security, just to come back on that. So the main problem is, in effect, that it’s that it’s not clear what the limits are to these these kind of clauses, right?

[32:56]
That is the issue. Correct. I mean, if nothing tells us what national security and national interest and it could be anything

[33:06]
So that, uh, I don’t know, something related to advertisement, as soon as you target Chinese people with an advertisement that maybe already seen as…

[33:15]
It might be the problem is that nobody knows. And the thing about most European laws and Dutch laws is that it is very, very clear. And if something is is not clear, then sometimes you can get that extra interpretation. Any China also can get that extra interpretation. And that is something we really are doing some advocacy work for now is to get that explanation and to really see what’s, uh, what’s happening.

[33:45]
And obviously, China is still a country when we’re talking about intellectual property rights, where there’s a lot of fake goods. China is also the production plant of the world. Most things are made in China. So it makes sense that they also are the source of the problem. And that would mean for European companies, Dutch companies, to start attacking the problem at the source, because as long as your factories, as long as the factories in China are still open, goods are flooded, all of the world that can infringe upon your rights. And they have to attack that in each and every country, which takes a lot of time, tremendous amounts of money.

[34:25]
But most important of all, it doesn’t solve the problem. So so really, companies should start looking into and getting evidence of infringements in China. And when we’re talking about differences in the system, a big difference between the two systems, the Dutch legal system and the Chinese legal system, is that evidence in China is only evidence if it notarised, if it is notarized by a notary public in China, which means that if a factory is selling fake goods on e-commerce platforms here as a lawyer, I would make a simple purchase, get that notarized, and then we have the proof that are if it’s a fake ID, that that company actually sold us fake goods.

[35:13]
And then you can go into negotiations, go to court, and then you win your case. And the compensation you get in these cases are higher than the lawyer costs. So that’s definitely worth your time. But putting that into the Dutch perspective as a Dutch lawyer, if I’m practicing from Amsterdam or Rotterdam or wherever, I can just take a screenshot myself from that e-commerce platform and use it as evidence in the courts in the Netherlands. I don’t have to notarize anything because the judge will believe that because I’m a qualified lawyer and a practicing lawyer, that I can actually, that I will actually, not provide him or her with fake evidence. That’s a huge difference.

[35:58]
OK, well, maybe to get to the end of the podcast, can you mention a couple of future developments that you see coming that are important to the Chinese IPR system? So you just mentioned the new patent system. Are there any others? And perhaps you could say a little bit more about the new patent system that’s coming up?

[36:19]
So with the patent law, we have a very, very interesting new law coming up in 2021, which provides a lot of new changes.

[36:29]
For example, when you look at design patents in European design patents, you can protect, let’s say, graphical user interface just by taking a screenshot of that graphical user interface.

[36:45]
So if I grab my Apple phone and I just show you my background, that would be something that Apple would have registered in in Europe as a graphical user interface. Now, in China, under the current, which is still the old law, such graphical user interface can only be registered as a design Patents when it comes together with the products, the iPhone.

[37:09]
Now, under the new law, this will change, which is very good, which means that from now on, a graphical user interface can be applied for separately, but also all other partial designs can be applied for separately. Doesn’t have to come with a product. It’s a huge, huge change. The design protection period is going from 10 years, it will be longer towards 15 years, which is great because that puts it into The Hague Protocol.

[37:44]
So that way, it’s also for international design applications that there’s a very interesting change. You see some changes also for the pharmaceutical world, so if you make, for example, vaccines, based upon Chinese national emergency situation, the novelty periods – and if you apply for a patent, it has to be new, it has to be inventive and it needs to be industrially applicable, those are the requirements for Patents ability – now, that novelty requirements means that if you put it on the market or if you tell me about it anywhere without a written contract to keep it secret and safe, it’s out in the public. Everyone can use it. Now, they put a national emergency in the law for these kinds of of Patents so that there’s an extra period of six months to still apply for it.

[38:44]
Also, we see the compensation going up, which is very good. So the money you get for infringing of your patents goes up. China introduces also a system of punitive damages. And we also see that in Chinese civil law, which goes into effect soon, we see that also in other law amendments.

[39:13]
So China really wants to punish people more for Patents infringement because China is actually embracing the idea of intellectual property rights. And they truly believe that that will make Chinese companies great worldwide. You see Chinese companies registering more patents, trademarks, et cetera, and you see the same thing here in the domestic market. So those are some of the changes we see in the Patent law at the same time, also, the national security interest is in the patent law.

[39:50]
Also, the competition law that I mentioned is in the patent law. So those might be a little bit more worrisome things. Um, China is trying to get rid of bad faith Trademark registration because there’s still this huge problem where we see that people are massively registering trademarks of known or lesser known international companies. That’s also lobbying work we do for the European Chamber, for example, to to try to curb that there was the 2019 trademark law that already goes against that.

[40:25]
But the law, to be honest, ideally still needs to go further into actually starting to punish people, I would say, for applying for this Trademark, because to be honest with you, David, you see a lot of companies and especially SMEs who don’t really have the money to fight these Trademark applications.

[40:46]
And mind you, if you win such a case with Intellectual Property Agency, then the other company might still be going to appeal, which makes you spending more money. So through my advocacy positions, I really would like to create or argue for our system that if it’s clear that some someone knew about your brand and then registers that same brand for their personal gain, then that person or company should be punished. And I think this punitive damage is such a system that could really work.

[41:26]
In Copyright law, there was a recent amendment proposed for that. So that might come out into 2021, might be postponed a little bit further. But that’s also something that we might see some changes on soon. So on the IP front, there’s lots of things happening. There’s lots of Supreme People’s Court opinions further explaining the law. So it’s to be honest, a very exciting time to work on intellectual property rights here now in China.

[41:55]
OK, well, exciting times. That’s a that’s a good way to finish up. Thank you, Reinout, for this podcast.

[42:02]
Thanks for having me. Thanks for having me, David.

[42:06]
And thanks to you for listening to our podcast. More information on our speakers can be found at our website www.netherlandsinnovation.nl.

[42:15]
If you would like to reach us, you can do that by sending us an email at [email protected] We hope you will tune in again. 

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