China's reputation in IP rights is still dismal, law firm survey finds

PUBLISHED : Monday, 21 November, 2011, 12:00am
UPDATED : Monday, 21 November, 2011, 12:00am


Old habits die hard, and so is the daunting image of China in protecting intellectual property rights.

This is a key finding of a survey of 1,000 respondents in multinational firms, each with at least 500 employees, conducted by law firm Allen & Overy in July and August.

More than a third of the respondents indicated that they were not confident of being able to protect their companies' intellectual property rights in China. However, most of them named Russia as a market in which they had the least confidence. India, famous for software development, emerged as a favourable market in protecting patents and intellectual property rights ahead of Japan, the survey showed.

Benjamin Bai, the law firm's head of its intellectual property practice in China, said the findings showed that China was still struggling to shake off its 'long-held [dismal] reputation' despite its efforts in improving intellectual property protection.

He noted that the 42,000 intellectual property-related lawsuits filed in China last year was the highest number in the world, and that multinationals' success rate as plaintiffs ranged between 60 and 90 per cent. That was 'very unusual' when compared with plaintiffs' usual success rate of below 60 per cent in the United States and Europe, Bai said.

'There are many risks [with the mainland market], but the biggest risk of all is the failure to understand and embrace the system,' he said of China's intellectual property regime.

'Another important lesson is to tailor their expectations - investors should not expect China, or other emerging economies, to operate in exactly the same way as the West.'

China is in the midst of building its own intellectual property rights governance regime, which means that a set of harmonised rules aligned with global practices will be elusive in the next few years, according to Bai.

Last year, the number of patent applications filed in China surged to more than 750,000, from about 289,800 in 2008, according to a research report, based on official Chinese figures, by the Hong Kong Trade Development Council.

That propels China to being the world's largest patent-filing country, overtaking the US. In China's 12th five-year plan for 2011 to 2015, the technology and clean energy sectors are identified as key development sectors, which is expected to spur an increase in technology patents and trademarks applications.