Fines for IP violations will rise with new revisions to Chinese patent law. The minimum fine has increased tenfold, while the maximum has risen from one million to five million yuan.

For years foreign companies have been reluctant to seek and enforce IP protection in China. Challenging litigation, low damages and weak enforceability of judgements made the country undesirable. By introducing bigger fines, China hopes to attract more international companies and strengthen its trading position.

Drafting the future

When put into effect, the new draft will be the fourth revision to Chinese patent law since 1984. Shen Changyu, head of the State Intellectual Property Office (SIPO), stated: "The draft is meant to solve new patent problems, such as difficulties in collecting evidence in patent lawsuits, online IP infringement and low compensation for victims of patent infringement."

The draft will:

  • Raise fines for IP rights violators, helping protect patent owners
  • Empower courts to use evidence provided by patent holders to calculate fines
  • Clarify responsibilities to make online service providers liable for blocking or deleting violated works or products on their platforms

Rapid maturity

A record 1.38 million patents were filed by China’s IP office in 2017, cementing Asia as the global leader in patent filings – receiving 65.1 per cent of all applications filed worldwide.

The country’s patent growth has mirrored its explosive economic upswing. In 2000, China’s Gross Domestic Product (GDP) was 1.211 trillion USD – in 2017 it was 12.24 trillion USD. Its IP systems and laws have been slower to catch up.

The road to trade disputes

China has developed a reputation for blatant IP theft. Its economic boom led to a practice of produce-and-copy – where authorities turned a blind eye to IP infringement. In 2013, worldwide seizure statistics found $461 billion of world trade coming from China was counterfeit or pirated.

Chinese companies want to expand globally and innovate at home. They have demanded more robust IP protection from the government to do so. China has updated its IP laws, allowing IP rights cases to go to China’s Supreme Court and opening new IP appeals courts.

The patent law revision is the latest step in alleviating concerns around China’s IP practices. Well-received by legal specialists, it will help tackle IP violators and further develop the country’s innovation agenda.