A Post-Revisionist Look At Chinese Intellectual Property Law: A Report From The Periphery (Or The Frontier?) To The Core

Andrew Jensen Kerr† & Ding Ding††

Introduction

The monolithic image of China as an intellectual property pariah persists in both the popular media and in academic literature. And not without reason. The derivative grey-market industry for counterfeit goods is so robust that it has spawned its own dynamic of retail tourism. Indeed, the U.S. government openly permits returning citizens to declare “one article of each type” of infringing good on return to the United States.[1] This so-called shanzhai phenomenon is certainly curious to the American abroad.[2] It seems that there is as much gradation in quality for fakes as there is in the “legitimate” market for the analogue branded product. Given this everyday contact with trademark infringement it is not surprising that the United States Trade Representative (USTR) continues to prioritize China on their IP watch list.[3] But China has responded to their IP regulatory lacunae by creating a legal framework that fills some holes still left open in the U.S. Indeed, it is an academic question whether China and the U.S. should “substantively converge” in how they manage the increasingly high-tech world of online counterfeiting.[4]

History

Context is important in China. And orthodox historiography has been eager to trace the genealogy of China IP back to its dynastic origins. Imperial China is commonly described as a place where the law was not the dominant form of private ordering.[5] Instead, a Confucian ethic of reciprocity shaped social relations, and notions of hierarchy and deference to the past were woven into the social fabric. William Alford explained in his canonical historical work how this kind of respect through imitation translated to a supposed absence of copyright law in early modern China.[6]

But here is the ineluctable fact that Max Weber and his armchair Orientalism couldn’t explain—how could Imperial China be characterized as non-innovative when it was also home of the transformative “four great inventions” of early civilization: paper, gunpowder, woodblock printing, and the compass?[7] Ken Shao posits the confounding question of how sixteenth-century Chinese publishers with larger businesses than their English equivalents “had developed copyright practice that did not contain the monopolistic nature of the London copyright claimers?”[8] Perhaps the missing link is the false equation of intellectual property with a codified intellectual property law. While it is true that IP rights were not protected by Chinese civil law until the early twentieth century,[9] a twelfth-century Chinese printing house made perhaps the world’s first copyright statement that their books must not be copied without permission.[10] In 1265, the provincial Fujian government issued a decree for IP protection.[11] These data points have led at least one scholar to argue that China has possessed an uncodified copyright law since the Song Dynasty (960-1276 CE).[12]

Recent Reform

In today’s China, the socialist ethos of communal property seems fundamentally at odds with the notion of profiting from knowledge. But after the Cultural Revolution, Chinese leader Deng Xiaoping re-constituted Chinese IP law as part of the Gaige Kaifang (“Reform and Opening Up”).[13] The formative Trademark Law of 1982 is representative of this modern push to rationalize the IP system of the People’s Republic of China (PRC).

With China’s accession to the World Trade Organization and concomitant adherence to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS),[14] the nation has further improved its IP protections. In 2000, the Supreme People’s Court promulgated its version of the U.S.’s Digital Millennium Copyright Act.[15] In 2010, the Chinese government launched a Special Campaign to stamp out counterfeiting, and by June 2011, the campaign had resolved over 15,000 cases representing an aggregate $2 billion.[16] The Chinese government also “shut down over 9,130 plants making pirated and counterfeit goods and 12,854 underground factories.”[17] Despite these prodigious numbers the USTR continues to petition against China for their supposed derelict administration, an index of the overwhelming size of China’s counterfeit market.[18]

Lost in Translation?

