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Innovative nation built on firm IPR foundation
Tao Wenzhao China Daily  Updated: 2006-03-14 05:51

On February 23, the Conference on Enterprises' Intellectual Property Rights (IPR) Protection and Innovation was convened at the Great Hall of the People in Beijing. Vice-Premier Wu Yi, who is also head of the State IPR protection task force, delivered an important speech on the issue. Proposals calling on enterprises to step up IPR protection efforts and refuse to use pirated software were initiated by business associations. This shows that China is making greater efforts to protect intellectual property rights.

China's IPR protection, starting from scratch in the late 1970s when the country embarked on the road of reform and opening up, has made impressive progress over the years, despite the odd turn and twist.

Now an initially complete system of IPR protection has been established. China has committed itself to implementing the Agreement on WTO's Trade Related Aspects of Intellectual Properties and the negotiations conducted in this field have come to a conclusion. It is safe to say that China's IPR protection rules and regulations are basically compatible to those of the WTO.

China and the United States signed a bilateral memorandum of understanding on IPR in January 1992 and agreements on IPR in February 1995 and June 1996.

At the same time, the Chinese Government has been stepping up efforts to crack down on piracy over the years.

In spite of all this, some US businesses remain unsatisfied with China's IPR protection efforts.

The United States claims more patents on advanced technologies than any other single economy in the world. And in many sectors, technology constitutes the most important competitive edge of US business. The copyright industry, therefore, contributes a substantial share to the US GDP. The copyright industry churned out, for example, a total output value of US$791.2 billion in 2002, accounting for 7.75 per cent of the total GDP in the United States that year.

A 2002 report released by the US Chamber of Commerce in China, for instance, said that China's enforcement of law in this regard was rather weak and, as a result, IPR violation was widespread, though the country had revised relevant articles in its Patent Law, Copyright Law and Trademark Law.

In its 2004 report, the chamber alleged that the market situations were in general deteriorating instead of improving because China lacked an effective law enforcement system. This was the report's most severe criticism of the country's fulfilment of its WTO commitments.

The report claimed that the most important task in this regard is to revise the Criminal Law, which, despite containing loopholes in this respect, remained intact when China joined the WTO. Also, they urged that improvement be made in law enforcement systems, taking into account the fact that local protectionism considerably weakens law enforcement in many IPR violation cases.

Chinese Vice-Premier Wu Yi, on behalf of the Chinese Government, made the commitment that IPR-related laws, rules and regulations would be effectively improved; that education on IPR protection would be strengthened; that the country's joining of the digital treaty of the World IPR Organization would be approved; that a joint Sino-US task force on IPR issues would be set up to settle law enforcement questions; and that interpretations on criminal liabilities for IPR violation would be offered by judicial authorities, covering prosecution, conviction and measurement of penalty. The vice-premier said all this at a session of the US-China Joint Commission on Trade and Commerce, which was convened in Washington DC on April 21, 2004.

2005 witnessed consistent campaigns against IPR violation, with 4,767 patent-abuse cases and 8,060 copyright violation cases handled, of which 299 were transferred to public security departments for criminal investigation.

At the same time, public security departments across the country cracked 3,149 IPR-violation cases involving 2.65 billion yuan (US$327 million). The police detained 5,981 suspects.

Strengthening IPR protection is of course aimed at developing trade and business ties with other countries. More importantly, however, it is of vital importance to the encouragement of the country's scientific and technological innovation mechanism.

President Hu Jintao said at the National Science and Technology Conference on January 9 that innovation on our own constitutes the core of the country's competitiveness. Observing the industrialization process, not a single country has achieved economic prosperity relying exclusively on foreign capital and technologies, except for a number of oil-rich countries and city-states.

Borrowing foreign funds and importing foreign technologies is certainly important, especially at the initial stages of China's reform and opening up. But borrowing and importing can never replace innovation.

Without innovation, we have to be heavily dependent on foreign advanced technologies, which renders the country vulnerable to technological blockades.

The country's current situation is by no means optimistic. Only 3 per cent of enterprises own intellectual property rights and more than 90 per cent of the Chinese enterprises have not yet applied for patent rights. In general, Chinese corporations' investment in research and development (R&D) is lower than not only developed countries, but also many developing nations.

This is obviously far-removed from the mode of sustainable development energetically championed by the top authorities.

Now that innovation and blazing scientific and technological trails are specially being promoted by the State, protection of IPR has taken on overriding importance.

Without IPR protection, there can be no innovation. Technological innovation takes large amounts of research efforts and resources. If innovations are randomly pirated when they have just been launched on the market, the huge R&D costs can never be met. To make matters worse, the faked products, which are inevitably of low quality, may ruin the research outcomes and, in turn, disrupt the process of innovation.

In her speech at the IPR protection conference, Vice-Premier Wu Yi announced that China will formulate action programmes for IPR protection and stage specialized campaigns of IPR protection across the country. She promised that education in this regard will be strengthened and offence reporting centres be set up in 50 big cities.

The IPR protection conference, as a milestone in China's IPR protection bid, will have profound impacts on the progress of innovation.

The author is a researcher with the Chinese Academy of Social Sciences.

(China Daily 03/14/2006 page4)

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