Legal Transplantation of China IP Law

IIC (2017) 48:4–41
DOI 10.1007/s40319-016-0542-1
ARTICLE
Legal Transplantation of Intellectual Property Rights

in China: Resistance, Adaptation and Reconciliation
Liguo Zhang . Niklas Bruun
Published online: 1 February 2017

Max Planck Institute for Innovation and Competition, Munich 2017
Abstract China’s current intellectual property rights (IPRs) system has been
developed through the transplantation of the concept and models from the Western
world following its socialist market economy reforms in the late 1970s. The process
of establishing an IP regime in China thus reflects a vivid model of legal trans-
plantation. This study examines how China’s IP regime has been shaped and how
the legal transplantation of IP laws has interacted with norm building concerning
IPRs in Chinese society. In China, local social norms inherently conflict with the
idea of IPRs. China’s IP norms have been shaped by the convergence of political,
economic, cultural and legal factors. Therefore, in transplanting foreign IP laws,
China has also created its own legal and social norms, which diverge from those of
the source of legal transplantation. In this process, China is thus not only a norm
taker but also a norm maker. The resistance to the legal transplantation of IPRs has
led to a divergence between the formal IP rules in China and the actual IP norms as
they are followed in practice, which has resulted in difficulty in the enforcement of
IP laws. The achievement of convergence between IP laws and IP norms in China
This study was conducted with the support of the ‘‘TRANSIP’’ project, which is funded by the Academy
of Finland. We thank Professor Nari Lee (Hanken School of Economics), Professor Mingde Li (China
Academy of Social Science), Professor Peter Yu (Texas A&M University) and Professor Yang Li (Sun
Yat-sen University) for their substantial contributions to the research project.
L. Zhang (&)
LL.D, Postdoctoral Researcher
Faculty of Law, University of Helsinki, Helsinki, Finland
e-mail: liguo.zhang@outlook.com
N. Bruun
LL.D, Director of IPR University Center, Professor at the Hanken School of Economics,
Helsinki, Finland
e-mail: niklas.bruun@hanken.fi
123
Legal Transplantation of Intellectual Property Rights in… 5
will ultimately require improvements in IP governance and the establishment of

rule-of-law norms in China.
Keywords Comparative law Legal transplant Chinese law Chinese intellectual

