Parameters

The first category of country-specific factors that may have affected China’s compliance with its international obligations consists of parameters which include basic characteristics of the country such as the previous behaviour of the country; the history and culture of the country; the physical size of the country; the physical variation within the country and the number of neighbours that the country has. As described above in Chap. 1, the development of Chinese intellectual property law has not followed a smooth and unbroken path. Intellectual property, as a set of exclusive legal rights, was virtually unknown until the final years of the Qing dynasty and its introduction in the early years of the twentieth century was predominantly as a result of Western pressure to reform the legal system and China’s concomitant desire to bring extraterritoriality to an end. When the People’s Republic of China (PRC) was established in 1949, the entire legal system, including the early intellectual property laws, was overhauled as new socialist laws were launched. In addition, much of the wider legal framework of courts, lawyers and judges was dismantled during the Cultural Revolution. Thus, at the start of the reform and opening-up period in the late 1970s, China faced an awesome task in rebuilding the entire legal system, embracing both substantive laws and regulations, reforming the court system and recruiting the necessary legal personnel.

The establishment of a modern legal system beginning in 1978 also included the need for a modern system of intellectual property protection. Therefore, it could be said that the intellectual property system in China was still less than 30 years old when WTO accession led to the obligation to comply with the TRIPS Agreement. However, no respondent in 2005-6 explicitly referred to intellectual property protection in China prior to the start of the reform period in 1978, although many respondents did consider China’s rapid development in the post-1978 period as a key factor in the contemporaneous IP system. For instance, one Chinese respondent explicitly stated that the IP system

Is changing every year since China’s reform and opening-up

and that

The success that China has achieved in intellectual property protection in the past 20 years is equivalent to what has been gained by others through several decades or even the efforts of a century. Without knowing this, it is unlikely that you will fully understand the development of IPR in China, or learn the relevant regulations.⁵

The idea that China’s previous behaviour in the intellectual property arena only stretched back a short distance was echoed by this respondent:

Don’t forget that the country only opened up 30 years ago. So these issues are only a small hick up ((sic)).⁶

As a consequence, it would seem that respondents did not feel that China’s previous behaviour of protecting intellectual property rights was a significant factor in explaining the “enforcement gap” in the system of protection at that time. Rather, the only mention of the past was to recognise, and indeed praise, China’s progress in such a short time span.

The historical influences of Confucianism and socialism are often cited as continuing influences in contemporary Chinese culture and consequently on the post-TRIPS intellectual property system. Confucianism was often cited as the main reason why intellectual property protection was not stronger in China, even to the exclusion of other factors.⁷ There are two aspects to the influence that Confucian thought was believed to exert on the concept of intellectual property in China. Firstly, it is contended that Confucianism advocates a belief that “copying another’s creative works is not morally bankrupt, a view contrary to Western beliefs” (Kolton 1996, p. 424). This is because copying or imitation is seen as a “noble art,” and thus the Chinese were encouraged to become compilers rather than composers (Yu 2002, p. 17). The second aspect of Confucianism that is held to impact upon the modern protection of intellectual property is the emphasis placed on collective rights, over individual rights (Yu 2002, p. 18). It has been suggested that this led to a lack of individual private property rights, which in turn was blamed for the lack of intellectual property enforcement (Endeshaw 1996, p. 37).

However, despite the strong emphasis placed on the influence of Confucianism in the literature, most respondents considered the influence of Confucianism on the modern IP system to be minimal. Out of the 16 factors identified on the questionnaire as potential influences on the IP system in China, Confucianism ranked 16th with an average score of 1.09 suggesting that it played only a minor role, if any, in the twenty-first-century Chinese IP system. In addition, there did not appear to be clear agreement about exactly what Confucianism meant in the context of the intellectual property system. As one respondent commented when questioned about the influence of Confucianism:

I don’t really know about the Confucian part, but I would definitely, for social issues anyway, yeah, they, they have an attitude that yep, copying can be good... Copying is not necessarily bad.

And the whole idea of, um., you know, of taking something that works, that you maybe didn’t develop yourself and being able to duplicate that and, and, you know, the bottom line here is all about making money. So I don’t know so much if it’s about Confucianism.⁸

This perception of confusion about exactly what Confucianism meant and whether it necessarily equated to willingness to copy is strengthened by the comments of another respondent who explained the influence of Confucianism as follows:

The principle generally is, let’s say, don’t do something radical, just keep quiet, keep everything in the middle, don’t go to extremes. Let’s say, this is an interpretation of Confucianism in one aspect. So, with the influence of Confucianism over 2000 years, or 2500 years, most of the Chinese people feel the best way to solve conflicts and disputes are not in court.⁹

Thus, these two respondents defined Confucianism quite differently in their interpretation of what it meant for the post-TRIPS intellectual property system in China. The first respondent appeared to be suggesting that Confucianism was linked to “an attitude that copying can be good,” whereas the second respondent appeared to be defining Confucianism more in terms of the preference for non-legal resolutions to disputes, rather than linking it to an attitude towards copying.

