BY: ANTHONY DEFRANCESCO

China, a major source of counterfeit goods globally, has long been considered a hotbed of intellectual property infringement with a reported astounding copyright piracy rate of over 90%.[1]  In To Steal a Book is an Elegant Offense: Intellectual Property Law in Chinese Civilization, William P. Alford explains the history of China’s political culture and attempts to answer the question of why “intellectual property law, and in particular copyright, has never taken hold in China” to the level that it has in Western culture.[2]  Alford explains that late imperial reforms in intellectual property law were not very effective due to the fact that those individuals instituting the reforms did not properly consider whether or not Western models were relevant in the eyes of Chinese people who have historically lived in an economy that emphasized agriculture over commerce. At the same time, China has had a difficult time reconciling Western legal values with those of its own people, and the bilateral agreements that the Chinese have entered in terms of intellectual property law protection have not always been properly understood or adequately enforced on the mainland.

In order to understand the difficulties that the Chinese have faced in developing their intellectual property law system, an overview of Chinese culture will shed some light on the issue. Throughout history, the Chinese have embraced Confucian ideology, which has shaped their worldview, social ethic, political ideology, and their way of life.[3]  In a society that has long served hierarchies within a structured social order the concepts of imitation and copying have traditionally been considered forms of flattery and respect. Chinese culture has therefore placed little social value on proprietary intellectual property rights, which has led to its hesitation to completely embrace the Western notions of such protections, especially for foreigners entering the Chinese market.

In the 1980s, China began to make progress in this area through the development of intellectual property legislation. However, depending on the resources and the social pressures a given country may face in developing their intellectual property law, the process of truly enforcing intellectual property rights is one that can take time. One must keep in mind that the Chinese people did not have legislation relating to intellectual property customs enforcement until fifteen years ago. Their enforcement policies and procedures are still evolving today.[4]  Throughout this time, China has become a major source of counterfeit goods globally, while piracy has been a pervasive issue for the country.  “Basically, in China, you have a good set of rules. The problem is the enforcement of rules and the willingness to enforce the rules.”[5]

There are a number of substantive law issues that a foreign company must deal with when doing business in China. To note is the fact that China has revised much of its substantive law in intellectual property to further meet global standards.[6]  Regardless, while China has made these positive steps in developing its legal system with respect to intellectual property law and its relationship with WIPO and similar organizations, a number of flaws still remain in intellectual property protection.[7]  The Copyright Law of the People’s Republic of China addresses issues such as copyright infringement and broadcasting rights, but Article 47 of this law, which deals with enforcement of infringement, is vague and has been historically ineffective as applied.[8]  While Chinese law protects a range of works under copyright law and recognizes trademark protection, minor holes in substantive law relating to inadequate enforcement needs to be addressed.

China has historically been a country that has not adhered to the same rule-of-law standards as the Western legal system. While the country has made efforts to strengthen the rule-of-law in the form of legislation and legal education, substantial flaws still remain in these areas. Corruption in the People’s Republic of China (“PRC”) is a significant part of the problem, and many infringers are actually protected by Chinese officials. In the Chinese legal system, these protected violators are generally beyond the intellectual property Courts’ ability to prosecute, which deeply affects the viability and application of the law.[9]  Furthermore, the legal system is vulnerable to political interference. For example, there have been instances of Communist Party officials reviewing and affecting the outcome of litigated cases.[10]  Corruption is also exacerbated by the relatively low salaries of judges and court officials, which makes bribery an enticing option and negatively effects the application of China’s evolving substantive law in the field of intellectual property.

Since the Chinese legal system is so young in terms of its intellectual property law, lack of sufficient legal training among the judges in the PRC is another significant issue. While China has made efforts to step up legal education and train young lawyers to effectively adjudicate legal issues in a developing intellectual property system, the fact that judges are typically politically appointed means that it will be some time before these individuals will even get the opportunity to rule on these matters. Too often, judges are actually retired military officials with little to no legal training, which does not bode well for the development of China’s legal system in the realm of intellectual property enforcement. Since the Chinese legal system is inquisitional as opposed to adversarial, lack of legal education becomes an even larger problem.  Furthermore, the case reporting system in the PRC is barely sufficient, making legal precedent almost useless since cases and decisions are not well documented or accessible.

China’s criminal thresholds regarding intellectual property law present further challenges to intellectual property protection.[11]  The relevant legal issues present include the lack of criminal liability for certain acts of copyright infringement, the profit motive requirement in copyright cases, the identical trademarks requirement in counterfeiting cases, the absence of minimum, proportionate sentences, and the lack of clear standards for initiation of police investigations where there is a reasonable suspicion of criminal activity.

Ultimately, while China does have a relatively well-formulated system of copyright laws and firm substantive law on the issue, government cooperation, enforcement and the development of the judiciary is necessary in order to overcome the significant substantive and procedural hurdles to intellectual property protection in the People’s Republic of China.