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Home >> Opinion
UPDATED: 17:01, May 22, 2006
China faces challenges of IPR competition
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With more and more patent disputes occurred, China is facing increasing challenge of intellectual property rights competition.

On the one hand, the number of related cases increased substantially. Take the Section 337 IP Infringement Investigations of the United States as an example, the main target country for the investigation has been diverted from Japan and South Korea to China. The Section 337 investigation has become another block following the investigation on anti-dumping that made the "Made in China" exports to the US more difficult. The patent costs and compensation that have been claimed easily exceeded hundreds of millions, covering from lighters and zippers to biopharmaceuticals, digital chips and other high-tech industry products. On the other hand, IPR has become one of the tools for some transnational corporations to suppress Chinese competitors and seek greater profit. Currently, 30% of the total annual invention patent applications registered in China are submitted by transnational corporations. The closely spread "traps" of IPR have become a thorny problem for many dometic enterprises. In addition, Chinese enterprises own fewer patents and trademarks registered in overseas markets; they have run into hot water of IP issues. Trademark has become another thorny issue. A high rate of IPR disputes have arrived ahead of schedule.

Comparatively speaking, the gap between China and developed countries in IPR system is obvious. Although China ranks the fourth for the total number of patent applications for inventions in the world in 2005, it only ranks 80th-90th in per capita volume. From the quality perspective, among the three categories of invention patents--utility models and exterior designs, inventions only accounted for 18% of China's patent applications. Among foreign applications, 86% are inventions. Chinese applications mainly focused on Chinese medicine, non-alcohol beverages, food and Chinese character input methods. Foreign applications focused more on the high-tech products. Most Chinese enterprises do not have patented technology. Only 0.03% of the Chinese enterprises possess core technology with independent IPR. About 99% of the enterprises haven't applied for patents, 60% of the enterprises have no trademarks. Most of them are "making" instead of "creating". They do possess the "property rights", but do not have the "knowledge".

Chinese Premier Wen Jiabao has pointed out, "The future competition in the world is about intellectual property." From the second half of the 20th century till now, a large number of major scientific and technological inventions and world-recognized brands such as television, computer, Internet, satellite, cellular phone, credit cards, hybrid rice, etc, have significantly changed human's life. The intangible IPR not only stand for a vast reservoir of wealth, but also are closely related to the course of a country's international status and dignity. For this reason, technology and intellectual property rights have become the strategic high ground in the world technological and economic competition. Strengthening IPR protection has become an inevitable choice of all the countries to improve their international competitiveness. Japan has explicitly put forward the basic state policy of "building the country through intellectual property" replacing its previous one of "building the country through science and technology". The United States takes IPR as a basic national strategic resource and use IPR as an important measure to monopoly overseas markets.

China is a latecomer in establishing IPR system, but has developed the course in 20 years which took the developed countries several hundred years to accomplish. China witnessed an unprecedented speed and intensity in the development and demonstrated tremendous inputs and achievements that are obvious to all. But frankly speaking, China's creativity of intellectual property is not strong enough. Its IPR holdings do not match its level of economic development. Chinese enterprises are not good at protecting themselves by using IPR as a tool. By the end of this year, the "transitional" period for China's WTO accession will basically conclude. More severe challenges will be ahead.

Although some Chinese enterprises like Huawei and Haier have submitted a large number of patent applications, and some of them have won the cases on foreign intellectual property disputes, there is still a need to enhance awareness of IPR in the whole society and to accelerate the construction of an innovative nation so as to be proactive in the competition. This is one of the issues that must be tackled in the following five years.

By People's Daily Online

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