The second element of history and culture that may have been influential in the context of China was the influence of socialism. The lack of an emphasis on individual rights may also be attributed to the impact of socialism, as the socialist economic system was based on the notion that property belonged to the state, rather than the individual. Furthermore, as intellectuals had been targeted at various times during the PRC’s history, especially during the Cultural Revolution, creators and innovators became reluctant to acknowledge their creations (Yu 2002, p. 18). Both Confucianism and socialism were thus seen by many academic observers to have played a major part in the evolution of the post-reform legal system (Jenckes 1997, p. 554).

As discussed in Chap. 1 , it is undeniable that the initial development of intellectual property in the PRC was strongly influenced by socialism, particularly in the years immediately following the establishment of the PRC in 1949. The initial reliance on Soviet legal models in the early 1950s gave way during the 1960s to a more extreme socialist concept of intellectual property whereby all creations and innovations were properties of the state and the individual had no claim over them whatsoever. This view was at its height during the Cultural Revolution, but clearly faded from the legislation and official rhetoric in the years following the beginning of the reform and opening-up period.

Overall, socialism was not considered to be a highly significant influence on the post-TRIPS IP system by the majority of respondents in this study. The influence of socialism was ranked 15th out of the 16 factors on the questionnaire and on the scale of 0-6, scored an average of 1.78. Therefore, it is clear that although it appears that socialism exerted a powerful influence on the intellectual property system in the pre-reform years of the PRC, this influence had diminished by the turn of the twenty-first century. However, there appeared to be some differences of opinion amongst the respondents, with some respondents still attributing much of the ineffectiveness of the postTRIPS IP system on the continuing influence of socialism. For example, one respondent from a foreign-invested enterprise in China claimed:

Socialism is an important cause of the problem.¹⁰

On the other hand, most respondents expressed the opinion that the influence of socialism was no longer highly significant:

I don’t think socialism can be blamed at all, I think maybe (specifically) it could, but in general I don’t think it can be blamed or, you know, said to be a reason for, for the ineffectiveness of the protection of intellectual property here.¹¹

Besides this, several respondents mentioned the influence of socialism in the context of the success of the ruling Communist party; for instance,

At the end of the day, the traditional Communist party is at threat if there is no

innovation.¹²

This opinion, that further economic reform and development were essential for the future of Communist party rule and in turn, were dependent on increased innovation supported by an effective intellectual property system, was also expressed by several other respondents. Therefore, although the influence of socialism was not significant in the idealistic way it was in the pre-reform years of the PRC, it could still be argued that socialism was still a significant factor in the 2005-6 IP system as the government attempted to tread the fine line between maintaining China as a communist country and moving further towards a free market economy.

The parameters which may have impacted upon China’s compliance with its obligations under the TRIPS Agreement also include basic characteristics of the country such as the size and variation of the country. Clearly China is a huge country, with great variation between the highly developed and industrialised seaboard and the largely rural and underdeveloped western interior. Indeed it has been recognised that “the sheer size of China’s landmass inhibits effective monitoring of compliance with Chinese intellectual property laws” (Feder 1996, p. 253). Moreover, there was also an acknowledgement that certain areas of China, notably Beijing and Shanghai, were better at protecting IP than other smaller cities, or inland areas. As a matter of fact, one respondent from a multinational operating in China stated:

It’s much better in some areas of China than others - China is not a single country but more like a series of smaller countries!¹³

Consequently, it is difficult to make sweeping generalisations about the entire intellectual property system in China as there were massive variations between major cities such as Beijing and Shanghai and smaller cities or inland areas. This characteristic of China could be classified as one of the primary parameters of significance under the comprehensive model of compliance applied in this study and furthermore, could be said to have just as much effect on the IP system in 2015 as in 2005. In the context of China’s physical size and variation, one of the most significant considerations which may influence the operation of the modern intellectual property system is the divide between the central and the local levels of government. As China is so large, many local and provincial governments are physically very far away from the central government in Beijing. Thus, even if the central government shows a strong commitment to the protection of intellectual property rights, “there is some doubt that the central government has enough influence over the local governments to effectuate their cooperation” (Jenckes 1997, p. 569). These problems are not new in China; in fact, “perennial problems” of tensions between central and regional authorities and of cross-cutting bureaucratic lines “had plagued China since the late Ming dynasty” (Spence 1999, p. 498).

