China Law Insight : China Business and Intellectual Property Lawyers & Attorneys : King & Wood Law Firm : IP, Arbitration, Litigation, Securities, Foreign Investment

China filed 7,946 applications, an impressive 29.7% increase over its 2008 filings. Two Chinese filers were among the top 100. Huawei Technologies Co., Ltd. came in with 1847 applications, second only to Japan's Panasonic Corporation and ZTE Corporation jumped 15 places to finish 23rd with 502 filings. Together, these two companies accounted for 30% of China's 7,946 filings. For the year, Huawei filed 110 more applications than in 2008, an increase of 6.3% while ZTE increased by 52.6%, submitting 173 more applications into the PCT system than in the previous year.

The prolific activities of these two equipment makers in the telecommunications industry indicate the importance of protecting intellectual property rights in multiple jurisdictions as Chinese companies expand beyond China's shores to become players in the global market. The WIPO statistics indicates that Chinese companies are taking advantage of using PCT applications for international protection.

The PCT procedure gives an applicant the convenience of filing initially only one patent application with one set of papers in one language with a receiving office designated by the PCT. At a later stage, should the applicant desires, it can then choose the jurisdictions where the patent application should be filed. Only at that stage would the applicant have to pay for necessary translations and filing fees of the national jurisdiction where the application is filed. The procedure gives the applicant much more control over the application process. Companies with proprietary knowhow or inventions interested in expanding overseas should consider this option as part of their patent application strategy.
 

In addition, many regional Arbitration Commissions have also started paying more attention to the importance of IPR arbitration and some have set up their own Intellectual Property Arbitration Centers in an attempt to provide an effective means for IPR disputes resolution, in addition to judicial and administrative remedies. For example:

• On February 15, 2006, the first intellectual property arbitration center was set up by the Xiamen Arbitration Commission.
• On April 15, 2007, the Intellectual Property Court of Arbitration was officially set up by Wuhan Arbitration Commission.
• On April 25, 2008, the Intellectual Property Arbitration Center of Guangzhou Arbitration Commission was officially set up.
• On October 29, 2008, the Shanghai Intellectual Property Court of Arbitration was officially set up.
• Nevertheless, IPR arbitration in China is just at its infant stage and still facing the following problems:

a. Unbalanced Development among Regions in China

There are over 170 regional arbitration commissions at various levels in China. However, in addition to the Domain Name Dispute Settlement Center set up by the CIETAC, only four regional commissions, including Xiamen, Wuhan, Guangzhou and Shanghai, as mentioned above, have set up arbitration organs specializing in IP disputes. It is clear that the development of IPR arbitration is not balanced among different regions.

b. Lack of International Regard

Since the first PRC Arbitration Commission was set up in 1956, Chinese arbitral practitioners have strived to be professional, fair and efficient. In the past decade especially, the amount of arbitration cases involving foreign parties has increased every year, an indication that foreign parties have more confidence in Chinese arbitration institutions. On the other hand, IP cases accepted by the arbitration institutions are actually still quite rare from what one would expect given the number of IPR disputes. Chinese arbitration institutions must lift their arbitration standards in IP arbitrations, promote China's IP protection system to the rest of the world, and establish a series of IP arbitration centers that are internationally recognized.

c. Lack of Supplementary IP Arbitration Rules

Since intellectual property is knowledge-based, IPR arbitration is special and different from general commercial arbitration. Therefore, the procedural rules for general arbitration cannot be entirely applied to IPR arbitrations. In this aspect, the WIPO Expedited Arbitration Rules has provided a good reference point but unfortunately, to date none of the Chinese arbitration institutions has issued its own arbitration rules specific to IPR disputes.

Conclusion

Under the background of globalization, utilization of intellectual property has also become more internationalized and commercialized as can be seen through a variety of cross-border cooperation arrangements, such as through licensing, technology transfer and co-operative research and exploitation arrangements. This has raised the demands of the rights holders for dealing with IPR disputes at an international level. When seeking mechanisms for dispute settlement, more and more parties take their commercial interests as the primary concern, i.e. they require the dispute procedure to be personal, highly flexible and efficient so that the cross-border disputes can be solved without ruining the commercial relationships. As an alternative means for dispute resolution, arbitration can avoid parallel litigations and has its inherent advantages in dealing with commercial disputes in respect of flexibility, confidentiality, finality.

China has taken steps to promote and encourage IPR arbitration. In June, 2008, the State Council issued the Outline of the National Intellectual Property Strategy, which indicates that intellectual property is becoming a strategic resource in national development and a core element in international competitiveness, and therefore the development of an IP protection and arbitration system should be an important focus of the national development plan.