China to Restructure SIPO – A Step Toward Better IP Protection

By: Han-Mei Tso

On March 13, 2018, after deliberation at the First Meeting of the 13th National People’s Congress of China, the “State Council Institutional Reform Plan” (hereinafter referred to as the “Reform Plan”) was passed. This drastic Reform Plan involves the cancellation, formation, or restructure of a number of State Council departments and subordinate agencies under the State Council, including the State Intellectual Property Office (SIPO). The SIPO was originally one of the subordinate agencies under the State Council and was dedicated to handling patent administration throughout the country, receiving and examining patent applications, and granting patent rights in accordance with the laws.

According to the Reform Plan, the State Administration for Industry and Commerce (SAIC), the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ), and the China Food and Drug Administration (CFDA) will no longer be retained, and a new body called the State Administration for Market Regulation (SAMR) will be established instead. The SIPO will also be restructured under the Reform Plan. After the restructure, the SIPO will expand its administrative responsibility from solely patent work to covering trademark and geographical indication of origin. Additionally, the SIPO will no longer be a subordinate agency under the State Council, but will instead be a subordinate to the newly formed SAMR.

The integration of administrative responsibilities of patent, trademark, and geographical indication of origin may be one of the highlights of the SIPO’s restructure. The original responsibility of the SIPO was limited to patent work only. The responsibility of trademark administration originally belonged to the SAIC, which will no longer be retained under the Reform Plan. The responsibility relating to geographical indication of origin belonged to the GAQSIQ. In other words, the two major intellectual property rights, i.e., patent and trademark, were previously managed by two different agencies. According to the Reform Plan, they will now both be managed by the restructured SIPO. It is worth mentioning that prior to the introduction of the Reform Plan, it was said that the administration of trademark and copyright would be incorporated into the SIPO. In fact, under the Reform Plan, the administration of copyright was not changed and is still administered by the National Copyright Administration. Nonetheless, the merger of the patent and trademark administration to the SIPO is considered well-deserved. As a result, the SIPO’s authority of intellectual property administration will be similar to the United States Patent and Trademark Office.

Furthermore, the restructured SIPO will also undergo important changes in its responsibilities. It will be responsible for the protection of intellectual property rights, promote the establishment of an intellectual property protection system, be responsible for the registration and administrative rulings of trademarks, patents, and geographical indications of origin, and provide instructions regarding tasks involving trademark and patent enforcement, etc. The patent enforcement tasks that were originally undertaken by the SIPO, together with the trademark enforcement administered by the SAIC, will be handled by the Market Supervision Integrated Law Enforcement Team under the SAMR. The separation of patent administration and patent administrative enforcement from one organization, the SIPO, to two different organizations is another highlight of this restructure. Law enforcement powers will be bestowed on the SIPO’s superordinate, the SAMR, and the resulting law enforcement team will be an enforcement body that has centralized administrative enforcement powers for market regulation involving patents, trademarks, quality, or even anti-monopoly.

Currently, enterprises generally indicate that the strength of patent administrative enforcement in China is still relatively weak. Its deterrence is far inferior to that of industry and commerce administrative authorities. Once a law enforcement team for centralized market supervision is formed, the strength of patent administrative enforcement should be notably enhanced. At the same time, the expected amendment to the Chinese Patent Law is also actively progressing which may enhance the strength of patent administrative penalties, as well as clarify the measure of such penalties. One may agree that for patent infringement disputes, it will be easier to obtain timely relief, such as preliminary injunction, with a simpler procedure for stopping an infringement act through patent administrative enforcement and have the preliminary relief effectively enforced. Patent administrative enforcement nevertheless has its limitation; that is, it cannot be used simultaneously with judicial remedies, and no damages can be awarded through patent administrative enforcement. Although the petitioner may raise a damage claim in the petition for patent administrative enforcement and negotiate with the respondent, i.e. the alleged infringer, to reach an agreement on the damage amount, the petitioner can only pursue damages by filing a lawsuit with a court if no agreement is reached in patent administrative enforcement.