Civil Code to help protect intellectual property

Its philosophy and principles penetrate every rule in related acts, says professor

The Civil Code, which is scheduled to come into force in January 2021, will exert much influence on China's intellectual property legal system, according to experts.

The new code, which was passed by the National People's Congress in May, is a codification of civil statutes. It comprises 1,260 articles, more than 50 of them related to IP, China Intellectual Property News quoted Tao Xinliang, honorary dean of the School of Intellectual Property at Dalian University of Technology, as saying.

"It will be of great significance to enhancing IP protection, supporting IP utilization and promoting continuous improvements to related laws and regulations," Tao said.

Liu Chuntian, a law professor at Renmin University of China, told the Beijing-based newspaper that the Civil Code will have a "fundamental, systematic and decisive role" in China's IP legal system. Its philosophy and principles penetrate every rule in related acts and provide guidance for them, he added.

According to the code, the IP spectrum includes copyright works; patented inventions, utility models and industrial designs; trademarks; geographical indications; trade secrets; integrated circuit designs; and new plant varieties.

As the code makes the IP types clear, Tao predicts a rise in legal disputes centering on trade secrets and heated debate on whether legislators need to roll out a separate act for that.

Currently, the Anti-Unfair Competition Law applies to legal wrangles over trade secrets, which are becoming an increasingly important means of protection in the business community.

Liu cited semiconductor manufacturer TSMC as an example. At the Taiwan-headquartered company, more than 90 percent of its technologies are protected as trade secrets, he said.

Lyu Wei, former head of the innovative development department at the Development Research Center of the State Council, told China Economic Times that a survey among domestic manufacturers showed trade secrets rank highest among various tools for IP protection.

With the popularity of new technologies, such as cloud storage, big data and artificial intelligence, growing infringements on trade secrets are gaining more attention, Lyu said.

The battle against such violations is also a frequent issue in international trade talks among countries. It indicates the key role in improving a related protection system for global competition, she said.

Liu said a market economy is a complex system so its development requires a sophisticated and elaborate civil law scheme.

Market competition is essentially a race for technology and IP, he said. "To ensure the motivation for innovation, sufficient and effective IP protection is a must."

The country's stance on the issue can be reflected by the provision of punitive damages in the Civil Code, which is expected to further deter IP infringements, according to Tao.

As higher-level norms exist in the legal system of civil rights, the code will come in order of precedence. Thus subordinate laws, including those focused on patents and copyrights, which are being amended, will be adapted to it, with an addition of punitive damages-related content, Tao said.

Targeting severe IP infringements, punitive damages were included in the 2013 revision of the Trademark Law and the 2019 Anti-Unfair Competition Law.

"It is envisioned that a new wave of punitive damages will be granted in court after the Civil Code takes effect," Tao said.

In addition, Tao said the provisions for technological contracts in the code will help to standardize licensing deals and encourage IP commercialization and industrialization.

Before the code was presented to the congress for approval, academia had been divided over whether IP should take up a section of the landmark legislation.

As it turned out, IP-related provisions are scattered throughout the code rather than being a dedicated section.

IP legislation in China involves both civil rights and administrative management. In contrast, the Civil Code is designed to govern the relations of civil subjects on an equal footing. Therefore, it is hard for the code to incorporate administrative management, said Shen Chunyao, head of the Legislative Affairs Commission of the NPC Standing Committee.

Also, it is hard to generalize about common principles from a variety of IP statutes each with distinct features, Shen added.

Another reason that IP is denied a dedicated section of the code is that its legislation and enforcement have to be adjusted frequently in tune with rapid technological progress.

Such frequent amendments would make the massive code hard to remain consistent and stable, Shen said.

However, some experts are expecting future changes in the structure of the code.

Tao said the current structure will likely leave space for amendments to the code in the future.

Wu Handong, a senior IP expert, told China Intellectual Property News: "The systematization and codification of China's IP legal system still has a long way to go."

He said scholars will explore a charter for IP legislation, either in the form of an added section to the Civil Code, or as a separate IP code.