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Centralization, Professionalization, and Uniformity in China's Intellectual Property Reforms, 19 UIC REV UIC REVIEW OF INTELLECTUAL PROPERTY LAW IS THE EMPEROR STILL FAR AWAY? CENTRALIZATION, PROFESSIONALIZATION, AND UNIFORMITY IN CHINA’S INTELLECTUAL PROPERTY REFORMS WILLIAM WEIGHTMAN ABSTRACT As China’s rapid economic growth continues to slow, the Chinese Communist Party now seeks to promote innovation as the engine of future development. With this new economic agenda, reforms to China’s intellectual property rights (IPR) regime have emerged as a key policy domain as China attempts to build market-supporting institutions and improve law enforcement capabilities. By reviewing the legal frameworks supporting specific judicial reforms and through non-randomized, semi- structured field interviews with lawyers, IP officials, and industry representatives, this article analyzes how China’s evolving legal institutions are increasing central control in the IP adjudication process, building judicial professionalism, and ensuring uniformity in case outcomes in line with the demands of its economic transition. The question of how IP rights are enforced in China is of interest not only to those who want to understand how IP protections have developed in China, but also to those who wish to analyze the role that law and the courts play in structuring central-local relations and implementing institutional reform in a historically fragmented authoritarian system. Although China’s IPR regime is far from perfect, these reforms are indicative of a major initiative to improve IP protections, nurture domestic innovation, and increase the role of China’s judicial system in efficiently resolving disputes. Cite as William Weightman, Is the Emperor Still Far Away? Centralization, Professionalization, and Uniformity in China's Intellectual Property Reforms, 19 UIC REV. INTELL. PROP. L. 145 (2020). IS THE EMPEROR STILL FAR AWAY? CENTRALIZATION, PROFESSIONALIZATION, AND UNIFORMITY IN CHINA’S INTELLECTUAL PROPERTY REFORMS WILLIAM WEIGHTMAN I. INTRODUCTION ............................................................................................................ 145 II. EXPLANATIONS FOR CHINA’S IPR REGIME ................................................................ 148 III. IPR ENFORCEMENT AND CENTRAL-LOCAL RELATIONS ............................................ 151 A. The Historical Evolution of China’s IPR Regime ............................................ 151 B. Central-Local Relations and China’s Legal Institutions ................................ 153 C. Legality in China’s Judicial Reforms .............................................................. 156 IV. CENTRALIZATION, PROFESSIONALIZATION, AND UNIFORMITY .................................. 157 A. Creation of Specialized IP Courts .................................................................... 157 B. Creation of the Specialized IP Tribunals ........................................................ 160 C. Creation of the SPC IP Appellate Tribunal .................................................... 162 D. Technical Investigators and Expert Assessors ............................................... 163 E. SPC Guiding Case System ............................................................................... 165 V. CONCLUSION .............................................................................................................. 169 VI. APPENDIX ................................................................................................................. 171 A. Table 1. China’s Major Domestic Intellectual Property Laws ....................... 171 B. Table 2. Major Intellectual Property Treaties to which China has Acceded ............................................................................................................. 172 C. Table 3. Specialized IP Courts and Tribunals with Cross-Regional Jurisdiction ....................................................................................................... 173 D. Table 4. List of Interviews ............................................................................... 176 E. Figure 1. First Instance IP Cases by Type of Case. ........................................ 177 F. Figure 2. First Instance Civil IP Cases by IP Type ........................................ 