Intellectual Property Rights Protection in China

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Assignment 6.2: Intellectual Property Rights Protection in China


The globalization of manufacturing has increased problems in respect to intellectual property (IP) rights, particularly in China and India. The U.S. government estimates that as many as 20 percent of all consumer products on the Chinese market are counterfeit, mainly due to local government corruption and limited enforcement resources. The Chinese central government is aware of the problem, as the country’s lack of IP enforcement is occasionally stopping foreign investments in manufacturing. This is due to the fact that proprietary technology is often of higher value to a manufacturing company than the resulting products.

Industrial property includes trademarked symbols (such as company logos), which can last forever, as well as trade secrets, product design and inventions covered by patents. It is this category that is the most important to manufacturers, as inventors can be given the right to prevent others from using their developments unless it is approved and payment to the inventor negotiated.

Technological companies broadly understand that they need to be present in the biggest developing markets, notably China, in order to secure their market access in the future. However, many also feel that their heavy investment in knowledge should guarantee that they will hold the rights to their research findings and profit from them. Indeed, the central Chinese government in an effort to attract more technological investment has begun to take steps to aid in IP enforcement by establishing 50 reporting centers.

Recently, chocolate maker Ferrero Rocher won a suit against a Chinese company that was manufacturing a counterfeit version of its products. The Japanese companies Kawasaki and Hitachi, makers of the high-tech bullet trains in Japan, have been successfully operating a joint-venture with their Chinese counterparts to build Chinese versions of the bullet trains, regardless of the original worries on IP rights protection. However, one industry that still remains particularly hard hit is the automotive parts industry, which estimates its losses to be $12 billion per year due to counterfeiting.

Recently, The U.S. Department of Commerce, in cooperation with the American Bar Association, the National Association of Manufacturers, and the American Chamber of Commerce in China, has established a new China Intellectual Property Rights Advisory Program. Through this program, American small and medium-sized enterprises can request a free one-hour consultation with a volunteer attorney experienced in both IPR issues and the Chinese market to learn how to protect and enforce IP rights.


  1. Access Strategy Targeting Organized Piracy (STOP) and the US Embassy’s IP Toolkit. Study the resources related to IP issues in China.
  2. Imagine confronting allegations that:
    1. IP rights are a legislative tool devised by the Western governments in order to deflect the rising capability of the Chinese scientists.
    2. In some industries (notably in pharmaceuticals and biotechnology) the IP rights protection in the developing world is unethical.
  3. Compose a short, but substantive, essay in which you offer list at least four counter-arguments. Think especially on how the IP rights protection may profit a developing economy (i.e., China).

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