Innovation, IPR Localization, and Technology Transfer
Rights holders in China face challenges not only as a result of difficulties in protecting and enforcing their rights against unscrupulous actors, but also as a result of government measures, policies and practices that systematically disadvantage foreign rights holders. Chinese government agencies, including at national, provincial, and local levels, frequently release documents, including regulations, rules, and other measures (e.g., opinions, notices and circulars) that seek to promote China's development into an innovative, IPR-intensive economy. The United States recognizes the critical role of innovation in development and in improving living standards in the United States and China. However, the United States reiterates its concerns regarding China's innovation-related policies and other industrial policies, such as strategic emerging industry policies, that may discriminate against or otherwise disadvantage U.S. exports or U.S. investors and their investments, or may otherwise hamper the ability of IPR rights holders to obtain full and effective protection for their rights, including the ability to monetize products using their rights. Chinese regulations, rules, and other measures frequently call for technology transfer and, in certain cases, require, or propose to require, that eligibility for government benefits or preferences be contingent upon IPR being developed in China, or being owned by or licensed, in some cases exclusively, to a Chinese party. Such government imposed conditions or incentives may distort licensing and other private business arrangements, resulting in commercial outcomes that are not optimal for the firms involved or for promoting innovation. Government intervention in the commercial decisions that enterprises make regarding the ownership, development, registration, or licensing of IPR is not consistent with international practice, and may raise concerns relative to China's implementation of its WTO commitments.
Sustained U.S.-China engagement through the JCCT, the U.S.-China Strategic and Economic Dialogue (S&ED), and high-level visits has resulted in important Chinese commitments, including "that technology transfer and technological cooperation shall be decided by businesses independently and will not be used by the Chinese Government as a pre-condition for market access," and "to treat and protect intellectual property rights (IPR) owned or developed in other countries the same as domestically owned or developed IPR." In addition, at the 2012 JCCT, China "reaffirmed that technology transfer and technology cooperation are the autonomous decisions of enterprises" and pledged further that "[i]f departmental or local documents contain language inconsistent with the above commitment, China will correct them in a timely manner." The United States looks forward to China's full implementation of these commitments.
Patent-Related and Other Policies
Patents Used in Chinese National Standards
China has prioritized the development of Chinese national standards, as evidenced by its Outline for the National Medium to Long-Term Science and Technology Development Plan (2006-2020), issued by the State Council in February 2006, and amplified shortly thereafter in the 11th Five Year Plan (2006-2010) for Standardization Development, issued by the Standardization Administration of China (SAC) under the Administration for Quality Supervision, Inspection and Quarantine. In 2009, SAC welcomed comments on draft interim regulations on national standards involving patents. Of serious concern were provisions indicating that China would rely, during the standards development process, either on non-patented technology or on patented
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