Introduction

Despite tremendous progress in the implementation of institutional Intellectual Property Rights (IPR) protection, China, one of the world's largest modern economies, still has problems enforcing and complying with IPR laws. Due in part to its economic might and ambition as well as its significance for the global economy, China has become a significant player in the IP world during the past few decades. On the other side, Chinese businesses and institutions have repeatedly been accused of violating intellectual property. Although some academics disagree with the severity of piracy in China, it has been noted that China is "both the greatest manufacturer and biggest consumer of counterfeit products.

China has increased its vigilance over its own intellectual property rights in the interim. According to a recent Financial Times report, the Chinese government altered IP-related legislation in 2019 and 2020. For example, the burden of proof for defendants under patent law was lowered, and the maximum punishments for copyright law violations were increased. Between 2016 and 2020, the number of IP-related litigation in China more than tripled. As opposed to dealing with potential infringements by Chinese enterprises, as has historically been the case, foreign businesses in China increasingly need to be ready to face legal action from Chinese rivals. For instance, two Chinese corporations filed a trademark action against Ryohin Keikaku, a company with headquarters in Tokyo. (Alfrod, 1995) Despite the fact that the Japanese corporation prevailed, the legal proceedings took two and a half years. On the other hand, Chinese businesses operating abroad have improved their litigation management skills. The legal battle between French fashion brand Chanel and Chinese technology corporation Huawei is a well-known example. When Huawei sought EU trademark protection for its computer gear in 2017, Chanel objected, arguing that the two companies' logos were too similar. (BBC, 2021) The EU General Court determined that "the distinctions in appearance are substantial," and as a result Chanel lost against Huawei in a protracted trademark dispute.

The World Intellectual Property Rights Organization (WIPRO), which China joined in the 1980s, is where China's current IPR laws were first established. The Trademark Law was enacted in 1982, followed by the Patent Law in 1984, and the Copyright Law in 1990. The WTO accepted it as a member in 2001. As a result, the Paris Convention for the Protection of Industrial Property, beyond the Berne Convention for the Protection of Literary and Artistic Works and the Madrid Agreement for the International Registration of Trademarks, to which China had acceded during the 1980s, the TRIPS developed as the pertinent international framework shaping legal regulation of IPR in China. Laws relating to IP that were already in place were adapted accordingly. Nevertheless, the enforcement of IPR regulations has repeatedly come under fire as being somewhat lax, for instance, in comparison to historically neighbouring territories like Hong Kong or Singapore.

IPR protection and enforcement generate both benefits and costs, and the balance seems more favourable for more advanced economies because they generally have more firms relying on (highly) creative rather than primarily imitative business activities and tend to be more active exporters of goods.. (BBC, 2021)

Chinese consumers' perceptions regarding fake and pirated goods (particularly in luxury goods, illegal software, and entertainment products) are the subject of an expanding body of research. This research primarily focuses on the recognition of ethical, moral, and socio-demographic precursors of views and purchase motives because customer perceptions and behavioral objectives have a significant impact on the demand aspect of counterfeiting.

From Policy to Practice: How Trademark Counterfeiting Highlights Failed Enforcement Measures

As is evident, throughout China's brief history of development, the importance of intellectual property rights has increased, with national policy serving as the norm for preserving innovation and fostering progress. However, this part seeks to show how local enforcement, where counterfeit manufacturing and patent theft still happen, is not taken into account when developing policies.

The illegal, deliberate use of another brand's trademark to market a comparable, but frequently inferior, product is known as trademark infringement. Contrary to popular belief, counterfeit goods can have a detrimental impact on a variety of factors, including local economies, consumer health, and even the funding of other international criminal organizations and other crimes. (Kennedy, 2020) This section looks at Chinese intellectual property rights through the prism of trademark counterfeiting for two reasons. First, products that are probably counterfeit are frequently noticeable on e-commerce sites because they copy the design of well-known brands. Second, as shown in Figure 1, trademark infringements account for about one third of all intellectual property infringements suffered by US businesses.

It is naturally difficult to comprehend the precise figures underlying the counterfeit trade because of its clandestine and criminal character. Nevertheless, figures derived from goods inspections demonstrate that roughly 90% of all counterfeit goods come from China. According to these figures, China produces counterfeit items worth more than $400 billion. Despite the fact that the illicit industry has risen by more than 10,000% since 2000, this wasn't always a serious problem. Even though no metric is completely dependable on its own, these figures show how China's counterfeiting industry has expanded into an unmatched colossus over the past 20 years (Administration, 2016).

