Development of Intellectual Property in the PRC

After the victory of the Chinese Communist Party and subsequent establishment of the PRC in 1949 following many years of bitter civil turmoil, all Guomindang laws and decrees were abolished, as they were seen as tools for the repression of the masses (Blaustein 1962, p. 41). Consequently, the preliminary intellectual property protection system that had been established by the Guomindang was dismantled, and the new PRC government began to consider a Communist alternative. This dismantling of the Guomindang legal system and codes for ideological reasons clearly left a legal vacuum (Chen 2000, p. 30). Therefore, the question became how could inventions and outstanding works be encouraged and rewarded in a way which was consistent with Communist ideology?

The Provisional Regulations on the Guarantee of Invention Rights and Patent Rights which were promulgated on 11 August 1950 were the first regulations passed to fill this legal vacuum. These Provisional Regulations from 1950, “closely paralleled western patent laws in granting exclusive rights of exploitation of the patented device to the patentee” (Gale 1978, p. 336). It is also significant that rights granted under these Regulations were inheritable and transferable under Article 7, as these rights reflect Western notions of personal property rights. However, the relatively liberal 1950 Provisional Regulations were soon amended by the Provisional Regulations on Awards for Inventions, Technical Improvements and Rationalization Proposals Concerning Production, approved on 6 May 1954.⁸ These Regulations provided for monetary awards for improvements to any production process, calculated according to the money saved in the 12 months after the invention.

However, in these revised regulations, “patents as such were ignored” (Gale 1978, p. 337). The focus of these Regulations on monetary awards rather than the granting of property rights reinforces the notion that Communist legislation at this time was firmly aimed at promoting the state’s interests and not at promoting individual proprietary rights. This supports the proposition that early intellectual property legislation was patterned on the Soviet model, with just a few modifications to allow for the gap in development between the Chinese and Soviet economies. The abandonment of personal property rights in the limited rewards offered to inventors also reflects classic Marxist thought (Marx 1963, p. 157). Thus, under Communist ideology, the notion of privately owned property rights effectively became meaningless (Hsia and Haun 1973, p. 280).

The patent system was further amended by the 1963 Regulations on Awards for Inventions and the separately published Regulations on Awards for Technical Improvements, which permanently eliminated the certificate of ownership in favour of a lump sum payment system. As a result, the 1963 Regulations were even more radical than the previous system in operation, with much fewer rewards and legal rights for inventors. This more radical approach is also reflected in a People’s Daily editorial from 1963 which emphasised the position of inventions as collective property and added:

This is totally different from the old society... it is not necessary for us to regard the inventions and technical improvements of a certain individual or a certain unit as personal property which deserves ‘protection’. This is different in nature from the so-called ‘patent rights’ under the capitalistic system.⁹

The trademark system could also be considered to be fairly radical compared to that established in the Soviet Union. Trademarks were not retained in order to assist businesses, but rather to assist the consumer, individual or collective, to identify the quality of a product. Thus, they were predominantly used on products made for export (Hsia and Haun 1973, pp. 285-6) as individual consumers did not play a role in a centrally planned economy.

In contrast to the Regulations passed to govern patents and trademarks, the PRC did not enact any statute on copyright following the abolition of the Guomindang Copyright Law from 1928, amended in 1944; indeed the only protection available to Chinese authors was in the form of model contracts from 1957 (Hsia and Haun 1973, p. 289). This lack of copyright protection exemplifies attitudes to intellectual property in the early years of the PRC. Patent law was codified in order to encourage industrial innovation, much needed to stimulate economic growth; trademark law was tolerated in order to promote consumer interests and potential exports; but copyright law did not promote any public interest and thus was simply at odds with Communist ideology.

Overall, the provisional IP regulations and reward systems put in place from 1949 to the 1970s did not succeed in promoting innovation and steadily moved away from the initial position of recognising an individual’s IP rights to a more radical socialist approach that viewed IP as collective property. Consequently, between 1950 and 1963 only four patent rights and five inventions were granted in China (Xue and Liang 2010). The Soviet intellectual property laws were also quite influential in the early IP regulations adopted in the 1950s, although the Soviet model was not always appropriate due to the differences in industrialisation between the Soviet Union and China. Furthermore, during the Chinese Cultural Revolution which took place from 1966 to 1976, even the system of lump sum bonuses was abolished in favour of a strict policy that all inventions and creations were national assets (Kolton 1996, p. 416). As a result, the research and development system was virtually paralysed throughout much of the pre-reform years of the PRC, with many individuals reluctant to acknowledge their role in a creation or invention, for fear of the potentially capitalist or individualistic stigma that would be attached to them. As China began to face the post-Mao era in the late 1970s, it was clear that the existing intellectual property system was inadequate to stimulate the necessary economic development and foreign investment.