IP System and Economic Development:

Empirical Evidence from China

Qi Su

IP Institute, Tong Ji University

Dec 04, 2013

2013 TongJi Global Intellectual Property Forum2013 TongJi Global Intellectual Property Forum

Introduction

The overall effects of IP system on economic growth

are in general ambiguous.

The IP system has been the subject of frequent

controversies in discussion about China’s economic

growth.

What is the real drive behind the China’s miracle?

What are the roles of IP system in China’s developing

process?

IP System and Development Process: Empirical

Evidence from China

Traditional ： concept of IP as exclusive personal property alien to Chinese culture

Intellectual creations viewed as being in the public domain rather than

belonging to individual, creativity considered as collectively benefiting

community.

Invention and authorship not recognized as worthy of legal protection.

IP System and Development Process: Empirical

Evidence from China

It was not until the promulgation of national “open door” policy

of 1979 that China realized the need to protect IP and the

importance of the IP law.

1984: First Patent Law Enacted

Background: Open Door Initiatives

Reasons: attracting FDI & the pressure form the abroad

Main Purpose: facilitate diffusion of new technology

1984: First Patent Law Enacted

IP Infrastructure

kinds of patent allowed: invention, design and utility modeldesign and utility model

exclude chemical, pharmaceutical, and alimentary or process

inventions from patent coverage

first to file

shorter duration period

SOEs cannot deal with their patents autonomously

1992: The First Amendment of Patent Law

Background:

Market- driven reform

strategy to revitalize the nation through science, technology and

education; sustainable development

Reasons:

Attracting high technology industries

Pressure from USA

Main Purpose:

Facilitate the transformation and commercialization of science and

technology achievements

1992: The First Amendment of Patent Law

IP Infrastructure

Patent coverage: food, beverages, flavoring, pharmaceutical products,

and substances obtained by means of chemical processed

Duration of invention extended

Individual were allowed to own patents for invention-creations during

working time if an agreement was made between individuals and

employers.

domestic priorities

Narrowed the situations in which compulsory licenses may be granted

2000: The Second Amendment of Patent Law

Background: Strengthen the indigenous innovation capability

Anticipating of China’s accession on the WTO

Reasons:Government initiates three strategies in order to strengthen the

indigenous innovation capabilities: patent, standard and talent

Comprehensive integration into global market

Main Purpose: Fulfillment the requirements of the WTO

Resolve the shortcomings of the existing system

2000: The Second Amendment of Patent Law

IP Infrastructure: various new provisions to strengthen

protection and enforcement of patent rights in China

Simplification the examination process

IP protection enhanced

Standard for determining compensatory damages for patent

infringement

2008: The Third Amendment of Patent Law

Background: Building an Innovation-oriented Country

The State Council issued the “National Intellectual Property Strategy

Outline” (“IP Strategy”)

Reasons:Neither by external pressure nor made in an attempt to conform with

an international treaty, focus on China’s own ambitious

Main Purpose: Implement the goals set forth in the IP Strategy

2008: The Third Amendment of Patent Law

IP Infrastructure:

Promote patent application

Encourage patent exploitation

Heighten the requirement for patentability

Increase patent protection

Address compulsory licensing

Establish protection of genetic resources

Developing PerformanceThe applications for patens received from home and abroad

Source: SIPO

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

180000019

8519

8619

8719

8819

8919

9019

9119

9219

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9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0720

0820

0920

1020

11

Domestic Applications Total Applications

Economy performance:Foreign Direct Investment Flows (Unit value is US$ 100m)

Source: Chinese Ministry of Commerce

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

1400.0019

8319

8419

8519

8619

8719

8819

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9119

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0120

0220

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11

FDI

Economy performance:Contracts for Chinese technology import

Source: Chinese Ministry of Commerce

0

2000

4000

6000

8000

10000

12000

14000

Contracts

Economy performance:Value of China’s technology import

Source: Chinese Ministry of Commerce

0

50

100

150

200

250

300

350

Value(Unit value is US$100m)

Conclusion:

Correlation between China's economic development

and the IP System

- economic interests playing a more determinative role

- IP system can support economic development

- The role of IP system dependent on many other complementary

factors

Conclusion:

The Necessity of a flexible IP system: tailor the IP

system to meet the local needs and circumstance.

- IP System design

- International collaboration