But perhaps the U.S. government is not looking in the right places? Chinese IP regulation doesn’t exist in the same legal space as in the U.S. China is a civil law country, and thus the full force of stare decisis does not exist.[19] In addition, each of the three main branches of government possesses separate IP rule-making capacity. The Standing Committee of the National People’s Congress (and the NPC as a general body) authors statutes,[20] including foundational IP architecture such as the Trademark Law, Patent Law and Copyright Law.[21] The Executive, i.e. the State Council, produces something akin to administrative regulations, which require a lower quantum of deference.[22] China’s highest court, the Supreme People’s Court, publishes judicial interpretations that are binding on Chinese courts.[23] Of recent import is the 2012 Judicial Interpretation on Network Dissemination of Information, which identifies the shared interests of copyright holders, Internet service providers, and the general public, and extends the scope of information networks beyond the Internet to mobile technologies and intranets.[24] This hierarchy of authority between administration regulations and judicial interpretations remains unresolved.[25]

Apologists for the current state of Chinese IP point to its recent achievements and the need for an idiosyncratic, path-dependent approach to development (e.g. the centralized ambition for zizhu chuangxin or “self-driven innovation”).[26] China is already among the top five nations for patent applications through the Patent Cooperation Treaty.[27] It can be debated how many of these patents are of “high-quality.” Still, the development of drugs founded in Traditional Chinese Medicine such as Artemisinin and Tamiflu are evidence of China’s contributions to high technology.[28] There is also the second-order rejoinder of whether Western nations are themselves creating technologies that are “highly-innovative” or merely “highly-protectionist.”[29]

And thus the touchstone question for any developing nation: how to balance the static efficiency of antitrust with the dynamic efficiency of patent law?[30] It is telling that the Chinese Law against Unfair Competition of 1993 is a keystone for protection of trade dress and trade secrets in China. Courts are still in the process of trying to flesh out these protections. For example, the percolating Wanglaoji case has pitted two market-leading tea producers against one another.[31] Commentator Xie Xianhui (who also argued the celebrity iPad case) expects the Guangdong High Court to not only resolve the question of ownership of the relevant trade decoration, but to possibly comment on this separation of trade dress from trademark.[32]

Culture also informs this relationship of antitrust to IP. Professor Cheng notes how things like uncertainty-tolerance[33] or poverty alleviation goals can re-calibrate the line drawing process between IP integrity and access. In an emerging economy such as China the marginal value of an extra dollar can be profound, cordoning off the low-income family from access to a generic life-saving medicine. One could make a related argument that even for cultural products such as music or movies that lessened IP protections are necessary to educating individuals so they can participate in our increasingly globalized, cosmopolitan culture. In the Internet Age should there be formal protections to becoming cool?

Going Forward

IP in China is very much in a state of flux. The celerity with which the IP laws are updated is itself evidence of this rapidly changing area of law. For example, the Copyright Law of 1990 was first revised in 2001 and then endured another new round of revisions in 2010.[34] A third revision was published in 2011 but has been the subject of particular controversy.[35] This draft establishes expanded collective copyright management organizations (withdrawing from individuals certain IP rights related to compensation).[36] It has unsurprisingly inspired fierce objection among those in the literati or record industry. Famous writers and musicians have argued that they do not want to be “represented” by these organizations, which they characterize as incompetent and self-interested.[37] The recent backlash to Baidu Books, as illustrated by the “March 15 Letter by Chinese Writers,” is indicative of these same tensions.[38]

A recent September 2013 episode of CNN International’s On China focused on the rise of “e-commerce” in the world’s second biggest economy.[39] Observers expect China this year to add 50 million digital shoppers to their 2012 base figure of 220 million.[40] But what is interesting are the kaleidoscopic ways in which Chinese consumers can click “buy” differently than in the U.S. One concerning example is the trend of Qijiandian (or “flagship” stores) through eBay-like web portals, including the behemoth platform Taobao. These Qijiandian are licensed to operate directly by the product’s trademark owner; however, recent investigative journalism has uncovered that they are sometimes operated by third party agents.[41] So what happens when Qijiandian sell trademark infringing product to trusting consumers? It is unclear both how officious the Chinese government should be in imposing duties to monitor the integrity of these online sales and on who this duty to monitor should be imposed. However, it will be exciting for legal audiences on both sides of the Pacific to observe how the dynamic, though very different, Chinese IP system responds to these sorts of cutting-edge Internet issues.


