SIPO/IP Agencies to Be Reorganized and Consolidated

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:

(九)重新组建国家知识产权局。强化知识产权创造、保护、运用,是加快建设创新型国家的重要举措。为解决商标、专利分头管理和重复执法问题,完善知识产权管理体制,方案提出,将国家知识产权局的职责、国家工商行政管理总局的商标管理职责、国家质量监督检验检疫总局的原产地地理标志管理职责整合,重新组建国家知识产权局,由国家市场监督管理总局管理。其主要职责是,负责保护知识产权工作,推动知识产权保护体系建设,负责商标、专利、原产地地理标志的注册登记和行政裁决,指导商标、专利执法工作等。商标、专利执法职责交由市场监管综合执法队伍承担。 

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.

 

 

 

E-Commerce Law Up for Public Comment

The National People’s Congress announced this week that it has released a draft of the E-Commerce Law for public comment.  The public comment period began December 27, 2016 with comments due by January 26, 2016.  Although focused on the overall development and regulation of e-commerce, the draft also contains provisions regarding IP protection by platforms and their responsibilities, in order to preserve market order and fair competition 市场秩序与公平竞争.  The draft in Chinese is attached here, with relevant provisions and machine translations below.  I hope to provide more detailed comments later – I am particularly interested in how this draft relates to provisions in the tort law, IP laws and civil laws regarding online liability, as well as how enforcement authority over infringements for online operators will be amended and divided up amongst the various IP agencies if this draft is implemented into law.

Article 53 provides:

第五十三条   电子商务经营主体应当依法保护知识产权,建立知识产权保护规则。电子商务第三方平台明知平台内电子商务经营者侵犯知识产权的,应当依法采取删除、屏蔽、断开链接、终止交易和服务等必要措施。         

Article 53 The electronic commerce business principal operator shall protect intellectual property rights in accordance with the law and establish rules for the protection of intellectual property rights. If the e-commerce operator infringes the intellectual property rights within the platform, it shall take the necessary measures such as deleting, shielding, breaking the link, terminating the transaction and service according to law.

Article 54 provides:

第五十四条   电子商务第三方平台接到知识产权权利人发出的平台内经营者实施知识产权侵权行为通知的,应当及时将该通知转送平台内经营者,并依法采取必要措施。知识产权权利人因通知错误给平台内经营者造成损失的,依法承担民事责任。   

平台内经营者接到转送的通知后,向电子商务第三方平台提交声明保证不存在侵权行为的,电子商务第三方平台应当及时终止所采取的措施,将该经营者的声明转送发出通知的知识产权权利人,并告知该权利人可以向有关行政部门投诉或者向人民法院起诉。   

电子商务第三方平台应当及时公示收到的通知、声明及处理结果.

Article 54 Where a third-party platform for e-commerce receives a notice from a platform operator of intellectual property rights issued by the owner of the platform for intellectual property infringement, it shall promptly transmit the notice to the operators within the platform and take the necessary measures according to law. If the intellectual property right owner causes any loss to the operator of the platform due to the wrong notification, he shall bear civil liability according to law.
If the platform operator submits a declaration to the e-commerce third-party platform to ensure that there is no infringement, the third-party platform shall promptly terminate the measures taken and forward the statement of the operator to the notification Property rights, and inform the right person to the relevant administrative departments of complaints or to the people ‘s court.
E-commerce third-party platform shall promptly publicize the received notice, statement and processing results.

Article 88 provides:

第八十八条   电子商务第三方平台违反本法第五十三条的规定,明知平台内经营者实施侵犯知识产权行为未采取必要措施的,由各级人民政府有关部门责令限期改正;逾期不改正的,责令停业整顿,并处以三万元以上十万元以下的罚款;情节严重的,吊销营业执照,并处以十万元以上五十万元以下的罚款。         

Article 88 If a third-party platform for e-commerce violates the provisions of Article 53 of this Law and knows that the operator of the platform does not take the necessary measures for infringement of intellectual property rights, the relevant departments of the people’s governments at various levels shall order it to make corrections within a prescribed time limit; If the circumstances are serious, the business license shall be revoked and a fine of not less than 100,000 yuan but not more than 500,000 yuan shall be imposed.