11 April 2019Trademarks

Chinese officials seek to strengthen Foreign Investment Law

Chinese efforts to clean up the country’s reputation on IP enforcement are continuing apace as the government releases further updates on the new Foreign Investment Law.

According to a  state media report shared on official Chinese government channels on Tuesday, April 9, non-discrimination and harsher penalties will be a “cornerstone” of the new law.

Chinese legislators approved the law at the second session of the 13th National People’s Congress last month. Once implemented, it will formally ban the practice of forcing foreign companies to hand over technology and IP in exchange for access to the Chinese market.

At a meeting of the executive of the State Council earlier this month, led by Premier Li Keqiang, officials submitted amendments to the law which would further strengthen the principle of non-discrimination as well as impose harsher violations for breach of the new rules.

As part of the amendments, “non-discrimination will be added to administrative approval procedures, along with increased financial penalties imposed on violators who infringed trademark rights”.

Allegations of forced technology transfer have been a source of tension between the Chinese and US governments.

For the most part, these accusations have centred around foreign companies being forced to negotiate joint ventures with domestic Chinese companies in order to gain access to the market.

Chinese officials have denied the reports, saying that there is “no forced technology transfer in China”.

Tim Smith, executive at Rouse Consultancy with a focus on China, told WIPR last month that the US claims were “weak” and painted an inaccurate picture of the Chinese IP system as a whole.

The latest news from the State Council, however, indicates that Chinese officials are keen to enhance the country’s reputation as a favourable market for foreign businesses.

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More on this story

25 March 2019   A senior Chinese official has said that the country is to “cut the time needed for patent review” by at least 15%, it has been reported.
8 March 2019   China is set to implement a new law banning the forced transfer of technology from companies wishing to enter the Chinese market.
4 June 2019   The Chinese government has issued a robust defence of the country’s IP regime and rejected allegations of technology theft as an “unfounded fabrication” in a white paper on the continuing trade talks with the US.