24 CHINA BUSINESS REVIEWOctober–December 2012BY THOMAS I. ROSSINTELLECTUAL PROPERTY RIGHTSEnforcing Intellectual Property Rightsin ChinaForeign companies that do business in China should become familiar with the Chinese system for enforcing intellectual property rights.PETER ROGERS/GETTY IMAGES NEWS/GETTY IMAGES
October–December 2012CHINA BUSINESS REVIEW25China’s oft-stated reputation for being lax on protection of intellectual property rights (IPR) can deter foreign companies that want to do business in the world’s second largest econ-omy. While enforcement of copyright protec-tion is still difficult in China, it is possible to win court cases or protection through administra-tive rulings in the areas of patents, trademarks, and trade secrets. But the only way for IPR holders to succeed is to familiarize themselves with China’s system of enforcement. ENFORCEMENT OF IPR IN CHINACivil enforcement of IPR in China is a two-track system. The first is the administrative track, whereby an IPR holder enlists the aid of a local government agency office (see p. 26). The second is the judicial track, whereby com-plaints are filed through the court system. Those who take the administrative route are almost exclusively Chinese. Set up in the prov-inces and some cities, these local government offices operate as a quasi-judicial authority and are staffed with people who specialize in their respective areas of IP law. If they are satisfied with an IPR holder’s complaint, they investi-gate. The authorities can issue injunctions to bring a halt to the infringement, and they can even enlist the police to assist in enforcing their orders. But agency officials do not have the authority to award monetary damages. Also, there is no established appeal procedure, so if a party is dissatisfied with the agency’s deci-sion, it has to take the case to court to change the result.The court procedure in China is the most popular method chosen by foreign companies for IPR enforcement for two reasons. First, IPR holders based outside of China are famil-iar with going to court to enforce their IPR. Second, administrative proceedings in China cannot award monetary damages. The time to trial in a Chinese court is usually less than a year from the filing of the complaint. (The conventional time to trial in the United States is at least two years.) However, in China, a court case for patent infringement is usually delayed to await the result of an invalidity determination, which is not decided by the court. In China, if a patent is contended to be invalid as a defense to infringement, that deter-mination must be made by the State Intellectual Property Office (SIPO), China’s patent office, and usually takes one to two years.