Preferred citation: Andrew Jensen Kerr & Ding Ding, A Post-Revisionist Look At Chinese Intellectual Property Law: A Report From The Periphery (Or The Frontier?) To The Core, 30 Santa Clara High Tech. L. J. Online (2014), http://law.scu.edu/high-tech-law-journal/a-post-revisionist-look-at-chinese-intellectual-property-law-a-report-from-the-periphery-or-the-frontier-to-the-core/

* The Online Edition of the Santa Clara High Technology Law Journal is an independent scholarly legal publication founded in 1984 by the students of Santa Clara University School of Law. http://digitalcommons.law.scu.edu/chtlj/

† Andrew Jensen Kerr (B.A. Wesleyan 2005; J.D. Columbia 2011) is a Senior Lecturer at the Peking University School of Transnational Law.

†† J.D. & J.M. Candidate, Peking University (2015); B.S., Peking University (2011).

[1] U.S. Customs and Border Protection, Prohibited and Restricted Itemshttp://www.cbp.gov/xp/cgov/travel/id_visa/kbyg/prohibited_restricted.xml#TrademarkedandCopyrightedArticle (last visited Sept. 20, 2013).

[2] Peter K. Yu, Intellectual Property and Asian Values, 16 Marq. Intell. Prop. L. Rev. 329, 390 (2012).

[3] Matthew A. Marcucci, Navigating Unfamiliar Terrain: Reconciling Conflicting Impressions of China’s Intellectual Property Regime in an Effort to Aid Foreign Right Holders, 23 Fordham Intell. Prop. Media & Ent. L. J. 1395, 1428 (2013).

[4] See, e.g., Thomas K. Cheng, Convergence and its Discontents: A Reconsideration of the Merits of Convergence of Global Competition Law, 12 Chi. J. Int’l l. 433 (2012).

[5] Marcucci, supra note 3, at 1401.

[6] For example, the Chinese language is thought to have lacked a lexical for “rights” (quanli) until the nineteenth century. Id. at 1400-01.

[7] Peter K. Yu, Five Oft-repeated Questions About China’s Recent Rise as a Patent Power, Cardozo L. Rev. de novo 78, 103 (2013).

[8] Ken Shao, Zizhu Chuangxin and China’s Self-Driven Innovation: Calling for a Holistic Perspective, Cardozo L. Rev. de novo 168, 178 (2013).

[9] The first law to provide IP protection as a civil right was the Interim Trademark Charter of 1904. See Dong Baolin, Hede Yu Zhongguo Shangbiao Shiban Zhangcheng [Hart and the Chinese Interim Trademark Charter], 4 Shangbiao Tongxun [Trademark Communication] (1993).

[10] Zhang Xiuling, ed., Zhishichanquan Fa [Intellectual Property Law], 30 Beijing Daxue Chubanshe [Peking University Press] (2010).

[11] Zhang Yumin and Li Yufeng, Zhongguo Banquan Shi Gang [Abstract of the History of Intellectual Property Law in China], 1 Keji Yu Falue [Science, Technology and Law] (2004), at 43.

[12] Id.

[13] Id. at 44.

[14] World Trade Org., Protocol on the Accession of the People’s Republic of China, WT/L/432 (Nov. 10, 2001), available at http://docsonline.wto.org/imrd/directdoc.asp?DDFDocuments/t/WT/L/432.doc.

[15] Vincent Brodbeck, Using the Carrot, Not the Stick, 127 B. U. J. Sci. & Tech. L. 127, 137 (2013).

[16] Id. at 140-41.

[17] Shirley Liang, Tailoring a Safe-Harbor Standard for China: The Youtube Plus Standard, 41 AIPLA Q. J. 137, 164 (2013).

[18] The UN estimates that 70% of global counterfeits originate in China. See, e.g., Mark Turnage, A Mind-Blowing Number of Counterfeit Goods Come from China, Business Insider (Jun. 25, 2013), available at http://www.businessinsider.com/most-counterfeit-goods-are-from-china-2013-6.

[19] One notable development is that China is “perhaps the only country in the world to have established specialized intellectual property tribunals that hear civil cases in the first instance.” Marcucci, supra note 3, at 1415-16; Professor Martin Dimitrov describes these specialized tribunals as offering “the highest quality of judicial review that is currently available in China.” Id. at 1416; However, despite these courts, the empirical evidence suggests that foreigners make up only a small fraction of IP litigation in China. Id. at 1422-23.

