Fresh on the heels of the Section 301 announcement, USTR on March 23, 2018 made a consultation request of China regarding China’s discriminatory licensing practices. This is the first step in initiation of a WTO dispute. Here is a link to the press announcement.
The consultation request broadly speaking alleges discriminatory treatment in licensing pursuant to China’s joint venture regime as well as the Administration of Technology Import/Export Regulations (“TIER”), as compared to provisions under China’s contract law that may govern purely domestic technology transfers or Chinese exports of technology. The complaint is based on the National Treatment provisions of the TRIPS agreement as well as Article 28.2, which provides that “Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.” The Section 301 Report of USTR also discusses these issues.
Update of June 2, 2018: On June 1, the EU filed its own complaint against China at the WTO involving China’s technology licensing practices, including the TIER. A copy of the request for consultations, which appears somewhat more extensive is available here.
The EU China IPR SME Help Desk recently published a Guide to Geographic Indications in China that may be useful for European companies seeking to protect geographical indications in China, and for US companies seeking to understand Europe’s approach to this issue.
This Guide notes that there are two aspects to GI protection in China:
“GIs in China can be protected as an intellectual property right (IPR) under Chinese Trade Mark Law as a collective or certificate mark which provides the same level of legal and economic protection as for any other logo, name or mark registered as a trade mark. Alternatively and in addition, the GI can be registered at the AQSIQ [Administration for Quality Supervision Inspection and Quarantine] which monitors and manages the quality and standard of products offered in the Chinese market. Duel [sic] registration can ensure the GI is protected both as an IPR and as a indicating a certain level of quality assurance to the public.”
This Guide notes that AQSIQ can “help” in protecting GI’s, but does not identify the same administrative mechanisms for AQSIQ to protect GI’s as exists for trademarks. In addition the Guide states that it is “only possible to litigate under the China Trademark Law” (pages 4 – 5).
The December 2014 US-China Joint Commission on Commerce and Trade included the following bilateral outcome which includes geographical indications and generic terms, as well as legal procedures for cancellation and recognition of a GI:
- China and the United States …understand the following:
- That a term, or its translation or transliteration, is not eligible for protection as a GI in its territory where the term is generic in its territory;
- That the relationship between trademarks and GIs is to be handled in accordance with relevant articles in the TRIPS Agreement;
- That the legal means are available for interested third parties on the above grounds to object to and to cancel any registration or recognition granted to a GI;
- Where a component of a compound GI is generic in its territory, the GI protection is not to extend to that generic component. In the event a relevant agency does not have a disclaimer practice, the agency may adopt such practice noting that the compound GI registered or recognized is to be protected only in compound form….
The general differences between the two system (trademark and AQSIQ) in my personal opinion, are largely attributable to the differences between a trademark system which is primarily based on private property rights and a product quality/protection system which looks more to public management. These two systems may consequentially present different approaches towards the primacy of private enforcement and towards the role of the state. As they co-exist, they may also present challenges in coordination. Nonetheless, as the “sanctity of private property”, in the words of Dean Liu Chuntian of Renmin University, is a key principle in any intellectual property system, the trademark system more clearly reflects traditional notions of the balance between state and individual in how IP is to be created and protected, in my humble and non-official opinion.