On March 17, 2018, the 13th National People’s Congress (“NPC”) approved the plan of restructuring administrative organs under the State Council. The implementation of the plan is already in process, but the State Council did not announce a date for completion. Specifically, on the IP side, the SIPO will take over registration and administration of trademarks from the State Administration for Industry & Commerce (“SAIC”) by incorporating the China Trademark Office (“CTMO”). The SIPO will also take over registration and administration of geographic indicators from the General Administration of Quality Supervision, Inspection and Quarantine (“AQSIQ”). The SIPO will retain its responsibility of registration and administrative adjudication of patents (including examination of patent applications, reexamination and invalidation proceedings). Currently, the SIPO will not take over the administration of copyright from the National Copyright Administration.
In the past, patents, trademarks and geographic indicators were administered and enforced by separate ministries in China. This caused jurisdictional conflict and confusion. The most prominent issue was differences in administrative enforcement of patents versus trademarks. When a patent or a trademark is infringed, there are at least two ways for a right-holder to enforce their rights: one is to file a lawsuit and the other is to request an administrative authority to handle the matter. However, both the Trademark Office (usually a local administrative department of the SAIC) and the Patent Office (usually a local department of the administration of patent-related work) had the right to investigate IP infringement and had their own enforcement teams which followed different laws and regulations. Further, the two ministries had different administrative remedies for infringement. For example, the Trademark Office had the right to confiscate and destroy infringing goods and instruments mainly used for manufacturing the infringing goods, while the Patent Office could only order the infringer to cease the infringement action immediately. Accordingly, if the infringement related to both patents and trademarks, the right holder may prefer to only choose TM administrative relief.
Therefore, the consolidation of the three ministries should hopefully improve on the above problems of separated administration and conflicting jurisdiction of administrative enforcement of patents and trademarks. According to the plan, the newly organized SIPO will be governed under a new State Administration for Market Regulation (“SAMR”). Instead of separate enforcement, a single integrated enforcement team will be established under SAMR for both patents and trademarks. In the future, the right holder may not need to request different ministries to handle IP disputes, which will save time and resources and hopefully lead to better results for IP right holders.
According to the plan, antitrust authorities will also be merged into SAMR. In the past, the powers to enforce the Anti-Monopoly Law (“AML”) were mainly divided between Price Inspection and Anti-Monopoly Bureau of National Development and Reform Commission (“NDRC”), the Anti-Monopoly Bureau of the Ministry of Commerce (“MOFCOM”), and Anti-monopoly and Anti-Unfair Competition Enforcement Bureau of the SAIC. These three authorities were supervised by the State Council’s Anti-Monopoly Commission (“AMC”).
In recent years, antitrust investigation regarding licensing of intellectual property, especially patents, has been increasing. In 2015 and 2016, the NDRC and SAIC have successively issued the Anti-Monopoly Guidelines on Intellectual Property Abuse, and in 2017, the AMC has also issued the Anti-Monopoly Guidelines on Intellectual Property Abuse (draft). However, the separated administration and enforcement cause the three authorities to follow different rules and their powers overlap in some areas.
The new SAMR will take over the enforcement of AML from Inspection and Anti-Monopoly Bureau of the NDRC, the Anti-Monopoly Bureau of the MOFCOM, and Anti-monopoly and Anti-Unfair Competition Enforcement Bureau of the SAIC. The consolidation hopefully will improve on conflicting antitrust regulations by allowing the SAMR to presumably issue uniform rules and guidelines to regulate enforcement regarding IP abuse, especially in the patent licensing area. In addition, since the SIPO and the antitrust authorities are all combined into SAMR, foreign patentees may see more antitrust enforcement actions on patent licensing. The antitrust fine of Qualcomm for $975 million may be the first in a long line of antitrust enforcement cases in the patent arena.