Note: The following is an edited translation of a commentary from the Chinese-language "Commentaries on International Affairs."
At the ongoing seventh round of high-level economic and trade consultations between China and the United States in Washington D.C., the two countries have achieved progress in such areas as balance of trade, agriculture, technology transfer, protection of intellectual property rights (IPR) and financial services. They are reaching more and more consensus on protecting IPR. The reason is quite simple: IPR protection is an inelastic demand of any country’s innovation and development. As the world’s top two economies, China and the U.S. share at least three common interests in strengthening IPR protection.
First of all, IPR protection is a common demand from China and the U.S. in order to boost their economic competitiveness. Some liken intellectual property rights to a bridge linking innovation and the market. The relationship between the three aspects is even closer now as the world faces a new round of sci-tech and industrial revolution.
Since China began reform and opening-up four decades ago, it has amended a series of laws and regulations, including laws on patent, trademark and copyright, established special courts in IPR protection, and restructured the National Intellectual Property Administration. By the end of 2018, the Chinese mainland had recorded over 1.6 million invention patents, a rise of 18.1 percent year on year, averaging 11.5 patents for every 10,000 people. For the first time, China broke into the top 20 in the Global Innovation Index rankings in 2018 published by the World Intellectual Property Organization. China’s added value of patent-intensive industries contributed 12.4 percent to its GDP.
China is a major country in IPR protection, but it’s still not a powerful country. Problems still exist in protecting patents, such as difficulties in producing evidence, high costs and low compensation. Although China has been the world’s top invention patent applicant for seven consecutive years, the quality of patents still lags behind those of other countries. If those problems are not solved, China will not be able to gain a momentum to expand opening-up and boost innovative development.
One of the important ways to enhance IPR protection is to deepen international cooperation. The United States is a world-leading power in innovation and also towers above all countries in terms of legal system and the execution of IPR protection. In 2017, China paid the U.S. a total of 7.13 billion U.S. dollars for using American intellectual property. Facing the new round of sci-tech revolution, the U.S. hopes to maintain its leading status in innovation and expand markets by enhancing IPR protection. As such, in recent years it has been included in the list of goals for Sino-U.S. dialogues, including the trade talks currently underway in Washington.
Secondly, IPR protection has become a basic part of the international economic and trading system. One of the outstanding characters of modern international trade is economic globalization and the knowledge economy. As the world’s top two economies and major countries in trade, China and the U.S. share common interests in IPR protection. As China further expands its opening-up process, it must align with the standards of the international trading system more accurately. China plans to impose punitive compensation upon patent infringement for the first time in its revised Patent Law. The Supreme People’s Court has established IPR courts nationwide. These measures show that enhancing IPR protection is not only the internal demand of China’s innovative development, but also an initiative China is actively taking to expand international trade.
To make its companies more competitive, the U.S. government has elevated IPR protection to its trade policies. Since 1975, U.S. companies have filed over 300 cases involving patent infringement and business secrets against foreign companies at the U.S. International Trade Commission. More than ninety percent of these cases involve IPR infringement. Strengthening IPR protection is a key demand of the United States for all its trade partners, including China. These demands have been or are being implemented by China.
Thirdly, IPR protection between China and the United States should be strengthened given the size of their trade. Currently, the United States is China’s largest export market and 6th largest source of imports. China is in turn the United States’ fastest growing export market. Since they are so closely linked, it is natural that they have higher demands for each other in the field of IPR protection.
The United States has called on China to strengthen protection of the IPR of U.S. companies operating in China. This coincides with the goal of China’s own reform and opening-up drive. William Mansfield, Director of Intelletual Property at U.S. company Abro Industries Inc. said that his company has had many successful cases in IPR protection in China, which shows the Chinese government takes this issue very seriously and appreciates contributions foreign companies make in boosting the local economy.
Meanwhile, as more and more Chinese companies “go global,” China is hoping the international community will better protect the IPR of Chinese firms. According to the latest list on the number of patents applied in the United States released by the IFI Claims Patent Services, Chinese companies were granted over 12,500 patent claims in the United States in 2018, an historic high with a 12% increase over the year before. As Chinese companies galvanize their innovative capacity, they expect the U.S. to make greater efforts in protecting their intellectual property rights.
Trade teams from China and the United States are racing against time in order to strike a deal in Washington. They have been in search of common ground in IPR protection, which is a good example of how they can deal effectively with their existing differences. As long as they set their eyes on mutual and global interests and expand their consensus, they will find themselves closer to reaching a mutually beneficial, win-win agreement.