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IPR needs a holistic approach
By Ma Chao (China Daily)
Updated: 2010-10-21 18:12
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Chinese people today are more aware about the protection of intellectual property rights (IPR). Though many still have a vague idea about IPR, more businesspersons and consumers are paying attention to intellectual property, including patents, copyrights and trademarks.
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David Llewelyn, legal expert on IPR issues and deputy chairman of the Intellectual Property Academy of Singapore, says China has made good progress in IPR. The country has made great efforts and achieved lot in the area in a relatively short time. A latecomer to the intellectual property field, China introduced its first IPR law, the Trademark Law, in 1982. In less than three decades since then, it has put in place a fairly complete and mature IPR law system.
When China joined the World Trade Organization (WTO) in 2001, it accepted to abide by the international conventions on IPR and to protect intellectual property. The WTO membership has been functioning as a stimulus, culminating in the formulation of the national IPR strategy in 2008.
Llewelyn, however, says that enacting laws alone doesn't necessarily mean they would be enforced properly. Take China for example - it has introduced laws but faces enforcement problems. Pirated and counterfeit products are still available in the country, and many people still cannot tell the real products from the fakes.
There still are many consumers who don't care about intellectual property while buying products, Llewelyn says. Hence, educating the people about the importance of IPR is of utmost importance. Only if the IPR violations are curbed and relevant laws enforced properly can the domestic market be considered mature.
People usually see intellectual property from the legal point of view. But in reality it has various facets. So, people have to see intellectual property in a holistic way, Llewelyn says.
Intellectual property creates business opportunities. A company will find it hard to maintain its competitive edge if it only imitates others' products and makes them at lower cost, because another company could make the same products at an even lower cost. It is essential to invest heavily in research and development (R&D) to keep inventing new products continuously and thus build a business that remains competitive in the long run. Protection of IPR is crucial for encouraging companies to make innovative and creative products, which are at the core of a modern economy.
IPR requires financial institutions to be innovative with their system, too, Llewelyn says. Traditional banking focuses on physical property, and it is usually difficult for intellectual property owners to obtain capital from the financial market. Ways should be found to channel capital to companies that have the innovative capacity but face fund shortage.
He says China should introduce a pilot project to allow companies to use their intellectual property as collateral to acquire bank loans. Similar projects have been implemented in other countries, including the US, and experience shows that bankers have to be educated about the concept of intellectual property.
Employment plays a big role in the IPR issue. Sometimes local governments are reluctant to curb the production of pirated and fake products because they are afraid that if the factories making them are shut down many workers could be laid off. But contrary to popular belief, investment in innovative industries could create more jobs.
Llewelyn says IPR with its many aspects is more like a complete economic system, formed by authorities enacting and enforcing IPR laws, companies keen to make innovative products, consumers aware of trademarks and copyrights, and financial institutions ready to channel funds to intellectual property owners.
Shanzhai (or imitation) products violate IPR, he says. Using a product that looks like an established brand may confuse consumers and make them accept the counterfeits as the real thing.
Hence, such products should be declared illegal. Shanzhai products prevent the companies making them from winning over the market in the long run. If a company builds its product line by copying some other companies' products, it can never be innovative or creative. Hence, Llewelyn suggests that companies start creating their own brands. "If a company can develop its market position independent of another brand, it can have a long, sustainable life".
Singapore is a good example of an economic system that favors intellectual property, Llewelyn says. Its government focuses on industries that make high value-added products, for which it has invested heavily in R&D.
But the conditions of Singapore, a city state with only about 5 million people, are very different from those of China. Unlike Singapore, it is a lot more difficult for China, with its different regions at different stages of development, to enforce a nationwide IPR strategy, he says. Nevertheless, protection of IPR will benefit all parts of China.
The problem is that some Chinese companies see intellectual property as a liability, though many have learnt to treat them as assets by creating their own trademarks, designs and patterns. In fact, many Chinese companies - a few in even less developed regions - have begun to capitalize on intellectual property.
As early as 2004, Shenzhen-based Netac Technology Co that invented USB flash drive took Beijing-based Huaqi company to court for IPR violation.
Contrary to popular belief that only Chinese companies violate IPR, some foreign companies have also been caught in the act.
In recent years, Chinese companies such as Wahaha and Huawei have fought against foreign companies to protect their IPR. If this practice becomes the trend in China, the country will achieve its goal of changing the "Made in China" tag to "Created in China'.