Jason Yao
Senior Partner, Attorney-at-Law
Wan Hui Da Law Firm

China has reorganized its agencies governing intellectual property matters. In March, the National People’s Congress approved a massive plan to restructure State Council ministries and agencies. The State Council later announced a more detailed plan, under which a new State Intellectual Property Office (SIPO) was formed by merging the China Trademark Office (CTMO) and the former State Intellectual Property Office overseeing patent matters. The new SIPO is a secondary agency under the General Bureau of Market Supervision and Management and takes responsibility for both trademark and patent matters, as well as for geographic indications in trademarks.

Knowledgeable observers of China believe that the reorganization and the consolidation of the authorities for different intellectual property matters into one agency will enhance the management and protection of intellectual property rights. Before the reorganization, CTMO and SIPO were independent from each other and had very different management policies and enforcement mechanisms. The local trademark departments under the Market Supervision & Management Bureau had been quite aggressive and effective in enforcing the Trademark Law, while the local intellectual property offices, with limited manpower and resources, were much less aggressive in taking action against patent infringement.  Brand protection practitioners operating in China hope the reorganization will improve patent enforcement. Of course, the enforcement officers will need to be trained on how to deal with patent issues, as they can be very different from trademark matters.

Shen Changyu, the newly appointed Director General of SIPO, notes four ways the new SIPO would enhance the protection of intellectual property rights (Briefing on Development of China’s Intellectual Property Rights, 2018):

It would guide comprehensive enforcement for both patents and trademarks, allowing more effective crackdowns on all kinds of infringing activities.
It would help amend the Patent Law and expedite policy on punitive damages, increasing penalties for infringement and creating real deterrence. 
It would build a system that protects intellectual property rights in a more efficient and effective manner with lower costs. In particular, it would set up local intellectual property protection centers—and has already established 19 such centers in different cities. 
It will cooperate with international communities to build a more inclusive and balanced environment for intellectual property protection. This will create a friendlier international environment for those Chinese companies that invest in overseas markets and provide better protection for the intellectual property rights they hold. 

The Trademark Office under SIPO has also announced measures to improve the registration and enforcement of trademarks. Previously China had taken 12 to 18 months to register trademarks. The Trademark Office has committed to shortening the review process on new applications to six months by 2018, five months by 2019, and four months by 2020. This will make China the fastest among OECD members in processing trademark registrations.

The Office will also reduce registration fees. This has raised some concerns among brand owners who fear lower fees may encourage trademark squatters to file more bad faith applications, in turn causing brand owners to spend more money in oppositions. To prevent trademark squatters from filing bad faith applications, the Trademark Office has built a database that lists all bad faith applicants, although it is unclear under what conditions an applicant would be put on this “blacklist”.

Altogether, the reorganization has raised intellectual property protection to an unprecedented level for the Chinese government. The government hopes that the reorganization will significantly increase proficiency of intellectual property rights management and the effectiveness of enforcement. Brand protection professionals who work in China believe the merger of the trademark-governing and patent-governing bodies will improve efficiency and consistency. But it remains unclear whether this will also improve local-level protection and enforcement for trademarks and patents.

For previous BPP coverage of brand protection issues in China see BPP September, 2016, “The Influences of Economic Structure and Culture in China” and BPP December, 2016, “What You Need To Know About The 3rd Amendment to the China Trademark Law”.


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