IP Enforcement in China – how the landscape has changed!

By Greg Lynch

Having been working in the intellectual property profession for more than three decades, I probably qualify as a veteran.  As most stories from veterans go, many things in the IP world have changed in my time.  The IP enforcement landscape in China is no exception.

In a recent example of a New Zealand business having benefitted from the rapid changes in China’s IP regime, T&G Global has been successful in a court battle in China involving plant variety rights for its Scilate apple, sold under the ENVY brand.  The Supreme People’s Court of the People’s Republic of China upheld a 2023 ruling of the Lanzhou Intermediate Court of Gansu Province that T&G’s plant variety rights had been infringed.  Dismissal of the appeal now opens the way for T&G to seek compensation from the infringer.

Back in the 1990s, discussions I had with executives from companies and research organisations about geographical protection of their new IP developments often included comments from them along the lines “Why bother with protection in China – rip-offs are rife and enforcement is impossible.”

My usual reply was that the IP landscape in China was changing rapidly and IP rights can last a long time.  At least in the context of patents which can last up to 20 years, and where filing decisions need to be made at critical time points, with no ability to change your mind later, I would say you might kick yourself in 5 or 10 years’ time if you had not sought protection in China.  That has played out.  Many are thanking their stars that they did protect in China.

China certainly did have a reputation for copycat products and barriers to the enforcement of IP rights particularly by non-Chinese entities.  Triggering change was China officially becoming a member of the World Trade Organization (WTO) in 2001.  Among the many issues worked through to enable China to become a member, was the requirement that China radically upgrade its intellectual property protection and enforcement regime.  This was driven primarily by China being required to adhere to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement adopted by WTO-member states in 1994.

The TRIPS agreement sets a minimum level of protection that each government should grant to the intellectual property of WTO members.  Importantly, Article 3 of the TRIPS agreement established the “National Treatment” principle whereby locals and foreigners should be treated equally.  In addition to updating its IP laws, China set about complying with its obligations under the TRIPS agreement to provide the necessary administrative and procedural measures to enable parties to enforce their IP rights.  Under the TRIPS agreement, all members are required to “make available to right holders civil judicial procedures concerning enforcement of any intellectual property right.”

The pace of change in the IP field in China has been rapid, as it was for so many things in 1990s and 2000s.  For a time, there remained a suspicion that China’s IP enforcement regime tended to favour local Chinese businesses over foreign international corporations.  Whether or not that suspicion was supported by evidence, it seems to have largely evaporated.  There have been many examples in the last 10 years of IP court battles in China between local entities and foreign entities, between foreign entities and other foreign entities, and between local entities and other local entities, just as you might expect in most countries.

Foreign entities are increasingly using the Chinese IP courts.  According to an annual report released in 2023 of the Intellectual Property Court of the Supreme People's Court, the country's top court, 457 new cases involving overseas entities were received, an increase of 4.6 percent year-on-year.  The rise in cases reflects the increasing trust foreign rights holders place in China's IP judicial system.

These days, decisions are made, normally without hesitation, to include China as part of geographical coverage for protecting IP rights.  These are important decisions driven not only by massive market potential, but by a wide acceptance that China now has a strong IP regime in terms of both enforcement and protection.  How the IP landscape in China has changed!