[20] There is some ambiguity in the direct translation of the Chinese cognate “fa” to “law.” The authors instead prefer the more broadly applicable term “statute” here.

[21] Zhonghua Renmin Gongheguo Xianfa [Constitution of People’s Republic of China] § 67(2) (promulgated by the National People’s Congress on December 4, 1982).

[22] Id. at § 89(1).

[23] Zhonghua Renmin Gongheguo Renmin Fayuan Zuzhi Fa [Organic Law of the People’s Courts of the People’s Republic of China] § 33 (promulgated by the National People’s Congress on July 1, 1979, as revised).

[24] Zuigao Renmin Fayuan Guanyu Shenli Qinhai Xinxi Wangluo Chuanboquan Minshi Jiufen Anjian Shiyong Falue Ruogan Wenti de Guiting [Judicial Interpretation of the People’s Supreme Court on Issues Concerning the Application of Laws in Hearing Civil Cases Involving Infringement of the Right to Network Dissemination of Information], § 2 (China) (promulgated by the Judicial Committee of the People’s Supreme Court, Nov. 26, 2012, effective Jan. 1, 2013).

[25] Wang Zhiming, Xingzheng Fagui he Sifa Jieshi de Pengzhuang [The Conflict Between Administrative Regulations and Judicial Interpretations], 73 Zhongguo Jianchaguan [Chinese Prosecutor] 18, 18 (2008).

[26] See, e.g., Shao, supra note 8.

[27] Yu, supra note 7, at 80.

[28] Id. at 87.

[29] Shao, supra note 8, at 182.

[30] Thomas K. Cheng, A Developmental Approach to the Patent-Antitrust Interface, 33 Nw. J. Int’l L. & Bus. 1, 6 (2012).

[31] Xie Xianhui, Hongguang Zhi Zheng, Shui Ying Shengchu [Who shall win in the dispute of “Red Tin?”], 7 Dianzi Zhishi Chanquan [Electronic Intellectual Property] (2013), at 46-49.

[32] Id.

[33] An interesting etymological aside is that the the word for competition in Japanese, “kyoso,” is linguistically rooted in the charged concept of “quarrel.” This could be philological evidence for the conclusion that market economics is less organic for some cultures. See Cheng, supra note 4, at 468.

[34] Chen Xiang, Zhuzuoquan Fa Disanci Xiugai Shimo: Duochong Liyi Boyi Zhi Xinfa Nanchan? [The Third Revision on Copyright Law: Conflicts among different interest groups lead to the failure of the adoption of the new law?]Zhonghua Dushu Bo [Chinese Newspaper on Reading], (Mar. 6, 2013).

[35] Id.

[36] Id.

[37] Xu Ci, Zhuzuoquan Fa Xiugai Caoan Xianru Zhengyi Xuanwo (2) [The dispute arising out of the drafted revision of the Copyright Law (2)], Nanfang Zhoumo [Southern Weekend] (Apr. 20, 2012), http://tech.sina.com.cn/i/2012-04-20/15286992204_2.shtml.

[38] See Emily Gische, Repercussions of China’s High-Tech Rise: Protection and Enforcement of Intellectual Property Rights in China, 63 Hastings J. L. 1393, 1409-10 (2012).

[39] CNN, On China, Episode 12 Transcript: China’s e-commerce, (Sept. 19, 2013), http://edition.cnn.com/2013/09/19/world/asia/on-china-episode-12-transcript/.

[40] eMarketer, Ecommerce Sales Topped $1 Trillion in Sales for First Time in 2012, (Feb. 5, 2013), http://www.emarketer.com/Article/Ecommerce-Sales-Topped-1-Trillion-First-Time-2012/1009649.

[41] Huang Xu ed., Tianmao Zaojia Xilie Baodao (3) [Series on Counterfeit Products on Tianmao (3)], Diaonaobao [Computer Journal], 24 (Jun. 24, 2013), http://www.icpcw.com/Information/cycf/News/3190/319070.htm.