CHINESE INTELLECTUAL PROPERTY INSTITUTIONAL REFORM

In August 2018, China’s State Intellectual Property Office (SIPO) was renamed the National Intellectual Property Administration (CNIPA). It was reorganized under the new government body the State Administration for Market Regulation (SAMR).

SAMR was formed by the incorporation of several and currently separated administrative bodies. The following agencies or functions will be integrated under SAMR:

• the State Administration for Industry and Commerce (SAIC) (to be dismantled);

• the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) (to be dismantled);

• the China Food and Drug Administration (CFDA) (to be dismantled);

• the pricing regulation probe and anti-monopoly enforcement function of the National Development and Reform Commission;

• the anti-monopoly enforcement function against concentration of business operators that was originally undertaken by the Ministry of Commerce; and

• the Office of the Anti-monopoly Committee under the State Council.

The new CNIPA will integrate the registration and administrative adjudication responsibility for patents, trademarks and geographical indications. As a result of the reform, CNIPA will extend the current SIPO’s responsibilities in the administration of patents (currently with SIPO) to the administration of trademarks (currently charged upon SAIC) and geographical indications (currently with CFDA). Therefore, CNIPA will be responsible for the registration of patents, trademarks and geographical indications as well as issuing the corresponding administrative decisions. It will also provide guidance/direction for the enforcement of patents and trademarks at administrative level. In practice, the current structure of the administrative enforcement may be drastically reformed.

In order to coordinate with the Reform, two regulations were released by China’s State Commission Office for Public Sector Reform (SCOPSR) in September:

• On September 10, 2018, the “Regulations on the Function, Organisational Structure and Staffing of the State Administration for Market Regulation” (SAMR Regulations) were released and came into force retroactively on July 30.

• On September 11, 2018, the “Regulations on the Function, Organisational Structure and Staffing of the National Intellectual Property Administration” (CNIPA Regulations) were released and came into force retroactively on August 1.

The most prominent change in the restructuring of the SIPO to CNIPA is the integration of registration and administrative adjudication of patents and trademarks under one roof. This will align China with most other IP jurisdictions worldwide. The CNIPA will also oversee trademark and patent enforcement matters, which are to be undertaken by a market supervision comprehensive enforcement team under the SAMR.

This move will allow the administration to better allocate its resources and manpower to improve efficiency and create a consistent adjudication and enforcement mechanism. Brand owners will also benefit from the alleviation of the procedural burden.

On the CNIPA website, the following functions were already incorporated:

• online portals for patent filing;

• the patent search and analysis database;

• the patent examination inquiry system;

• the trademark e-filing system;

• the trademark search database; and

• the geographical indication database.

Although visitors to these portals are still being directed to the same pages as before, it is expected that the databases will be integrated so that information is more easily accessible to the public in a more user-friendly way. The SAIC has vowed to facilitate trademark registration procedures and improve trademark registration efficiency since November 2017. In its three-year plan for 2018 to 2020, the agency should shorten the deadlines for trademark prosecution procedures. It can be expected that the database integration will help with this process.

I. Integrated registration procedure for geographical indications

Before the restructuring of the SIPO, the protection for geographical indications was managed by the following governmental agencies in three independent systems:

• geographical indication certification marks or collective marks under the SAIC;

• geographical indication products under the AQSIQ; and

• geographical indication agricultural products under the Ministry of Agriculture and Rural Affairs (previously known as the Ministry of Agriculture).

The three systems are governed by laws and regulations at different levels, which has led to certain overlaps and conflicts that have increased the cost of registering and enforcing geographical indications.

Although protection for geographical indications agricultural products remains under the scrutiny of the Ministry of Agriculture and Rural Affairs, in practice, brand owners often register their indications to SAIC and AQSIQ.

With the restructuring of the SIPO, the SAIC route and the AQSIQ route will be integrated under the framework of the new CNIPA. It is likely that, for the sake of lowering administrative costs and streamlining administration, the two routes will eventually become one. This would simplify the registration and protection of geographical indications in China and effectively alleviate the procedural and financial burden for brand owners seeking to register geographical indications.

II. Integrated IP enforcement team

The market supervision comprehensive enforcement team, which answers directly to the SAMR, will take over the administrative enforcement responsibilities of CNIPA.

For example, in an enforcement case against a counterfeit product that infringes both a trademark and a patent, under the previous system the complaint was filed separately with the SAIC and the SIPO. Such practice increased the administrative burden and costs for IP owners and often resulted in inconsistent administrative penalties.

With the restructured CNIPA and its integrated enforcement team, IP owners will only need to resort to one governmental agency to enforce their trademark or patent rights. Under the CNIPA’s guidance, the market supervision comprehensive enforcement team will be well placed to unify the criteria for establishing infringement and the administrative penalty to be imposed on infringers. Although it may take some time for the team to get up to speed, in the long term, this new approach will benefit brand owners in providing enhanced and consistent enforcement programs.

III. Integrated resource for anti-monopoly enforcement

Before the institutional reform, the enforcement of anti-monopoly matters, placed under the guidance of the Anti-Monopoly Committee of the State Council, was handled by:

• the Ministry of Commerce (MOC) Anti-monopoly Bureau;

• the National Development and Reform Commission (NDRC) Price Supervision and Inspection and Anti-monopoly Bureau; and

• the SAIC Anti-monopoly and Anti-unfair Competition Enforcement Bureau.

In the future, even though the Anti-monopoly Committee of the State Council will not be dismantled, the above divided duties will be consolidated under the SAMR, including:

• the anti-monopoly law enforcement duties of the SAIC;

• the pricing regulation probe and anti-monopoly law enforcement duties of the NDRC; and

• the anti-monopoly law enforcement duties against concentration of business operators under the MOC.

