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New Draft Law In China For IP Right Protection & Banning Forced Tech Transfer

New Draft Law In China For IP Right Protection & Banning Forced Tech Transfer
China is set to address one of the key demands on trade by the United States – which was one of the reasons for the trade war, by accelerating a lawmaking process that would draft a new legislation for the protection of intellectual property rights of foreign investors and encouraging voluntary technology transfers but banning forced transfer of technology by administrative means.
All foreign funded firms would also be eligible for the all government support policies according to the draft of the foreign investment law that would be now reviewed by the Standing Committee of the National People’s Congress. According to the state-owned Xinhua News Agency This clause of the drafted law states that foreign funded firms will get an equal opportunity to join the process of making standards and would also be allowed to bid in government procurement.
This new legislation improves upon a draft that was prepared and reviewed and released in January of 2015 by the Ministry of Commerce for obtaining public views on the topic. The draft was never changed into a law.
According to the explanation given by Chinese justice minister Fu Zhenghua to the legislature, to decide on foreign participation in the Chinese economy, a “negative list” would be create which would create a list of projects or areas where foreign investment is prohibited instead of depending on a project-by-project approval process or annually released investment catalogue.
And even though the right to deny foreign investors under special circumstances would still rest with the government, under the new drafted law, such denial has to be completed through appropriate legal procedures and include “fair and reasonable” compensation.
“[China] encourages technology cooperation based on voluntarily agreed terms and business practices. The terms should be negotiated by the investors and administrative measures forcing technology transfer are prohibited,” Xinhua reported.
The key complaints of the US against China on trade included lack of intellectual property protection, an uneven playing field favouring domestic firms and a lack of market access.
It has been a long time that foreign companies have awaited a legislation that is bale to better protect their interests, but the actual time period before the new draft would be enacted into a legislation and implemented as a law is still unclear, said Shu Yujing, a China representative of US law firm K&L Gates.
“There’s no detailed regulation on how many reviews of the top legislature any draft law has to undergo before its enactment. Given the recent pressure [from the US], it could be rolled out over one or two years,” she said.
There are a number of issues that foreign companies face while doing business in China with respect to upholding their intellectual property rights.
Shu, who has represented many foreign firms in trademark and patent cases in Chinam said that unlike the legal process in US where defendants of allegations of violations of intellectual property rights have the onus to prove their innocence, complainants in China have to gather proof of violations and submit them to the courts.

Christopher J. Mitchell

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