Why is there such robust innovation in China given that the nation is notorious for piracy and intellectual property infringement? In Johanna Blakley’s Ted Talk, Lessons From Fashion’s Free Culture, we learned that the fashion industry thrives under a “free culture” system where copying and imitation are accepted. In the same way, there is a close connection between China’s powerful leaps in innovation and the free culture that has defined the country’s economic and social development over the past 20 years.
A Free Culture Increases Affordability and Accessibility
If anyone is familiar with Instagram, a Chinese app called the Little Red Book is even better. I use it every day. But sometimes, I’ll swipe to find exact replicas of content on the app. For example, someone’s vlog would be completely replicated and filmed by another influencer. Same script, same music. The same thing happens on Taobao!
If you know anything about Chinese culture, everybody buys clothes and everyday goods from Taobao. I always see the same item pop up from different stores. I’m almost sure that no one is monitoring and protecting intellectual property rights on these apps. This lax enforcement of intellectual property laws does have big advantages though – it incentivizes newcomers to get in the game. It makes products more affordable and accessible to consumers. More competition allows for lowered prices and increased quality. Additionally, gentle intellectual property enforcement can foster economic growth and development, as we’ve seen first-hand in the past few years in China. As such, I think Taobao and Little Red Book owe at least part of their success to the intellectual property landscape.
Drawbacks of a Free Culture
However, China’s free culture doesn’t come without its drawbacks. Chinese companies frequently face allegations of intellectual property violations. These claims have been documented by media outlets, such as The New York Times with headlines like “China has a world-leading knack for churning out copies and counterfeits,” and The Diplomat’s “How China’s legal system enables intellectual property theft”. From 2016 to 2020, the amount of intellectual property lawsuits has grown by over threefold. In August of 2014, the National People’s Congress initiated a trial program for three specialized courts specifically for IP cases in Beijing, Shanghai, and Guangzhou.
Myth 1: China’s Weaker IP System?
According to Harvard Business Review, it’s a myth that China’s intellectual property system is inherently weaker and therefore less attractive to businesses compared to affluent nations like the US. Despite some shortcomings in China’s intellectual property system, China is capable of adequately protecting intellectual property rights. In fact, China’s system may be more advantageous for businesses than those of other countries.
For example, China permits non-competes, which are not allowed in some US states. Additionally, China has more relaxed regulations for patenting business methods, biotechnology, and software than the US and Europe, which means it’s definitely more relaxed than Canada (remember Harvard College v. Canada (Commissioner of Patents)?). China’s patent examination process is faster than that of the European Patent Office and the US Patent & Trademark Office, and of higher quality than some national offices in Europe. China offers lower lawyer and court costs for intellectual property litigation than other major jurisdictions, quicker trials, and more efficient enforcement options. Additionally, due to the structure of China’s legal institutions, there may be less of a risk of patent trolls in China than in the US.
Myth 2: Less than Ideal Politics?
Another misconception, according to Harvard Business Review, is that because China does not have a liberal democratic system, its institutions will not properly respect intellectual property rights. While politics do play a role in economic governance, a liberal democracy is not required for adequate intellectual property protection. Countries that are not liberal democratic may still respect the rule of economic law, which is essential for protection, just as well or better than liberal democracies. For example, Singapore, a city-state that has rejected liberal democracy, has a strong reputation for protecting intellectual property, including foreign IP.
Final Thoughts
China has had an interesting intellectual property history.
Following the Cultural Revolution from 1966 to 1976, intellectuals were demonized as capitalist cronies, and the Central Administration of Industry and Commerce was dismantled. Intellectual property was not rewarded (or even encouraged at all), and tens of thousands of scientists and technical professionals were sent to labor camps. The 50,000 registered trademarks in China were criticized as representing capitalist values and were no longer used (Michigan State University). As a result, intellectual property rights were largely absent for the following decade.
Intellectual property rights were slowly rebuilt. In 2011, China joined the World Trade Organization and revised its patent, trademark, copyright, and trade secret policies to meet the requirements of the global community. Since then, China has continued to improve its intellectual property regime, with a focus on developing internally rather than protecting foreigners. In 2018, the US initiated a series of tariffs against China, forcing China to take international IP enforcement seriously. This resulted in Chinese intellectual property rights undergoing revisions, including the 2019 Trademark Law, which identified bad-faith filings as illegal. In January 2020, the Phase One Trade Deal was signed, which focused on directives for enforcement.
Communications Law