The U.S. International Trade Commission issued the first of two reports analyzing intellectual property rights (IPR) infringement in China. The first report outlines the principle types of infringement, which include illegal distribution of copyrighted works, counterfeit trademarks and patent infringement.
With respect to patents, the report notes that while “filings of all types of patents in China are on the rise, Chinese inventors particularly focus on 'utility model' and 'design' patents, while U.S. and other foreign inventors almost completely ignore such patents.” The authors of the report comment that Chinese utility model and design patents are inexpensive and easy to obtain, as they are not substantively examined by patent examiners. The authors warn that once a Chinese company has received such a patent, it can bring suit against foreign companies that manufacture similar goods in China or export them to China, or use the patent to defend against infringement allegations.
The first report associated IPR enforcement problems to a lack of coordination among government agencies, insufficient resources for enforcement, local protectionism and a lack of judicial independence. Other failings included insufficient penalties to deter repeat offenders and inadequate damage awards. The report did cite signs of improvement in IPR enforcement, especially with respect to courts in major cities in China.
The first report also analyzes the effects of China’s “indigenous innovation” policies, which promote the development, commercialization and purchase of Chinese products and technologies. The policies may be a disadvantage to U.S. and other foreign firms and create barriers to exported goods from these countries, along with direct foreign investment. A second report, due in May 2011, will quantify the impact on U.S. jobs and the U.S. economy. The reports were requested by the U.S. Senate Finance Committee. The Committee’s leaders, Senators Max Baucus (D-MT) and Charles Grassley (R-IA), called on China to do more to stop illegal practices. The issue was discussed during a high-level meeting of the U.S.-China Joint Commission on Commerce and Trade in December.
Click here for a copy of the report “China: Intellectual Property Infringement, Indigenous Innovation Policies, and Frameworks for Measuring the Effects on the U.S. Economy.”
Protecting the IPR of members is a top SEMA priority. Visit www.sema.org/ipr for more information about patents, trademarks and copyrights and links to U.S. government agencies to register your IP. The website also posts links to previous SEMA articles and webinars on this subject.
Questions? Contact Stuart Gosswein at stuartg@sema.org.