Intellectual property laws in China

China is well known for a business environment that carries significant risks of counterfeiting and infringement of intellectual property (IP) rights. For this reason, the US has put China on its Priority Watch List of countries having "serious intellectual property rights deficiencies." Nevertheless, the Chinese Government is concentrating on improving IP law and its enforcement, including the introduction of legal and regulatory incentives for Chinese companies to file patent applications. Improvements include aligning the relevant legislation to the minimum WTO requirements of the Trade-Related Aspects of Intellectual Property (TRIPs) protocol, which outlines general standards for the enforcement of IP rights. Overall, China’s legal framework for IP protection meets international standards, though implementation and enforcement of laws are areas of concern.

Australian businesses need to have in place formal legal protection of IP rights well before entering the Chinese market, including a well-researched and executed strategy to protect their IP. Be aware that the process of registering IP rights in China is more expensive and far slower than in Australia. For example, trademarks take 18 months to be granted, design patents six to eight months and copyright recordal procedures three months. Another critical difference is that China has a first-to-file system requiring no evidence of prior use or ownership, leaving registration of popular foreign marks open to third parties, who register famous marks ahead of the legitimate owner. There have been cases of well-known Australian companies whose brand had been registered in China by an unaffiliated Chinese party even before the firm considered entering the Chinese market. It can be difficult, time-consuming and expensive to recover these marks, so it is far better to register trademarks early. This should not in itself distract potential investors from the potential of the Chinese market. Risks, such as IP theft, can be managed, while the regulatory processes in China are improving.

Clearly, the administration and enforcement of IP laws in China are quite different from that operating in Australia, and enforcement of IP rights in the former are possible through both administrative and judicial avenues. But unless foreign entities have a residential or business address in China, applications must be filed through Chinese agents or attorneys.

Foreign investors can register IP in China for trademarks, patents, designs and copyright. However, each of these is administered by a different government body. The primary law in China pertains to copyright. This protects copyrighted works of foreigners that are either first published in China or in countries that are signatories to the World Intellectual Property Organisation (WIPO) copyright protection treaty, which includes Australia. Apart from the Copyright Law, other key laws are the Trademark Law and the Patent Law, with customs authorities also playing a role in China’s enforcement of IP laws. 

Registering IP rights ahead of entering the Chinese market is essential because without doing so, an Australian business would be unlikely to be able to enforce them later. There are various methods for registering IP, depending on its type. The Australian Government’s IP Australia website outlines the following information for Australian businesses operating in China:

Trademarks

  • Trademark applications must be filed with the Chinese Trademark Office (CTO), which is part of the State Administration for Industry and Commerce (SAIC).
  • It is essential to conduct a trademark search prior to registration.
  • The trademark should be registered in both Mandarin and English.
  • Other related rights, such as domain names and company names, should also be secured through registration.
  • It is advisable to file trademark applications in China as soon as possible due to the ‘first-to-file’ rule.
  • Three-dimensional shapes and colour combinations can be protected as trade marks in China. Other nontraditional marks, such as sounds and smells, are not yet able to be registered, although extending protection to these marks is currently being considered.
  • Enforcement of a trademark without registration is possible, although the process tends to be more expensive and less predictable.
  • Since 2004, customs recordation of IP rights has offered cross-border measures to help protect IP.
  • Trade mark registrations may be removed from the register if they are not used for three or more consecutive years after registration.

Patents

  • The State Intellectual Property Office (SIPO) is responsible for administering patents.
  • Two forms of patent protection are available in China: invention patents (equivalent to Australian standard patents, with a term of 20 years) and utility models (for lower level inventions, with a term of 10 years). Inventors may apply for both patents for the same invention.
  • The patent examination process in China tends to be longer than in Australia.
  • Certain types of subject matter are not able to be patented in China.
  • SIPO regional offices provide administrative enforcement.
  • Registration should be made through a registered patent agent in China.

Designs

In China, designs are registered through SIPO. Protection is available for 10 years. Known as design patents, they do not undergo substantive examination and can be obtained relatively quickly. 

Copyright

Unlike Australia, it is possible to register copyright in China. The National Copyright Administration Office is responsible for administration of copyright. No registration is required but registering copyright with the authorities is advisable.

Trade secrets

  • Trade secrets are technical or management information that is unknown to the public, but which is of practical value and can bring economic benefits to the rightful party. Product and brand elements such as unique names, packaging and ornamentation are also perceived to be trade secrets.
  • In China, trade secrets do not require registration.
  • The principal law governing trade secrets is the Anti- Unfair Competition Law.
  • The principal administrative enforcement agency is the Fair Trade Bureau of SAIC. 

Plant varieties

Plant varieties are protected in China for a period of 15 or 20 years, depending upon the type of plant. 

Technologies

Since October 1, 2009 China has placed restrictions on the cross-border transfer of certain technologies.

Want to learn more? Explore our other China information categories or download the China Country Starter Pack.