property law Law and norms
1 Introduction
Intellectual property rights (IPRs) have been recognized in Europe for more than
300 years.1 China first attempted to establish an IP regime approximately 100 years
ago as part of plan to modernize its legal system to transform the Qing Empire into a
modern nation. The effort failed when the Qing Empire collapsed in 1912. China’s
current IPR system has been developed through the transplantation of the concept
and models from the Western world since the end of the 1970s. With its political
and economic reforms in the late 1970s, China opened relations with the outside
world and radically reformed its legal system. Consequently, Western IP laws have
been introduced into China’s legal system. For instance, the Patent Act was passed
by the National People’s Congress (NPC), the highest legislative body, in 1984 after
five years of debate. Moreover, the Trademark Act was enacted in 1982; the General
Principles of Civil Law, which establish very simple and basic rules regarding
copyrights, trademarks and patents, were enacted in 1985; and the Copyright Act
was enacted in 1990. After several amendments, these IP laws were largely in line
with international standards by 2001, when China joined the World Trade
Organization (WTO). After more than 20 years, China has successfully established
a modern legal system for IPRs. This process demonstrates that when a country has
no prior relevant domestic experience in a specific legal area, it is natural to borrow
successful models from other countries.2 The process of establishing the Chinese IP
regime thus reflects a vivid model of legal transplantation.
Nonetheless, views on legal transplantation are quite divided. Advocates claim
that ‘‘borrowing from another system is the most common form of legal change’’
and that such transplantation has taken place all over the world during different
periods and under a variety of conditions.3 Zweigert and Kötz note that the adoption
of a foreign solution can be useful for solving a particular problem.4 An alternative
approach suggests that legal transplantation is impossible and that legal rules cannot
be divorced from their cultural or political context; hence, the mere transference of a
legal rule per se cannot play a significant role in introducing a rule into a new
jurisdiction.5 The German Historical School of Law emphasizes that law is an
1
When the English Statutes of Anne and Monopolies were passed in 1710 and 1624, respectively, it was
generally regarded as the origin of modern intellectual property law. See Sherman and Bently (1999),
pp. 207–208.
2
Watson (1974).
3
Watson (1991), p. 73; Chiba (1989), p. 179.
4
Zweigert and Kötz (1992), pp. 15–16.
5
Legrand (1996), pp. 52, 120–122.
123
6 L. Zhang, N. Bruun
expression of the spirit of people in the same manner as language, customs and
practices.6 It is logical to deduce from this point that legal transplantation would be
impossible. Further, Kahn-Freund argues that ‘‘we cannot take for granted that rules
or institutions are transplantable …; any attempt to use a pattern of law outside the
environment of its origin continues to entail the risk of rejection.’’7 He further notes
that ‘‘the use of comparative law for practical purposes becomes an abuse only if it
is informed by a legalistic spirit which ignores context of the law.’’8 Gunther
Teubner states that a ‘‘legal institution cannot be easily moved from one context to
the other, like the transfer of a part from one machine into the other’’ and even
proposes the term ‘‘legal irritant’’ instead of ‘‘legal transplant.’’9 Seidman argues
that ‘‘the hasty legal transplant syndrome constitutes a major block on the road to
good governance and development.’’10
The introduction of modern IP laws in China has offered an ideal opportunity to
test these theses because the process provides evidence documenting a process of
adaptation and rejection of the transplanted IP legislations and norms. The difficulty
of legal transplantation varies depending on the cultural background and legal
family of the country, the rules that are transplanted and other relevant factors. For
example, legal transplantation between Germany and Switzerland or between the
U.K. and Australia may be a simple process. However, more difficulties may arise
with legal transplantation between Germany and the U.K. Moreover, legal
transplantation, especially of IP law, between the U.K. and China could be
particularly challenging. First, modern IP laws originated in England and later
spread to many other European countries and beyond; nevertheless, these countries
usually shared the same or similar cultural and religious backgrounds. However, in
China, the historical and cultural background and legal traditions are materially
different from those in European countries. The legal transplantation of IP laws in
China has thus faced conceptual and practical difficulties, as indicated by William
Alford when discussing ‘‘western subject[s] in an eastern context.’’11 Second, when
transplanting family or civil laws, the transplanting country may adapt foreign rules
to fit its national context. However, IP laws are defined by international standards
that have been established through a series of international treaties, such as the Paris
Convention, the Berne Convention, and the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). Because IPR protection in a
country needs to comply with international standards, there is little room for China
to adapt IP rules to fit its specific domestic context.
When we discuss IPRs in China, are we referring to the same type of IPRs as those in
the European Union or the U.S.? Will the transplantation of IPRs in China, where the
cultural and political environment differs greatly from that of the countries where such
rights originated, create a new variety of IP law? Norms indicate general rules of
6
Rodes (2004), pp. 165, 165–166.
7
Kahn-Freund (1974), pp. 1, 27.
8
Ibid.
9
Teubner (1998), pp. 11, 12.
10
Seidman and Seidman (2006), pp. 282, 319.
11
Alford (1997), p. 7.
123
conduct within a group or society and serve as intermediaries between abstract values
and concrete behavior. Social norms are implicit among the people; whereas, legal
norms are explicitly imposed on the people by a government body.12 Moreover, social
norms and legal norms may not always be consistent with each other, and since
individuals in a society may face different, possibly conflicting norms, they must decide
to comply with certain norms and to violate others.13 Because norms reflect social
practices that incorporate cultural and political practices, customs, traditions and many
other factors and because social norms regarding compliance with IP laws differ across
countries, transplanting a legal rule from one country to another may not necessarily
lead to the same legal application and practice regarding that rule as in the originating
country or a similar norm. Furthermore, common terminology may carry different
meanings in different countries.14 This article examines how China’s IP regime has
been shaped and how the legal transplantation of IP laws has interacted with IP norm
building in Chinese society. The central hypothesis is that the process of transplanting
IP laws and building IP norms in China has not been a passive process of accepting
Western rules; rather, the process has been dynamic. In the process of introducing and
implementing a new IPR regime, Chinese lawmakers faced resistance from the
traditional ideology in China and relevant interested parties. The interaction among
legislative bodies, judicial institutions, administrative authorities, political and
academic elites, state-owned and private companies, foreign governments and
international organizations and consumers shaped the evolution of Chinese IP norms,15
and in this process, China has been not only a norm taker but also a norm creator. This
process of legal transplantation and the establishment and development of IP norms in
China also show that China has not only accepted and adhered to dominant
international IP norms but has also provided an alternative set of practices for its own IP
norms. China may potentially become a norm shaker of international IP norms.
Furthermore, this article argues that the transplantation of IP laws in China over
such a brief period has led to a divergence between the formal IP rules in China and
the actual IP norms as they are followed in practice. Commentators have identified
cultural factors as the cause of this divergence and thus as the source of the
difficulty in enforcing IPRs in China. However, this research argues that it is not
cultural factors which predominately affected the initiation of legal transplantation;
rather, it is the way in which IP governance in China greatly contributes to this
divergence. It is necessary to determine the role that cultural factors play in the
process of legal transplantation and to avoid allowing cultural factors to be the
excuse for the problem so that the appropriate solution can be identified. On the one
hand, China needs to improve its IP governance – specifically, further improvement
of IP law should focus on addressing concrete problems arising from IPR practices.
On the other hand, to achieve convergence between IP laws and IP norms, China
should ultimately establish rule of law norms. For the purpose of this study, IP is
narrowly defined to include patents, copyrights and trademarks.
12
Dechesne et al. (2011), pp. 50–51.
13
Ibid, p. 51.
14
Alford, supra note 11, p. 5.
15
Kshetri (2009), pp. 155, 157.
123
2 Resistance to and Adoption of IPRs in the Process of Legal Transplantation
2.1 The Starting Point for Transplanting IP Laws in China
In the late 1970s, there were many reasons for China to consider adopting IP laws
based on Western models, even though Chinese society had little knowledge of IPRs
at the time.
2.1.1 Pressure from the West
The traditional Chinese legal system, which was based on the Confucian philosophy of
social control through moral education, was in place for more than 2000 years.16 At the
end of the 1900s, China’s contact with the dominant and expanding societies in Western
Europe and America played a significant role in spurring the reform of the traditional
Chinese legal system. The West served as the primary influence in shaping the new
Chinese order.17 As Burkitt notes, ‘‘The West has consistently sought to impose
intellectual property laws on developing countries and indigenous populations with no
notion of intellectual property as conceived in the West.’’18 The first effort to transplant
an IP system in China began 100 years ago in 1902, when the Qing Empire and the U.S.
began trade negotiations, which involved patents. Specifically, the U.S. government
required the Qing government to provide protection for patents and linked patent issues
with trade issues to force the Qing government to accept the idea of protecting patents in
China. The trade treaties with the U.K., the U.S. and Japan in 1902–1903 required the
Qing government to establish a trademark registration agency and to prohibit
counterfeiting. In 1903, the British Robert Hart, the Inspector-General of Qing’s
Imperial Maritime Custom Service, prepared a draft of Experimental Regulations on
Trademark Registration for the Qing government. A revised version of the draft was
approved by the Qing government, but in the end, it was not implemented.19 Regarding
copyrights, in 1902 the U.S. and Japan proposed that the Qing government should begin
to protect copyrights, and the Qing delegation realized that it was necessary to do so,
even though copyright protection raised great concerns in China. A draft of the first
Copyright Act was completed in 1910.20 However, the Qing Empire collapsed in 1912,
and the Copyright Act was ultimately abandoned. Subsequently, the Republic of China
established the Copyright Act (1928), Trademark Act (1930) and Patent Act (1944)
based on Western models. However, because of the turbulent political environment and
wars in China, these laws did not take root, and when the Chinese Communist Party
(CCP) entered power in 1949, these IP laws were abolished in mainland China.
The establishment of the current IP system in China began in the late 1970s. In
1979, after China and the U.S. established diplomatic relations, when the Chinese
and the U.S. governments were negotiating the agreement to cooperate in the field
16
See Qu (1961).
17
Têng and Fairbank (1979), p. 10; Cohen (2010), p. 77.
18
Burkitt (2001), pp. 146, 175.
19
Qu (2012), p. 87, 87–95.
20
Liu (2002), pp. 47, 50, 152–154, 159–161.
123
of high-energy physics, the U.S. insisted on adding an IP provision to the

