I spent Independence Day this year climbing a preserved section of the Great Wall northwest of Beijing at Badaling. The Wall was built over a 2000-year period and once extended some 3,700 miles, bisecting much of China and separating the coast from the interior.
Standing at the top of the Wall, it seems to go on as far as the eye can see across the steep mountains and rough terrain northwest of Beijing, and one can’t help but marvel at the enormous task of its construction.
Built in part to keep "barbarians" out, today, only remnants of the physical structure remain. However, the Wall is a true metaphor for the physical and economic walls which are now crumbling as China’s economy advances by leaps and bounds into the 21st century.
As China’s market economy rapidly expands, many values of the social and legal order in place since the People’s Republic of China was founded by the communists in 1949 have had to be revisited, challenged and modified.
A particularly important "value" for the success of a Western-style market economy, which doesn’t quite mesh with the communist China envisioned by Mao Tse-Tung, is the legal recognition of individual ownership and the rigorous protection of individual property rights.
These rights include proprietary rights in patents, trademarks, copyrights and trade secrets, also known as intellectual property rights, or "IPR."
As a member of the Whyte Hirschboeck Dudek S.C. China Practice Group, I traveled to several major Chinese cities as a delegate of the American Bar Association Intellectual Property Section. Hosted by the All-China Patent Agents Association, our group conducted meetings in Beijing and Shanghai with Chinese officials in charge of administering patents, trademarks and copyrights.
We also met with Justices of the People’s Supreme Court and Shanghai Customs officials. We spent many hours discussing intellectual property issues with these officials and took a close look at the major differences between the Chinese and U.S. legal systems providing for IPR protections, as well as the significant U.S. concerns about insufficient and inconsistent Chinese enforcement of IPR.
Most of the officials we met with were younger and well-educated. They were concerned about developing the relatively new market economy in China and strengthening the protections available for IPR. They were also interested in satisfying U.S. concerns about problems in the IPR enforcement arena.
While in China, I also conducted discussions with a number of Chinese businessmen about these issues, through the help of U.S. contacts and the assistance of Wisconsin World Trade Center representatives.
Our delegation members took a "field trip" through the street markets of Beijing and Shanghai, where knockoffs and "seconds" filled the stalls, often offered at a fraction of what legitimate licensed goods would cost in the United States.
Within two blocks of my hotel in Beijing, I was offered multiple copies of Fahrenheit 911 (which had not yet been released in the United States) by several different vendors.
Being an IP attorney, I focused on purchasing pearls and silk for souvenirs instead, foregoing the deeply discounted THE NORTH FACE(r) jackets and ROLEX(r) watches.
There has been much criticism in the press of Chinese protections (or lack thereof) for IPR. While there is certainly an element of the "Wild East" to the Chinese market economy, the good news is there is reason to believe that evolution is happening in the right direction.
Consider that there was no legal recognition of IP ownership in China until a mere 20 years ago. Furthermore, these first laws provided very limited protections. It has only been since 2001, for example, that preliminary injunctive relief has been available in an IP infringement lawsuit.
There have been several amendments to the Chinese IP laws since 1984 and, as even government officials admit, more amendments are needed, particularly with respect to enforcement.
Enforcement, at least on an administrative level, currently resides in the hands of provincial officials located in China’s 17 provinces and, notably, a decision in one province is not binding on another, making administrative enforcement throughout China cumbersome and inconsistent.
One must also recognize how differences in tradition and culture play a part. In a communist society, governmental ownership of property is the norm.
For people who have not had a recent tradition of private ownership of property, the changes happening in China are happening quite rapidly. It will take some time for the cultural aspects of a free market economy to shake out.
Certainly, as Chinese businesspeople become more concerned about protecting their own intellectual property against theft or misuse by others, more pressure will be brought to bear on the Chinese government to make those changes necessary to protect everyone’s rights.
For those seeking to protect their IPR in the new Chinese economy, it is not that China doesn’t have a "Rule of Law" when it comes to protecting IPR, but that the "Rule" is new and evolving.
The meetings this past summer left me with the belief that in the near future, Americans will be able to do business in China with some security that IP laws will be respected by the populace and that the government will take steps to protect and enforce these rights.
It will take time and good leadership to enact and implement those changes that will make enforcement of these rights a reality in China.
Elisabeth Townsend Bridge is a shareholder with the Intellectual
Property Group at Whyte Hirschboeck Dudek S.C. and a member of the China
Practice Group. She can be reached at (414) 978-5532 or at
ebridge@whdlaw.com.
November 26, 2004, Small Business Times, Milwaukee, WI
