China: Why China Matters #3

China matters because it continues to see significant improvement in the development of intellectual property ("IP") right protection. In 2017, the country received 1.38 million invention and utility patent applications, a 14.2 percent increase from the previous year.

According to Mr. Changyu Shen, Commissioner of the State Intellectual Property Office ("SIPO"), 744,000 patents of the total applications have been examined and concluded. In addition, China received 51,000 patent applications under the Patent Cooperation Treaty in 2017, representing a 12.5% increase from the previous year.

China matters because the number of invention patents in mainland China reached 1.35 million, meaning that for every 10,000 people, there are 9.8 patents on average. About 67,000 administrative patent cases were filed in 2017, increased by 36.3% from the previous year.

China matters because it remains a country which receives the most trademark applications worldwide in 16 consecutive years. In 2017, the number of trademark applications reached 5,901,600, a 54.96% increase compared with the previous year.

Such data show that more and more IP owners have become aware of the significance of IP right registrations in China. China IP law is a first-to-file system, which means that whoever files registration first will become its lawful owner. For example, when a foreign company enters the Chinese market, and fails to register its trademark timely, some other person or entity beats it to registration, the company will be precluded from registering the mark, and risk paying damages for continued use of the mark. The absence of a strategic IP protection portfolio could cost severe consequences for foreign businesses.

A report issued by Frontier Economics, an internationally recognized economics research firm, indicates that the global economic value of counterfeiting and piracy could reach US$ 2.3 trillion by 2022. The report further projects that the negative impacts of counterfeiting and piracy will drain US$ 4.2 trillion from the global economy and put 5.4 million worth of legitimate jobs at risk by 2022.

Why China matters? It matters because 92% of counterfeits come from China, and if China improves its fight against counterfeiting by just a few percentage points, billions of dollars can be saved of the global economy.

The State Administration for Industry and Commerce prosecuted 21,000 trademark infringement and counterfeiting cases in the first 11 months of 2017. China's General Administration of Customs is helping to establish a standard framework for cross-border e-commerce to regulate the sector. Further, the Head of the National Leading Group on the Fight against IPR Infringement and Counterfeiting, Vice Premier Wang Yang, stated that in 2018, authorities will concentrate on the fight against counterfeiting and IPR infringement by monitoring online counterfeiting sales, cleaning up rural markets, ensuring further adoption of authentic software, improving e-commerce laws by increasing penalties for infringement, and speeding up the implementation of the "credibility system."

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