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New law will better protect IPR

Updated: Mar 18, 2019 By Wang Shujun China Daily Print
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Shi Yu/China Daily

The transfer of technology is a necessary requirement for innovative development. Article 7 of the World Trade Organization's Agreement on Trade-Related Aspects of Intellectual Property Rights (or TRIPS Agreement) says: "The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations."

Which suggests IPR protection and promotion of technology transfer are equally important. The TRIPS Agreement, however, pays more attention to IPR protection in terms of rules while undermining the importance of technology transfer, and thus fails to ensure the transfer of technologies from developed countries to developing countries.

Besides, the international community has not yet established a unified and feasible technology transfer protocol.

US uses excuses to accuse other countries of IP theft

These factors are being used by the United States to provoke trade conflicts against the developing countries, especially against China, based on its own high-standard technology transfer prohibition rules. Last year, the US accused China, without any evidence or basis, of forcing foreign companies to transfer their technologies as well as stealing intellectual property and launched an investigation under Section 301 of the US Trade Act of 1974.

But the reality is that China does not force any foreign company operating in the country to transfer its technologies to a Chinese enterprise. During the four decades of reform and opening-up, China has continuously opened its door wider to the outside world, implemented favorable policies to attract more foreign investments, protected the legal rights of foreign investors and companies, especially their intellectual property rights and interests, and always made efforts to provide a good business environment for foreign investors.

Also, China has accorded equal treatment to all kinds of enterprises operating in China.

New law encourages tech cooperation

The Law on Foreign Investment, which was passed by the second session of the 13th National People's Congress, China's top legislature, on Friday, will further strengthen IPR protection across the board and improve the system of punitive compensation for IPR infringements when it comes into effect on Jan 1, 2020.

More specifically, Article 22 of the law says China will better protect the intellectual property of foreign investors and foreign-invested enterprises, the legal rights and interests of IPR holders, and encourage technological cooperation based on voluntary agreement between the parties involved and business rules.

In the field of foreign investment, this effectively means all parties involved should determine, on an equal basis, the conditions of cooperation in technology transfer. The new law also forbids officials to use administrative means to force foreign enterprises to transfer their technologies to Chinese companies, and stipulates that administrative organs and Chinese companies should respect market rules and the spirit of contract.

In market economy, technology transfer is a normal phenomenon; it is achieved through negotiations among all parties involved on an equal footing. Market economy also makes enterprises the final decision-makers when it comes to technology transfer.

China will further open up its economy

The new law will help China to further open up its economy, showing its resolve to attract more foreign investment in the new era. It will also help the country to strengthen innovative cooperation with investors, companies and governments around the world, protect the free global trading system and build a community of mutual benefit and win-win cooperation.

Besides, China will also strengthen the legal protection system for foreign investors and companies. For that, however, China has to expeditiously enact supporting rules for the new foreign investment law.

China should also take measures to establish better cohesion between the new law and other intellectual property laws and regulations, as well as further strengthen IPR protection. And since there is always the fear of intellectual property rights being misused, the government needs to strike the right balance between IPR protection and safeguarding public interests.

Need to make clear nature of technology transfer

It is also important that the government issue regulations to make clear the transfer of what kind of technologies, especially those concerning public interests such as patents on medicines and use of eco-friendly applications, will not be considered infringements of intellectual property rights.

Moreover, the international community should urge the developed economies to fulfill their international obligations, according to the TRIPS Agreement, of transferring technologies to the developing countries, and expediting the process of making rules for international technology transfer, so that the rights and interests of the developing countries are not compromised.

The author is a researcher at the School of International Law, Southwest University of Political Science and Law. The views don't necessarily represent those of China Daily.

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