China as a Member of the TRIPs Agreement: on the Path of Implementation Essay

The multilateral trading system in the world has been governed by the General Agreement on Tariffs and Trade (GATT) for more than 50 years . The GATT was commenced in 1947 . Its implementation became a powerful spur to advancement of world market due to promotion of free trade which contributes greatly to world economic growth and sustainable development. The World Trade Organization (WTO) became the successor of the GATT being established by the Uruguay Round – the last trade round launched more than fifteen years ago. It was â€Å"the most ambitious thus far, and some of its agreements are still being implemented†. Tariffs reduction had encompassed much more world economy sectors than during the previous rounds. The documents adopted by the Uruguay Round established that quantitative restrictions would be actually eliminated by 2005. The round has developed regulations of the international trade applying to areas being earlier outside of the adequate control or coped by week rules. Especially it concerns the trade–related intellectual property rights (TRIPs). In the course of the Uruguay round developing countries played a more active role than in previous rounds and adopted the same WTO agreements as other members â€Å"as part of the round’s single undertaking – nothing is agreed until everything is agreed†. To date the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement) seems to be the most universal international covenant on intellectual property rights (IPRs) regulation. It was â€Å"an integral part of the Agreement establishing the WTO, comprising Annexe 1C to that Agreement† and replenished the basic World Intellectual Property Organization (WIPO) Conventions with essential liabilities in the framework of WTO subjects . This agreement implemented new rules presupposing both advantages and expenses for the participants of international markets. Its implementation undoubtedly constitutes a task far from being easy, especially for less developed countries. The TRIPs Agreement imposes certain obligations upon the latter to adopt legislation that protects patents for inventions. As one of the multilateral trade agreements, it is binding on all members and hence also a condition of membership for countries which have not yet joined the WTO. Such a condition is a significant one for countries seeking to join the WTO such as the People’s Republic of China. Here we will explore this country’s involvement into the process of adjusting its laws to conform to TRIPs, especially in the field of patents’ protection, evaluate its successes and faults on this path, consider the impact of those changes and make the conclusions concerning possible ways of acceleration and optimization of implementation process. The Obligations of the TRIPs Agreement Members The TRIPs Agreement came into effect in 1995. It entailed standards â€Å"concerning the availability, scope and use† of IPRs in all categories of intellectual property, namely copyright and related rights, trademarks, geographical indications, industrial designs, patents, layout-designs of integrated circuits, protection of undisclosed information . Article 27 (Part II Section 5) of the TRIPs deals with patentable subject matter, stating the spheres of patents’ availability in member countries (hereinafter referred to as a member): Patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. [†¦] Patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. The next article determines the exclusive rights which should be granted upon the patents issued in a member. It imposes on the member the obligation to forestall third parties from using neither the patented product nor the patented process anyhow without its owner’s permission. For his turn, the owner has the right to assign or transfer the patent. What is an important aspect for the developing countries, the member has to inquire the patent applicant about the information as to the applicant’s corresponding foreign applications and grants to prevent patents duplication. Exemption from such obligation in regards to cross–border use cover only very specified cases as for example those of â€Å"a national emergency or other circumstances of extreme urgency or [†¦] of public non-commercial use† (Article 31 (b)) subject to prompt informing of the right holder. The competent authority of the member should have power to consider applying such exemption to certain cases and possible duration of the above mentioned circumstances. Officially permitted legitimacy of any decision relating to the permission of such use should be subject to judicial review or other independent review by the competent authority of the member. In cases when the permission to utilize the patent is obtained, the member is to provide the following prerequisites: (i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent; (ii) the owner of the first patent shall be entitled to a cross-license on reasonable terms to use the invention claimed in the second patent; and (iii) the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent (Article 31 (l)). Upon Article 32 the member has the obligation to make available the opportunity for legal review of any decision made on recalling or forfeiting the patent. In the TRIPS agreement there is a very accurate definition of duration of the patent’s protection – twenty years from the date of registration (Article 33).   