Enforcement of law in China has the ability to pinpoint precisely where these firms are located, in addition to the Chinese judiciary being aware of the places where counterfeiting occurs. Individual sellers must upload company permits with the registrant's name, the business name, and its address for Chinese-facing third-party e-commerce marketplaces like Taobao or JD.com. Frequently, this data is openly accessible, enabling anybody to research the company. Figure 2 displays a business license for a distributor called "Lowest Price Women Bag" that likely sells fake handbags. It is actually easy to identify a firm, its owners, and the operating location in an era when the Chinese government is requesting more data from its citizens than ever before.

Although the extent, value, and extent of the counterfeit products trade are enormous, it frequently requires little effort to deconstruct. There are various obstacles to reporting when companies discover that their products have been the target of counterfeiting in China. Due to the fact that Chinese law enforcement rarely takes intellectual property rights allegations seriously, it is common for successful enterprises to launch their own private investigations by working with Chinese partners to obtain information. The firms will then give the evidence to local law authorities after they have gathered enough of it. However, even if sufficient evidence is gathered, these situations frequently do not receive the attention they merit. (Malmstem, 2019)

From a National Perspective on the Communist Party, How Does Intellectual Property Influence Economies?

Sustaining political equilibrium, preserving sovereignty over territory, and sustaining economic growth are the three key goals of the People's Republic of China, according to Chinese State Councilor Dai Bingguo in 2008. For its population to have jobs, China must sustain a high GDP growth rate, typically between 6% and 6.5%. The government may organize its economy, maintaining citizens engaged and securing regime acceptance by focusing on this range each quarter using a balance of state-owned enterprises (SOEs) and market methods. When this figure dips, concerns about instability are raised since a slowing economy is expected to reduce public support for the administration. Growth in the economy is therefore essential to the Communist Party. (Dai, 2009)

Although rules governing intellectual property rights safeguard and encourage innovation, they also put a stop to the manufacture of counterfeit goods. One can observe that illicit items have a major impact on the country's trade sector if one considers that China exports counterfeit goods worth about $400 billion and that the country's overall export value is $2.4 trillion. The Communist Party must weigh the potential for long-term growth facilitated by intellectual property rights against the reality of immediate losses that stringent enforcement would trigger while deciding on intellectual property rights legislation. When collaborating with foreign organizations who favor stronger rules, like the United States, this appears to be in contradiction. Even while the US exerts pressure on China to enforce intellectual property laws more strictly, the Chinese government cannot permit economic hardship, especially in order to placate foreign parties.

To be clear, this does not imply that the Chinese government has not taken any action to uphold intellectual property rights, though. The National People's Congress first recognized the rising demand for judicial bodies dedicated solely to disputes involving intellectual property rights in 2014. Numerous accusations demonstrated how municipal and regional legal systems frequently disregarded matters involving intellectual property because they had adequate training in this area. As a result, Beijing, Shanghai, and Guangzhou now have specialized tribunals for intellectual property. After receiving widespread recognition for its outstanding performance, this system expanded to include over 20 specialized courts and tribunals, notably even an appellate IP court. With at least ten years of experience in intellectual property law, these courts' judges are widely regarded as some of the best in China. This has had a substantial impact on the number of court proceedings involving infringements of intellectual property in China each year. Despite assertions that the specialist IP courts had exhausted their resources for legal cases, both 2018 and 2019 saw identical figures. (Smith, 2020)

Conclusion

In less than 50 years, the People's Republic of China has developed an intellectual property framework that enables it to continue operating internationally. China has shown a persistent interest in its intellectual property system, changing its laws at least once every ten years, while their implementation falls short of international standards. There are several claims that Chinese corporations have stolen technology from US companies, and China has emerged as the world's leading producer of counterfeit goods. Understanding the issue from the perspective of actor analysis might offer deeper insight into what drives effective enforcement, which can be challenging for US officials and brand owners. Local politicians strive for steady economic success and measured development, aspects of a region that intellectual property enforcement could impede, while national officials must strike a balance between long-term and short-term economic stability. Finally, the viewpoint of the Chinese public sheds more light on the common acceptance of fake goods. (Zhou, 2019)

Intellectual property laws place a strong emphasis on intangible assets, giving creativity and invention value. Although China has developed its policies gradually, the country's system is still far from ideal. However, the international community may continue to hold China responsible for preserving intellectual property by continuing to use international institutions and economic statecraft. However, these strategies require the addition of relationship-building, public awareness campaigns, and intercultural understanding. Only after addressing these crucial issues can China's attitude toward intellectual property improve, enabling both domestic and foreign businesses to operate without worrying about theft or copying.

Author : Pranav Kashyap, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.

Bibliography

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