European Commission believes China to be the worst offender in terms of intellectual property rights (IPR) infringement, according
January EU report that ranked Beijing as a “priority 1” country due to the scale and persistence of IPR problems. The report found that China grants questionable patents and uses patent-thickets dense groups of IP rights in certain fields — to hinder innovation.
Beijing’s frequent use of invalidation proceedings against patents by foreign companies allow Chinese firms to use patented foreign technologies “without paying adequate royalties,” the report says. The Financial Times commented, “Worst offenders continue to drain European businesses of jobs as well as billions of euros in revenues.”
As for trademarks in China, the report found the main problem to be the registration of bad faith applications. While China’s trademark law has recently been strengthened, many loopholes remain.
Forced technology transfer (FTT) remains a systematic problem in China, the report states. With FTT, the government or private companies with government ties require, pressure, or induce European firms to transfer their technology to China in order to gain market access, investment access, or other government approvals.
While Chinese officials have stepped up efforts to cut down on counterfeiting, the report says the “measures in place do not seem to keep pace with new technologies and the sheer amount of infringements.” It found that 80 percent of counterfeit and pirated goods seized by EU customs officials originated from China and Hong Kong.
Although China’s legal system has made some progress in improving intellectual property rights protection, “Concerns still remain about the lack of clarity of legal provisions, which often seem to provide the authorities with an unusually broad margin of discretion for the practical implementation of laws and regulations,” the report states.