In the cases of infringement of the patent owner’s rights as regards to patents for processes leading to generation of the product the agreement calls for the members to empower the corresponding legal authority to require the proved information about the difference between such process and those for manufacturing the identical product (Article 34). For the realization of the above concerned obligations the TRIPS agreement anticipates specified enforcement procedures which should be available in the members to strive against infringements of IPRs. Those include â€Å"expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements† which are to be applied by means excluding â€Å"the creation of barriers to legitimate trade and to provide for safeguards against their abuse (Article 41.1)†. The Developing Countries Advantages upon the TRIPs Agreement The main motives behind the move of the governments of many nations, and in particular, of developing countries, to enter the TRIPs Agreement had been, firstly, the fact of steady raising in developing countries’ exports of industrial goods into markets where earlier only developed countries were present which, in turn, made the latter to â€Å"rely more heavily on their comparative advantage in the production of intellectual property†; and, secondly, rather high expenditures involved by high–tech companies in different countries for research, innovation and development of know–how spurred them to try to find â€Å"international protection of intellectual property rights†. In general, the WTO agreements apply several instruments to make available some advantages to developing countries. Among them there are distinguishing of their interests without imposing any officially authorized obligations upon them; reducing their liabilities on some agreements in comparison with those of developed countries (which let them to protect their domestic markets more effectively). Some of the WTO agreements permit them longer implementation periods for certain obligations. In many WTO disciplines there are agreements encompassing provisions for technical assistance from developed countries to developing countries. All those are aimed at facilitation of transitional processes in the latter and giving them a chance to overtake the former. Like other parts of the WTO agreement, the TRIPs agreement grants the substantial preference to developing countries – they had four years for implementation of the agreement provisions (until the beginning of 2000), moreover this term became subject to prolongation to ten years (until 1 January 2005) for technology sectors where no previous IP protection accorded. The preferences for developing countries look adequate enough, and it is obvious that developing countries would derive benefit from implementation of efficient IPRs protection stipulated by the TRIPs agreement. Obtaining higher levels of intellectual property protection should lead to larger innovation globally from which all gain. It will stimulate attraction of more foreign direct investment (FDI) and technology transfer in view of increasing foreigners’ confidence in the products made in developing countries. But the process of implementation is costly too. The necessary costs of course vary depending on the member’s phase of development as well as its industry and technology basis. Where much innovation is informal, there are potential problems of access to, and affordability of, patent applications. Patent systems may be disproportionately expensive to set up and maintain. China’s Involvement into the TRIPs Agreement China is a unique country. It combines the features of both developed and developing countries. Evan Medeiros and Taylor Fravel emphasize that in this country evidence of the change abounds. They affirm â€Å"Chinese foreign policy has become [in the last ten years] far more nimble and engaging than at any time in history of the People’s Republic†. As for other developing countries the main concerns for China were limited coverage for products and processes, short terms of patents protection, wide scope for obligatory licensing, and inefficient enforcement in the cases of IPRs infringements. But last decades this country has been made giant steps to the progress. Few nations have changed as fast – or as dramatically – as China has since the 1970s. The world’s most populous nation has radically liberalized its economy and gone from producing low–quality and simple exports to sophisticated high–technology goods, while nurturing a vibrant private sector and attracting nearly $500 billion in foreign direct investment. After the death of Mao, Deng Xiaoping came to power in the People’s Republic of China. Since that time fundamental changes launched in the country – an â€Å"open door† policy was proclaimed re-opening Chinese markets and allowing citizens to own limited private property. Further rush development was unbelievable. In 1979 China entered into the Agreement on Trade Relations with the USA which required both parties to provide each other’s nationals with a corresponding level of IPRs. In accordance with this agreement the country became a member of the WIPO in 1980 and acceded to the Paris Convention for the Protection of Industrial Property in 1984. China also enacted a Trademark Law in 1982 and a Patent Law in 1984. Upon these regulations China provided authors and inventors with limited IPRs protection. As a final accord of this movement in 1995 China entered into the TRIPs Agreement with the USA. People’s Republic has committed itself, pursuant to this agreement, to raising the standards of intellectual property protection by means of implementation of enforcement measures and development of legal enforcement structure. The agreement envisaged expansion of US goods access to Chinese market and vice versa as well as certain changes in the IPRs protection legislation of China aimed to make it more transparent . Furthermore the country has patterned its IPR laws on international treaties: the Berne Convention and the World Trade Organization’s 1995 TRIPs Agreement. China acceded to the WTO on 11 December 2001. In order to ensure its accession to this organization, China preliminary ratified international intellectual property treaties and conventions and amended its laws. The Course of Implementation Despite of objective difficulties in implementation of IPRs legislation in China, the government succeeded greatly in the struggle against infringements of IPRs. Many laws adopted in 1980–1990s reinforced the system of these rights protection in all the categories: copyright, patent, trade secrets and trademark. For instance, as regards to patents protection, in 1993 China â€Å"extended coverage from fifteen to twenty years and also created the China Patent Management System (CPMS), a computerized system designed to handle patent applications more efficiently†. Besides China expanded patent envelopment to pharmaceutical industry that was excluded before. For instance, in 1997 CPMS â€Å"accepted 114,208 patent applications, including 24,137 from foreigners† . For many years before China became a WTO member, the state authority bodies such as police force and legal agencies had been vigorously striving against IPRs infringements especially piracy .   Beginning at 1982 China adopted many laws covering the field of IPRs protection, â€Å"such as the Trademark Law, Patent Law, Technology Contract Law, Copyright Law, Anti-Unfair Competition Law, and Regulations on Protection for Computer Software† . Notwithstanding the fact that China lacks long tradition for respect and protection of intellectual property , the progress of the country is doubtless. The Chinese government has recognized that to encourage technology transfer, there must be protection for technology. Such attitude resulted in adopting series of documents dealing with IPRs issues. Also the great importance of these issues led to the necessity to have qualified staff in patent law. Thus, now several of China’s top universities, including Tsinghua University in Beijing, have patent departments. Among the regulations adopted and amended last years there were documents regarding patents and licensing. On 28 December 2002, the State Council of China issued the Decree No. 368, modifying Article 101 and 108 of the Implementing Rules of the Patent Law of the People’s Republic of China. Modifications only involved new provisions concerning the implementation of the patent cooperation treaty, i.e. that the time-limit for international applications entering into the phase for individual country consideration should be unified as 30 months upon the priority date. On 13 June 2003, the State Intellectual Property Office of the People’s Republic of China (SIPO) issued the Methods of Compulsory Licensing for the Implementation of Patents, which came into effect on 15 July 2003. Patent Law of China was adopted much earlier – at the 4th Session of the Standing Committee of the Sixth National People’s Congress on March 12, 1984, and further amended by the Decision Regarding the Revision of the Patent Law of China, adopted at the 27th Session of the Standing Committee on September 4, 1992. Recently the Patent Law was revised in August 2003. The Implementing Rules of the Patent Law of the People’s Republic of China has been revised in June 2001 and December 2002. Such revisions have brought these laws and regulations into full conformity with the TRIPS Agreement. Wang Jingchuan, Commissioner of the SIPO, in his message said:   The creation, occupation and utilization of knowledge and intelligence resources, and quantity and quality in possession of intellectual property have become the key elements to the economic development of a country and the important foundation for countries’ participation into the competition of economic globalization and be in harmony of the world economy system. He stated that the IPRs system in China has been established and further improved last years. But much work has to be done in this field. He emphasized especially the importance of ensuring protection to interests of foreign patent applicants. In general, the main targets for the national patent work were defined by ‘Tenth Five–year Plan’. It anticipates further perfection of patent laws and regulations and patent protection scheme, further adaptation of patent procedure and maintenance system to the growth of international economy and socialist market economy, creation of environment favorable for patent protected goods and inventions as well as for technology innovation, raising the level of patent professionals’ skills and knowledge, upgrading of the patent protection level in enterprises and institutions, involvement of patented technologies to contribute to the economic growth, continuous increase of the number and quality of patent applications, updating of the patent information, acceleration and enhancement of the patent examination and granting. For achieving these targets it’s planned to facilitate the utilization of patent information resource, create and acquire more patent rights with authorization, create products and businesses with self-dependent intellectual property; pay much attention to patent work by SMEs while encouraging also corporations and business groups to acquire and transfer know–how. The task to speed up the industrialization of patent technology seems to be one of the most costly. For the purpose to enhance the patent work system the Plan anticipates supporting patent intermediate service agencies, implementing efficient examination and granting system and qualifying system for