177 [19:1 2020] Is the Emperor Still Far Away? 145 IS THE EMPEROR STILL FAR AWAY? CENTRALIZATION, PROFESSIONALIZATION, AND UNIFORMITY IN CHINA’S INTELLECTUAL PROPERTY REFORMS WILLIAM WEIGHTMAN* I. INTRODUCTION China is at a crossroads. Over the last four decades, it has experienced one of the most rapid economic expansions in world history as the Chinese Communist Party (CCP) successfully transitioned the country from an agrarian, centrally planned communist regime to an industrial, market-oriented authoritarian state. China achieved this economic success largely by allowing a constant flow of labor to migrate from the countryside to the new industrial sector in the cities, making massive capital investments, and pursuing a series of market-oriented institutional reforms that allowed for entrepreneurship domestically and economic integration with the world.1 However, this development model has become increasingly unsustainable and growth has continued to slow. Given these structural economic conditions, the CCP now seeks to promote innovation as the engine of future growth. With this new economic agenda, reforms to China’s intellectual property rights (IPR) regime have emerged as a key policy domain as China attempts to build market-supporting institutions and improve law enforcement capabilities. Since 2003, real wages in rural China have risen sharply, wages between skilled and unskilled labor have generally converged, and labor shortages have emerged in urban sectors demonstrating that China’s original surplus of rural labor can no longer fuel its urban-oriented growth model.2 Likewise, the global financial crisis showed the risks associated with utilizing a development model too reliant on exports to fuel growth. China’s export to GDP ratio fell from its peak of 36 percent in 2006 to about 24.5 percent in 2009 mostly due to the precipitous decline in global demand for Chinese exports.3 However, as exports collapsed, the government attempted to bolster growth through investment. This caused investment gluts to emerge across the economy, most * © 2020 William Weightman. 2017-2018 Fulbright Fellow based in Chengdu, China, Analyst at Kobre & Kim LLP. I would like to thank Professor Guo Hongling for hosting me and serving as my advisor at Southwest Jiaotong University as well as Professor Liu Xin and Wang Juan for their support on the ground. I would also like to thank Mark Jia and Beau Barnes for reviewing this article and providing insightful feedback and Orion Lewis for his guidance and support throughout the research process. Finally, I would like to thank the editors of the UIC Review of Intellectual Property Law for their time and effort publishing this piece. This research was funded by the U.S. Department of State Fulbright Research Grant. All views and mistakes are my own. 1 See Shang-Jin Wei, Zhuan Xie & Xiaobo Zhang, China’s Transition to a More Innovative Economy: Progress and Challenges, in CHINA’S NEW SOURCES OF ECONOMIC GROWTH: HUMAN CAPITAL, INNOVATION AND TECHNOLOGICAL CHANGE 174 (Ligang Song et al. eds., 2d ed. 2017). 2 See Xiaobo Zhang, Jin Yang & Shenglin Wang, China Has Reached the Lewis Turning Point, 22 CHINA ECON. REV. 542, 542-543 (2011); see also Fang Cai & Yang Du, Wage Increases, Wage Convergence, and the Lewis Turning Point in China, 22 CHINA ECON. REV. 601, 602 (2011). 3 WORLD BANK, World Bank National Accounts Data, Exports of Goods and Services (% of GDP), https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?end=2017&locations=CN&start=1960&view =chart (last visited Feb. 9, 2020). [19:1 2020] UIC Review of Intellectual Property 146 notably in real estate,4 infrastructure,5 and industrial capacity.6 Between 2007 and 2012, during the peak of the global financial crisis, China’s debt-to-GDP ratio increased by 56 percentage points.7 It is in this rapidly changing macroeconomic environment that China’s leadership has turned to innovation as the foundation for continued growth that will help China avoid the “middle income trap” and become a global economic leader in the twenty-first century.8 The most notable example of this goal was outlined in the 13th Five-Year Plan, where the CCP set a target of having 60 percent of China’s economic growth come from innovation by 2020.9 However, even with these ambitious policy targets, central dictates are rarely effective if they are not made within an institutional environment that allows them to be properly implemented.10 4 See Edward Glaeser et al., A Real Estate Boom with Chinese Characteristics, 31 J. ECON. PERSP. 93, 93-94 (2017) (conducting a statistical review of China’s real estate boom and the investment glut that has emerged); see also Dinny McMahon, China’s Ghost Cities and Their Multi-billion Dollar Debt are Raising Concerns, AUSTL. FIN. REV. (Apr. 6, 2018), https://www.afr.com/news/world/asia/chinas- ghost-cities-and-their-multibilliondollar-debt-20180404-h0ybjz (analyzing the “ghost city” phenomenon in China). 5 See Atif Ansar et al., Does Infrastructure Investment Lead to Economic Growth or Economic Fragility? Evidence from China, 32 OXFORD REV. ECON. POL’Y 360, 385 (2016) (finding that China’s “poorly managed infrastructure investments are a main explanation of surfacing economic and financial problems”). 6 See USHA C. V. HALEY & GEORGE T. HALEY, SUBSIDIES TO CHINESE INDUSTRY: STATE
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