China has to protect IP. Easier said than done.

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Back from the holidays, I first read this article , and then Stan Abrams’ response to it. Apart from the question about China’s reaction to the Internet revolution where IP law is concerned, I started thinking about another phrase that pops up in most China IP-related articles in many different forms: China has to/doesn’t/isn’t able to/is unwilling to protect IP. Sounds simple: “China” (whatever that may be) does not do what it should do (or what we want it to do), and it should behave better. Very often, there is little in the way of concrete and detailed analysis of how it can do so, and what the aims would be. So here, I’m approaching the same problem from the other side, by asking what can China do more to protect IP?

The big question of course is what we mean by “China”? Are we talking about the central government? But what can governments really do themselves to protect IP? They can either subcontract administrative enforcement powers to government entities or legislate and give civil or criminal courts jurisdiction over IP matters. China has done both. On the legislative level, China’s IP laws are basically up to scratch with their international commitments, which was already implicitly confirmed in the China-Intellectual Property WTO case. At the administrative enforcement level, everyone knows that the problems are huge. Issues such as local protectionism, corruption, fine farming, principal-agent problems, low political economy priorities, lack of funding, etc. have been repeated over and over by the IP lobby. In other words, administrative enforcement means that another agent is brought into the enforcement process, which has priorities, interests and incentives of its own, which may not necessarily align with those of rights holders.

So to a certain extent, and within the limits of its possibilities, the central government is doing what it can to protect IP. Local governments and the problems related to them aside, which non-governmental actors can assist in IP enforcement? Rights holders are uniquely placed, as both interested parties for IP protection as having expertise in the characteristics of their IP. They can unite into industry associations or initiate lawsuits against alleged infringers. To do so, they need reliable courts and consequent enforcement of verdicts. CIELA data shows that between 2006 and 2009, more than 80 per cent of cases resulted in a complete or partial win for the plaintiff, with about 80 per cent of cases resulting in an injunction. In other words, while there may still be issues with the court system, for example with enforcement of verdicts, especially against government entities, the courts actually have a relatively good track record in IP cases. Making more optimal use of the courts might then be the more plausible way forward in IP protection.

However, the big complaints about the purported lack of IP protection in China comes from large US companies or industry associations. For many of these, it seems easier to hide behind their government, rather than to be proactive in protecting their IP themselves. Also, they perhaps do not trust the Chinese court system. On the other hand, it would be worth looking into thresholds and obstacles barring foreign access to Chinese courts. In purely legal terms, more investment by rights holders themselves, especially in putting forth the effort to make more use of China’s court system, may result in stronger protection than any WTO case or Special 301 submission. In short, for better IP protection, the Chinese state needs to provide a high-quality judiciary, with low thresholds and well-trained staff, as well as better guarantee enforcement of verdicts. Rights holders, both Chinese and foreign, need to invest in protecting their IP, just as they would anywhere else in the world.

But IP problems are of course much broader than IP law itself. In copyright, for example, as long as China’s media market remains as heavily regulated as it is, foreign rights holders may not consider it worthwile to enforce their copyright, as they will not be able to profit from pirate copies disappearing from the market anyway. There is a general lack of relevant experience, both at the regulatory side and the business side, and very often, IP infringement is not the most important problem many Chinese companies face. In other words, while saying that China must do more to protect IP is an attractive slogan, it fails to understand both that China (as in the Chinese state) is already doing quite a bit, and that the business of trading in products and services protected by IP is quite a bit broader than IP itself.

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