Several Chinese news agencies have reported on by the State Council, the proposed reorganization now being presented to the National People’s Congress, which will significantly rearrange all Chinese agencies, including IP agencies.
According to the plan, after the reform, the number of state-level ministries and commissions will be reduced by 8 and vice-ministerial agencies were reduced by 7. State Councilor Wang Yong(王勇), who was formerly a Minister at AQSIQ (Administration for Quality Supervision, Inspection and Quarantine, 2008-2010) where he addressed tainted milk amongst other issues, noted in introducing the changes to SIPO that “SIPO would be newly organized. The creation, protection, utilization of IP will be strengthened as an important measure to speed up the establishment of an innovative economy.” The proposal includes combining trademarks and patents which are separately managed and have “redundant” enforcement authority. These authorities will be combined with ASQISQ’s authority over Geographical Indications to establish a national State Market Supervision Adminsitration (国家市场监督管理总局) (“SMSA” for purposes of this blog).
Wang Yong’s statement in Chinese:
The creation of SMSA suggests that SIPO’s once lofty goal/dream of serving as an integrated IP agency, which was initiated by Dr. Gao Lulin when he was Commissioner, may have come to a temporary end. At one time a stumbling block to this proposal may have been integrating the vast trademark enforcement resources of SAIC. It appears that such an integration would likely be accomplished under the new SMSA. Another legacy issue that may need to be addressed involves SIPO’s legacy authority over international IP which often overlapped with MofCOM’s authority over trade-related IP, which became especially important after WTO accession by China and may be even more challenging by the integration of SIPO into a bigger agency. Noticeably absent from this proposal, however, are the copyright authority (under the National Copyright Administration), as well as trade secret protection (under SAIC). Plant variety protection, already divided between two agencies (Agriculture, Forestries) with SIPO helping to support international engagement, is is also absent. One view of these changes is that voices within China that look at IP (including patents) as an instrument of market regulation, including consumer protection, may have won out. This approach was evident in the work of the National Leading Group Fighting IP Infringement and Substandard Products (全国打击侵权假冒办公室), as well as the increased activity of SIPO over the years in conducting market supervision actions involving false marking and patent infringements. Indeed the wisdom of keeping this Leading Group within MofCOM in light of a new SMSA may be questioned; however, the Leading Group consists of many more agencies than SIPO, SAIC and AQSIQ. Nonetheless the State Council had previously called for reducing redundancies in enforcing the market order, and it was also part of the yet to be adopted patent law revisions. In that State Council opinion, which may be a guiding part of this reorganization, there is a call for “the elimination of duplicative multilayered enforcement”, including territorial and subject matter overlaps. See: https://chinaipr.com/2014/07/16/state-councils-new-opinion-on-market-order/.
The approach of creating a SMSA to address enforcement challenges is also distinct from the technology-oriented reforms of China’s judicial system in recent years, which have led to the creation of technology oriented IP courts as well as the creation of more autonomous IP tribunals. The incorporation of sui generis GI protection into SMSA agency also pits two sometimes rivalrous agencies with different perspectives on utilization of the trademark (private rights) system with a sui generis (more public rights oriented) system to protect GI’s. Finally, it would also likely have the effect of elevating SIPO to a General Administration in the State Council structure, which is just below a Ministry-level agency. This is somewhat more similar to the structure of the USPTO which is within the Department of Commerce in the United States.
How do the other IP agencies shake out? It is too soon to know. The Ministry of Culture is merging with the Tourism Administration. Will the National Copyright Administration remain within the General Administration of Press and Publications/State Administration for Radio Film and Television structure? Also, there are some reports that the Ministry of Science and Technology is also being reorganized to absorb the State Foreign Experts Bureau and the China National Science Foundation. Finally, the Legislative Affairs Office of the State Council is reportedly moving to the Ministry of Justice. The SCLAO has exercised a tremendously important role over the years in crafting IP legislation. The impact of some of these changes will also likely depend on personnel shifts within the agencies. In addition, it could impact or accelerate efforts already in place by these agencies. For example, will the change in the SCLAO structure affect long-overdue proposed revisions to China’s copyright law, which reportedly are once again the subject of active discussion? Similarly, it is unclear to me at this stage what impact there will be on the China Food and Drug Administration (reorganized in 2013), in light of other changes to health-oriented agencies and SIPO, and if this will affect, or perhaps accelerate, efforts to reform IP administration by SFDA, such as through a patent linkage regime.
These proposed changes elicit more questions than answers; we will need to see how they are enacted and implemented in the coming months. We welcome corrections and additional information from readers!
Update of March 14: Fu Yiqin at Yale has put together a useful summary of proposed State Council reorganizations. Here is the link: https://yiqinfu.github.io/posts/state-council-reform/. Fu Yiqin notes that the State Food and Drug Administration and antitrust enforcement agencies will be combined in the State Market Supervision Administration (where SIPO, et al will also be located). SARFT is maintained as a separate agency in this chart. Other news has SARFT being restructured: http://deadline.com/2018/03/china-abolish-sapprft-media-authority-consequences-xi-jinping-1202336724/. Clearly we need some more dust to settle on some of these issues. Hypothetically if antitrust and IP are combined into one agency (perhaps including copyright), and if IP enforcement also is combined into that agency, the problem of the inherent conflict of interests between IP grants, IP enforcement and controlling for IP abuse would be heightened. However, if SFDA is also combined with SIPO/other IP agencies, there is also the possibility for greater coordination on pharma-related IP issues, such as linkage. I will be updating this as more information becomes available. Note that in a prior blog, I abbreviated SMSA as GAMA – I am following the nomenclature of Fu Yiqin.
Update of May 7, 2018: Here is a thoughtful article by the Anjie law firm on the government restructuring which points to the increased supervisory role of the new agency over SIPO’s formulation of IP strategy, as well as the new role of the Ministry of Justice in reviewing legislation.