SIPO transformed: what China’s office reshuffle will mean for enforcement and IP commercialisation

  • Combination of trademark and patent functions expected to optimise IP management
  • Changes to enforcement structure predicted to lower costs for rights holders
  • Strengthened administrative enforcement could relieve pressure on judicial authorities

An exclusive guest analysis on the implications of last month’s announcement that China’s patent and trademark offices will merge. Two experts from Chang Tsi & Partners claim the move should be seen by trademark practitioners as a positive, with increased remedies and enhancements to IP enforcement and the prospect of more reliable rights in China.

Last month, we analysed the announcement that China’s patent and trademark offices – in addition to a number of other agencies – are to be combined and housed under one roof as part of a major bureaucratic reshuffle. In the weeks since that shock announcement, more details have been emerging. For example, our sister website IAM reported on March 22 that, according to Chinese media reports, Shen Changyu (who has led China’s patent office since 2014) will lead the combined office, with Liu Junchen, a former SAIC vice minister (who has held high-level responsibilities in the trademark sphere during his career), to be the office’s party secretary.

While specific details are now emerging, questions still remain about what the move could mean for brand owners. To provide a deeper dive into the announced plans, we asked Spring Chang and Bohan Li, of Chang Tsi & Partners in Beijing, to author a guest analysis article, which can be read in full below.

Guest analysis

The restructuring of the State Intellectual Property Office (SIPO) comprises consolidating the duties of the current SIPO, responsibilities for trademark administration of the State Administration of Industry and Commerce (SAIC), and responsibilities for administrating geographical indications (GI) of the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ). A newly formed SIPO is to be administrated by the State Administration of Market Supervision and Management of the PRC (SAMSM) and will be responsible for protecting IP rights, advocating IP protection, registering and administratively adjudicating trademark, patent, and GI rights, and guiding trademark and patent law enforcement work.

The SAMSM will therefore be a new department under the State Council, and will be formed by integrating the different duties of various departments, including the SAIC, the GAQSIQ and the China Food and Drug Administration, as well as duties of price supervision & inspection (and legal enforcement on anti-monopoly) by the National Development and Reform Commission (NDRC) and enforcement against business operators on anti-monopoly (performed by the Ministry of Commerce). The newly organized SAMSM will be responsible for comprehensively supervising and administering the market, establishing information sharing mechanisms, organising integrated law-enforcement work on market supervision and administration, and legislating anti-monopoly law, amongst others. The SASM is also responsible for monitoring the safety and quality of industrial products, food, and special equipment, and uniformly administrating standards, authentication and certification, etc.

Enhancing IP protection and efficiency

The IP authorities have operated across a dispersed structure, which is complicated to coordinate. The reformation therefore optimises the structure and function of the IP management system of the State Council, improving efficiencies in communication and administration.

Specifically, it integrates the patent and trademark functions. Due to duplicated administration, the previous set-up was inefficient and policy responsibility was divided amongst different state departments, causing duplication in law enforcement efforts. Generally speaking, trademarks are the business cards of products, and patents are the internals. The intimate relationship between patents and trademarks is akin to the external and the internal value of the product. Administrating the external and the internal value of the product together can integrate resources and optimise institutional structures, thereby further improving the IP protection system.

Authorities in other countries already have a similar structure – for instance the United States Patent and Trademark Office, Japan Patent Office, Deutsches Patent- und Markenamt, and Instituto Nacional da Propriedade Industrial. For example, the UK IPO administrates patents, trademarks, and copyright. This unified supervision is an international practice, at least for industrial property.

Additionally, both trademarks and patents involve significant administrative examination procedures. Two administration departments can stimulate mutual improvement, thereby improving the efficiency of the entirety of IP administration.

The restructuring of SIPO therefore not only strengthens the creation, protection, and application of intellectual property, it also becomes a signal for China to speed up its march towards being an innovative country.

Unified enforcement avoids conflict, intensifies power

In the current administrative system, administrative responsibilities for patents, trademarks, copyright, and GIs are distributed to SIPO, the SAIC, the National Copyright Administration (NCA), and GAQSIQ respectively. Therefore, patents and trademarks are separately administrated by different departments, which creates enforcement conflicts between SAIC and SIPO on enforcement standards. This separation of administration has resulted in different enforcement standards and IP protection approaches. Unified administration by SIPO will allow the development of coherent enforcement effort – for instance, differences in damages and administrative remedies can be mitigated.

This unified enforcement also creates increased supervision powers. For instance, counterfeited products may involve both trademark and patent infringement. In such cases, the current, separated administration cannot form a joint force to tackle this illegal activity. The rights owner therefore tends to struggle between the old SIPO and the trademark office for legal rights determination and protection, which increases the operational costs of the right owner.

However, integrated enforcement teams for market supervision and administration will in charge of both trademark and patent enforcement after the reformation. It is also likely that law enforcement officers in the industrial and commercial authorities will be included into the newly-established integrated enforcement teams for market supervision and administration because law enforcement officers in the industrial and commercial authorities have relatively adequate personnel and comparatively strong competence in law enforcement.

The reformation will not only increase enforcement intensity and power but also shorten the enforcement period. Furthermore, integrated law enforcement regulates infringers in many aspects, meaning that more enterprises will adopt administrative measures to protect their IP, thereby relieving the caseloads of judicial authorities.

Embracing the market

Industrial property plays an important role in maintaining the normal market order. It is a product of the market economy, and fair and ordered market competition cannot exist without it. It is therefore necessary to incorporate IP protection alongside market supervision in order to encourage innovation and drive positive interactions between enterprises and the market. Restructuring SIPO is a signal from the government to encourage IP commercialisation. The new SIPO is also a signal of increased remedies and enhancements to IP enforcement, so that IP can become reliable assets to companies.

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