NBR Analysis: Volume 10

Private Enforcement of IntellectualProperty Rights in China

Donald C. Clarke is a professor at the University of Washington School of Law and a specialist in modern Chinese law. Previously he was an associate of the law firm Paul, Weiss, Rifkind, Wharton & Garrison. Professor Clarke has published articles in the Journal of Asian Law, China Quarterly, Stanford Journal of International Law, Journal of Chinese Law, and contributed chapters to edited volumes examining the growth of market institutions and economic reform in China. An earlier version of this paper was presented at the “Sino-U.S. Conference on Intellectual Property Rights and Economic Development: 1998 Chongqing,” Chongqing, China, September 16-18, 1998, sponsored by The National Bureau of Asian Research.© 1999 by The National Bureau of Asian Research. The traditional modes of policy implementation in China focus heavily on coordinated government action. Often overlooked, however, is the role that decentralized enforcement mechanisms might play. Such mechanisms work by providing multiple nongovernmental parties with the incentive and the actual ability to vindicate certain rights, and then by granting those parties a set of rights that will, if enforced, result in the accomplishment of some policy goal. Intellectual property rights (IPR) are no exception to the general picture: the role of government in enforcing IPR is large; the role of IPR holders is relatively small. Although decentralized enforcement is subject to numerous problems, including the weakness of institutions such as courts, it offers the promise of overcoming certain other problems endemic in administrative enforcement , and thus should not be overlooked as a necessary part of a comprehensive enforcement scheme. Introduction It has become commonplace to note that although China over the last two decades has established a panoply of laws and institutions for the protection of intellectual property rights (IPR), these rights are not protected to the satisfaction of IPR holders, Private Enforcement of Intellectual Property Rights in China Donald C. Clarke 67 either domestic or foreign. As a result, it is no longer possible, if it ever was, for the Chinese government merely to point to the existence of legislation and enforcement bodies as proof that China is meeting some particular international standard. Something more is required: a reason to believe that new legislation or institutions will actually work as promised. At present, it appears that foreign IPR holders are pressing their case for protection to the Chinese government more forcefully than are domestic IPR holders. But the forum in which foreign IPR holders tend to press their claims—government-to-government negotiations in which, for example, the Minister of Foreign Trade and Economic Cooperation squares off with the United States Trade Representative—is structurally biased toward producing only one kind of response: unequivocal enforcement action by a government agency. The period between early 1995 and mid-1996 is a particularly good example of this process. In February 1995, the United States and China signed the Action Plan for Effective Protection and Enforcement of Intellectual Property Rights (the “1995 Action Plan”),1 beginning an extensive series of bilateral negotiations concerning the enforcement of IPR. China’s failure to enforce the terms of the 1995 Action Plan led to the threat of sanctions by the United States in May 1996. China responded by making IPR enforcement part of a nationwide anti-crime campaign led by the Ministry of Public Security, thereby averting U.S. sanctions. Since 1996, largely satisfied with China’s progress in this area, the United States has taken a more multilateral approach to IPR enforcement. Joining with the European Union and Japan, the United States has pressed IPR concerns in its negotiations with China over accession to the World Trade Organization (WTO). Although bilateral negotiations may be effective in the short term, as demonstrated by the 1995 Action Plan and subsequent discussions, such negotiations are unlikely to produce another kind of enforcement structure that arguably has greater long-term prom1 See “China-United States: Agreement Regarding Intellectual Property Rights,” Feb. 26, 1995, U.S.PRC , International Legal Materials, vol. 34 (1995), pp. 881 ff. (consisting of a letter from Wu Yi, China’s Minister of Foreign Trade and Economic Relations, to Michael Kantor, the United States Trade Representative , and the Annex, “Action Plan for Effective Protection and Enforcement of Intellectual Property Rights”). 68 ise: a decentralized structure driven by individual actors in the legal system. Because such a system would not rely greatly on government funding or on government policy priorities at any given moment, it...