patent assets evaluation agencies and patent consultation service institutions etc. To create effective patent system China poses an assignment to complete the revision of rules and regulations including those for the implementation of the Chinese Patent Law and then make efforts to implement the revised patent law. Practical measures to facilitate patent examination include the increase of the number of the patent examiners, organization of supporting examiners group, intensification of professional training, and extension of the examiner’s inspection spheres, full involvement of information technology into patent procedures, strengthening of the examination of patent agencies and training of patent agents. The Plan stipulates reinforcement of the role of information systems and patent information resources in patent proceedings. For this purpose it’s scheduled to provide well-organized computer search system, examination supporting system, flow management system, e-filing system and e-publication system for the patent examination and granting work, realizing the paperless, electronic and network system of patent application, publication and examination procedures; to create China patent full text coded database using resources both from the country itself and abroad . Finally, the Plan anticipates reinforcement of the research on strategy, tactics and policy by means of establishment of intellectual property development research institutions, development of in-depth research on major patent issues, strengthening of the research on the patent protection of new technologies, such as computer software, nano–technology, gene engineering, biomedicine, biochips, biology engineering etc. Here also the importance of patent statistics analysis and prediction work is emphasizes . It is obvious that the government concentrates its efforts â€Å"on the implementation and enforcement of IPRs protection laws despite the difficulties faced by the Chinese authorities in a demographic, historical and cultural sense†. Now the reform and enforcement of law in the concerned field are more and more progressing. Groombridge ascertains that amplification of IPRs protection in China is for the most part the outcome of â€Å"indigenous social, economic, and political factors at work† in the country. He argues the pressure of â€Å"economic sanctions, such as those embodied in the trade laws of the United States† had no wholesome influence, and China has strived for more effective arrangements of IPRs due to â€Å"the changing perception of self-interest held by its Communist Party leaders and its citizenry† . In the course to fulfill the provisions of the TRIPs Agreement China has rebuilt its structure of legislative bodies responsible for regulation in the field of IPRs protection. The country set up a number of corresponding regulatory agencies: â€Å"the State Press and Publication Administration, the National Copyright Administration, the China Patent Office, and the State Administration of Industry and Commerce, in which the Trademark Office is located†. Also in 1998 the State Intellectual Property Office (SIPO) was established – the structure affiliated and directly subordinated to the State Council . A mission of all these bodies is to strengthen historically weak Chinese infrastructure of regulation, control and maintenance in IPRs compliance. Implementation of the TRIPs Agreement by the People’s Republic of China promises to become again the topic to analysis by the international community in 2008 in connection with the next Olympic Games which will be held in Beijing. Liu forecasts that owing to vast distribution of Olympic goods, audio– and video products â€Å"owners of IPRs will be seeking to protect their works from illegal reproduction and distribution by infringers†. He expresses belief that if the efforts undertaken by China â€Å"to reform and enforce its intellectual property laws [†¦] [will be] successful†, it would attract foreign investors to the country and promote know–how distribution here, which consequently should assist to go ahead to further economic development on the path to take leading positions in the world markets . Conclusions Experts note that having bolstered market power, TRIPs proves very weak especially on international regulation of the restrictive practices of the transnational corporations. It is true to say that the costs and benefits of IPRs are not so neatly distributed today. All the same, if the WTO is asking all countries to provide protection, it may still have to give something more in return. No doubt, China will increasingly regard itself as a great power and expect more defenses from other countries. In a speech two years ago President of the USA George Bush assured of his sympathy to the countries â€Å"that believe in the power of economic engagement to help solve the problems ranging from human rights to security matters†. China for sure is one of such countries demonstrating its aspiration for integration into the global economy . Nowadays we are witnessing the economic boom in this developing country. It is deserved outcome by the People’s Republic of China, as on its way to progress, in contrast to almost every other developing country, China has managed to eliminate the worst forms of social misery, and while denying the spirit, it displays spiritual values: in that underlies the paradox of Mao’s China. Having entered into the TRIPs agreement China pushed its trade policies behind the borders of the country, opened up its markets, and although experiencing certain difficulties in this agreement implementation, stays on the path of development. 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