The establishment of a unified anti-monopoly law enforcement team will solve the problems of multi-sectoral enforcement, form a joint force for anti-monopoly administrative enforcement and increase the consistency, professionalism, authority and stability of enforcement involving IP matters concerning anti-monopoly and unfair competition. Such measures will also be conducive to the protection of IP rights.

IV. SAMR Regulations

The SAMR Regulations outline the following IP rights (IPR)-related functions:

Market Regulation Enforcement: overseeing the integration and building of enforcement teams at local AMR offices; promoting integrated market supervision; and orchestrating major enforcement programs;

Anti-Monopoly Enforcement: coordinating and promoting the execution of competition policy; overseeing fair competition probe; conducting anti-monopoly probe against concentration of operators, as well as anti-monopoly enforcement against monopoly agreement, abuse of market dominance position, and abuse of administrative power in eliminating or restricting competition; and coaching Chinese businesses in coping with overseas anti-monopoly suits; and

Administration of Market Order: supervising and regulating market transactions, Internet commodity trading and the services thereof; organizing and overseeing the enforcement against pricing offenses or violations, unfair competition, illegitimate pyramid scheme or multi-level marketing, trademark or patent infringement, manufacturing or sale of counterfeits or shoddy goods; and supervising advertising industry and advertising activities.

These functions are expected to be fulfilled by the agency’s bureaus: The Enforcement Inspection Bureau, the Anti-Monopoly Bureau, the Internet Transaction Administration Bureau, the Price Probe & Anti-Unfair Competition Bureau, and the Advertising Administration Bureau.

According to the regulation, the Enforcement Inspection Bureau is tasked to organize and oversee investigations and enforcement against major cases of national implication or which have trans-provincial/municipal geographical reaching. Brand owners are advised to approach the Bureau if they seek to initiate nationwide or trans-provincial/municipal enforcement actions.

IPR enforcement against trademark or patent infringement, counterfeiting and unfair competition also falls under the jurisdiction of the Enforcement Inspection Bureau, but given the top-down nature of the institutional reorganization, a nationwide AMR network needs time to be completely formed. The Beijing AMR was set up on November 16, 2018. The establishment of other AMRs is still in progress. This could be problematic. The IPR enforcement function of the CNIPA and local IP offices (IPOs) has been de facto transferred to the SAMR and its local offices. However, in the regions where there is no local AMR, brand owners will need to resort to the local IPO and the Market Supervision and Administration Office (equivalent to the local Administration of Industry and Commerce) with respect to functions to enforce their IPRs.

The Anti-Monopoly Bureau, integrating the Anti-monopoly Bureau of the Ministry of Commerce (MOC), the Price Supervision and Inspection and Anti-monopoly Bureau of the National Development and Reform Commission (NDRC), and the SAIC’s Anti-monopoly and Anti-unfair CompetitionEnforcement Bureau, will be the nation’s anti-monopoly watchdog, acting as the executive organ of the Anti-monopoly Committee of the State Council.

V. CNIPA Regulations

The CNIPA Regulations outline, inter alia, the following functions, among others:

Drafting and Execution of National IPR Strategy: formulating major policies, initiatives and developing plans for building China into an IP powerhouse; and developing and executing administrative policies and mechanism to promote IP innovation, protection and utilization;

IPR Protection: devising and implementing protection mechanisms for trademark, patent, geographical indications (GIs), and layout design of integrated circuits; drafting laws, regulations, and departmental rules, and overseeing the execution thereof; and overseeing trademark and patent enforcement and supervising IP dispute resolution, enforcement aid, and dispute mediation at local levels; and

Examination, Registration, and Administrative Adjudication of IPR: trademark registration, patent examination, and registration of layout design of integrated circuits; re-examination, invalidation, and other administrative adjudication of trademarks, patents, and layout design of integrated circuits; as well as the drafting and execution of integrated GI assessment mechanisms.

The CNIPA Regulations explicitly task the agency to shorten the IP registration cycle and to enhance examination quality and efficiency, as well as to focus on trademark bad faith filings and unproductive patent applications. Given that the China Trademark Office (CTMO) and the Trademark Review and Adjudication Board (TRAB) have been incorporated into the CNIPA, the application and granting of trademarks, patents, layout designs of integrated circuits and GIs is under the independent governance of the CNIPA.

The CNIPA coaches the trademark and patent enforcement practice, sets criteria for the affirmation of trademark and patent rights and for the ascertaining of trademark and patent infringement and oversees the execution thereof, as well as sets parameters for the inspection, authentication and other practices in trademark and patent enforcement. It seems that the CNIPA is expected to devise a set of criteria and practice manuals on IP infringement, which the SAMR will be executing in its enforcement actions.

Copyright issue will not be managed by CNIPA. The copyright sector has been removed from the governance of the State Council and put under the direct administration of the Communist Party. The State Administration of Press, Publication, Radio, Film and Television of China (SAPPRFT) will be dismantled and its responsibilities in censoring news and publications will come under the publicity department of the Communist Party. As part of the SAPPRFT, the General Administration of Press and Publication and the National Copyright Administration (which are one agency with two identities) will still be incorporated in the publicity department. The publicity department, which will govern copyright registration, the import of publications, supervision and administration of the contents and quality of publications, will no doubt have more control over the content. As to the administrative enforcement of copyrights, this is likely to be left to the cultural market administrative enforcement teams nationwide.

The reorganization of CNIPA has generally been received positively. Unification of the administration and enforcement of patents, trademarks and geographical indications under one single governmental agency will be beneficial to brand owners.

Disclaimer: This article was first published on LinkedIn by Daniel Albrecht on https://www.linkedin.com/pulse/chinese-intellectual-property-institutional-reform-daniel-albrecht/

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