Intellectual Property Rights in China. Zhenqing Zhang
groups, such as China’s rising export sector, impacted decision makers at the top level.
In 1978, China resurrected the 1963 Invention Regulations. Although that move was regarded as a first step back toward recognition of industrial property rights, the exclusive right to patent was still not recognized. It was still widely believed that granting property rights to scientists and inventors contradicted the underlying principle of socialism. With the introduction of reform and opening policy, Chinese senior leaders decided that a patent system was necessary to speed up scientific development.
In 1979, a group of scholars and officials convened to draft China’s first patent law. However, after the drafted version of the patent law was completed, certain ministries voiced skepticism and even opposition to the adoption of a patent law in China. On August 25, 1980, a vice-ministerial official with the Ministry of Machinery Industry wrote a letter to the top Chinese leader, Deng Xiaoping, expressing strong opposition to the enactment of patent law.35 During several high-level meetings in and after October 1980, those opposition opinions had gained direct access to vice premier of the Chinese State Council, Fang Yi. The opposition opinions centered on the following points: first, the monopoly rights granted to the patent holders went against socialist norms of ownership and production. Second, a patent system would end up only protecting foreign interests during a time when foreign technology led a dominant advantage over Chinese domestic technology. Third, the adoption of a patent law in China would endanger the country’s “economic security,” particularly with regard to the chemical and pharmaceutical industry.36
The propatent opinion prevailed in those meetings after hot debates. On March 7, 1981, the State Science and Technology Commission and the State Patent Bureau submitted the Report on the Patent Law of People’s Republic of China to the Chinese State Council.37 The report recommended that the Chinese legislature adopt the patent law by the end of 1981. When the report was circulated among the different ministries for further discussion, it became bogged down at the Ministry of Machinery again.
This time, the Ministry of Machinery did not oppose the adoption of a patent law. Instead, the ministry put forward over seventy revision suggestions to the draft patent law. Many suggestions touched on fundamental principles of the draft patent law. For example, the draft patent law outlined different kinds of penalties against patent infringement. But the revision suggestions recommended a much lower level of penalty against patent infringement as outlined in the draft patent law. Moreover, the revision suggestions also recommended a much weaker stipulation of the exclusive rights of patent holders on the grounds that it went against the basic principle of socialist public ownership. If those suggestions had been incorporated, the patent law would have been left with only an empty frame.38
These opinions stopped the draft patent law from being submitted to the Chinese State Council for further review. Since the Ministry of Machinery possessed the same bureaucratic ranking as the State Science and Technology Commission (SSTC) and the SPB, the SSTC and the SPB could not overcome the resistance of its own bureaucratic mandate. Luckily for the propatent officials, a series of events that happened during China’s trade and technology exchange with foreign countries provided the momentum for them in 1981 and 1982. In 1981, for example, a pesticide company in Shanghai copied the technology of a French company and produced an insect killer called phosethyl-al. When it advertised the “new” product, the French company, the French Embassy in Beijing, and the French National Institute of Industrial Property protested against the Chinese side. Eventually, the pesticide company in Shanghai had to stop the production of phosethyl-al. This resulted in a heavy economic loss for the Chinese company. There are no accurate statistical data about how many China-foreign trade disputes were caused by the absence of a patent law in China at that time. For the propatent officials in China, however, the key issue was that the reports of those disputes attracted the attention of the Chinese top leaders. Wu Heng, then director of the Chinese SPB, collected a series of similar trade disputes in a report and submitted the report to Chinese top leaders, including Vice Premiers Wan Li and Gu Mu, Premier Zhao Ziyang, and Communist Party General Secretary Hu Yaobang.39
Similar things happened in China’s deepened technology exchange with foreign countries. In 1981, for example, a Chinese engineer affiliated with Northern China’s Taiyuan Polytechnic Institute invented a new means to produce alloy with mild steel, tungsten, and molybdenum when he was a visiting scholar in the United States. Applying that method at a massive scale in the Chinese metallurgy industry, energy and precious metals would produce significant savings, and the strength of the newly made alloy would be greatly improved. An American professor, who happened to be the collaborator of the Chinese engineer during his visit, identified the value of that technology and proposed they apply for a patent together with his Chinese colleague in the United States. Unfortunately, there were no legal arrangements in China to guide the Chinese engineer to apply for a patent and protect the technology. In fact, nobody in the Taiyuan Polytechnic Institute even thought about the issue in that way. Hence, the Chinese side did not receive any benefit from the technological innovation. A senior correspondent with Guangming Daily, China’s second largest newspaper, learned of that case and wrote a detailed report. Like the report on the aforementioned trade dispute cases, that report made its way into the internal government news sources (neibu cankao ziliao) and was circulated among Chinese senior leaders. That report attracted the attention of Hu Qili, then a member of the Chinese Communist Party Politburo. He commented on the report, “The adoption of a patent law is an imperative task for us. At least we should have a framework to protect our scientific inventions.”40
After the first director of the Chinese SPB, Wu Heng, retired in spring 1982, his successor, Huang Kunyi, kept pushing for the adoption of the patent law.41 This time, the propatent voices gained the endorsement of the Chinese top leaders. In December 1982, the Chinese National People’s Congress approved the Report on the Sixth Five-Year Plan on National Economic and Social Development, drafted by then Chinese premier, Zhao Ziyang.42 The report posited that “those regulations that prevent the progress and technology should be abolished. A patent law should be adopted and implemented [in the next five years].”
On January 5, 1983, Chinese state councilor, Bo Yibo, told journalists that “[recently the leaders of the State Council] approved the establishment of a patent system. That is a great thing indeed. Our past experience suggested that there should be legislation to govern the realm of science and technology. Once there is such legislation, we should implement the law seriously.”43 The fact that Bo Yibo participated in the drafting of the 1950, 1954, and 1963 Regulations added weight to his comment.
The endorsement from the Chinese top leadership helped the propatent camp overcome resistance from the antipatent camp. Since the propatent voice came from leaders with higher ranking, the leaders of the Ministry of Machinery told Huang Kunyi and his colleagues that they would no longer raise any objections to a patent law.44 On September 29, 1983, the draft patent law, which had been bogged down for almost two years, was eventually submitted to the Chinese National People’s Congress for the final review. On March 12, 1984, the Standing Committee of the National People’s Congress (NPC) adopted China’s first patent law, which went into effect on April 1, 1985.
Different from the characteristically brief 1950 Regulations, 1954 Regulations, and 1963 Regulations, the 1984 patent law consisted of sixty-nine articles that covered requirements for the granting of patent rights (Articles 22–25), procedure for application for patent rights (Articles 26–33), process to review patent applications (Articles 34–50), balance of interests in the process of applying for patents (Articles 51–58), and the protection of patent rights (Articles 59–66).45
The adoption of the first patent law in China turned out to be a big festival for Chinese science and technology professionals. The State Patent Bureau received 3,455 applications on April 1, 1985, the first day that the SPB started to accept patent applications. According to WIPO, this was a record high compared with patent organizations in other countries.46 For the rest of 1985, the SPB received a total of 14,372 patent applications. In 1986, the SPB handled the first patent dispute case in China. During the 1980s, the total number of patent applications in China grew at an annual rate of 18.3 percent.47 The adoption of patent law provided