These concerns over the ability of local-level governments to strongly enforce intellectual property rights were also voiced by several respondents. For example, this respondent from a multinational enterprise drew a clear distinction between the central government’s commitment to IP protection and the reality in many provinces:

The central government starts to realize the importance of IP protection. It starts to realize a better IP protection mechanism is essential for China to move to higher value added service. However, the municiple ((sic)) do not see it the same way.¹⁴

A luxury goods manufacturer contradicted this perception by identifying the following as the primary factor in the ineffective enforcement they had experienced:

Unwillingness from central as well as local authorities.¹⁵

However, by distinguishing the central and local authorities, this respondent was also implicitly acknowledging that the different levels of government did not always place the same level of emphasis on enforcing IP rights. Therefore, there seemed to be overall agreement amongst various respondents that there may be differences between the policies of the central and local levels of government and that all levels of government need to be fully committed to enforcing intellectual property rights in order for an effective system to be established.

The number of neighbours that a country has is also posited as a factor influencing that country’s compliance with their international obligations. In the context of intellectual property obligations, the number of neighbours that China has may have two effects; firstly, in connection with the vast physical size of China, the customs enforcement of IP at China’s borders may be a challenge and secondly, China may have used the example of the intellectual property system in neighbouring countries as a model for developing its own.. China has a large number of bordering countries; fourteen countries share land borders with China. As a direct result of this, China has a long border to defend against import and export of goods which may be infringing intellectual property rights. In 2006, the US customs authorities estimated that 81% of all IP-infringing goods seized came from China (US Customs and Border Protection 2007, p. 267) and the Chinese customs authorities themselves declared a total of 1210 infringement cases in 2005, involving goods with a total value of almost 100 million RMB (General Administration of Customs of the People’s Republic of China 2006, p. 268). Therefore, exports of goods which infringe IP rights were clearly a significant problem for the customs authorities to tackle.

However, customs enforcement of intellectual property rights was highlighted by several respondents as an area of some improvement in the years leading up to 2005. For instance, one respondent from a multinational company cited, as the key positive change that they had noticed in the IP system in the past few years,

Expanded IPR protection channels (like customs protection).¹⁶

Furthermore, two legal respondents independently cited key regulations expanding the powers of customs’ authorities in IP enforcement as notable improvements that they had recently observed.¹⁷

In addition to the impact of China’s long borders on the protection of intellectual property rights, China’s neighbouring countries may also have an impact on the IP system by providing an example for China to follow. Taiwan and Korea, in the 1960s and 1970s, both focused on duplicative imitation of mature technologies from abroad, utilising their highly skilled, but cheap labour force. At this time, lax IP helped to nurture economic development, especially through reverse engineering (Kim 2003, p. 17). In the 1980s and 1990s, both began to lose their comparative advantage in the face of rising labour costs and increased competition from second-tier newly industrialised economies. As a result, both shifted towards more technology-intensive industries (Van Hoesel 1999, pp. 56-7). In this “creative imitation” phase of economic development, intellectual property became more important, for local firms as well as foreign firms. The influence of other countries’ IP systems is mentioned in passing by some respondents, who directly compared China’s IP system to the development of intellectual property protection in neighbouring countries such as Taiwan, Japan and South Korea. For example, it is implicit in this Chinese respondent’s comments that China needed to look at neighbouring countries and their path of economic development:

A lot of people call China a manufacturing base of the world, but it can start from this base and become other things like, uh... to become a base of creating more technology, innovation. We don’t say we copy the way or approach from Japan or others, but they do really quite good job in the past 20 years or 40 years. We have to learn something from advanced economy.¹⁸

This notion that China should look at neighbouring countries and follow their example of economic development was expressed more definitely by this respondent:

You can’t (rely on) factories, you’ve got to (adapt), just look at Taiwan, Korea, even building a domestic market, you need to have innovation to go to the next level. Without it (...), every country in Asia, I mean look at Japan, no matter what you think of it or say, it sits there at the edge of Asia like a shining light in terms of economic development.¹⁹

Thus, these comments seem to suggest that this role of the neighbouring countries as an example to be applied is more to be desired than one that actually existed at that time.