agreement. The Chinese representatives realized that to provide protection for
copyrights and patents it would be necessary to support the Chinese open-door
policy.21 Although there were no IP laws in China at the time, the Chinese
government agreed to include an IP provision in the agreement and promised to
provide protection for IPRs.22 In 1979, a senior Chinese official delegation visited
the U.S. and signed a series of bilateral agreements in the fields of scientific,
technological and cultural interchange as well as trade relations, which included
more provisions on IP protection. For example, Art. 6 of the Agreement on Trade
Relations stated that both parties should provide protection for patents, trademarks,
copyrights, and unfair competition and reciprocal treatment on IP issues. Similarly,
China’s trade agreement with Germany and Switzerland included provisions
regarding IPR protection. These bilateral treaties led to China’s accession to the
World Intellectual Property Organization (WIPO) in 1980, the ratification of the
Paris Convention in 1984, and the establishment of the Trademark Act in 1982 and
Patent Act in 1984.
>Foreign pressure has also stimulated revisions to China’s IP system. The
Chinese government has had to amend its IP laws several times to ensure
compliance with international treaties. In particular, the trade negotiations between
China and the U.S. in 1991 induced China to update its IP laws systematically.
The U.S. alleged that China had failed to provide sufficient IP protection for U.S.
products and included China in the Special 301 Report from 1989 onward,
threatening to impose trade sanctions.23 The U.S. and Chinese governments had
continually negotiated on these issues, and the negotiations ultimately resulted in a
Memorandum of Understanding (MOU) on IPRs in 1992. The MOU committed
China to update its copyright law and to provide full copyright protection for U.S.
authors’ works at internationally acceptable levels. China also agreed to accede to
the Berne Convention by October 15, 1992, and to the Geneva Phonograms
Convention by June 1, 1993.24 Regarding patent law, the MOU committed the
Chinese government to extending the term of protection for patents to 20 years;
providing protection for chemical inventions, including pharmaceuticals and
agricultural chemicals; and establishing restrictions on compulsory licenses. It also
required that the Chinese government submit a bill for the protection of trade
secrets to its legislative body by July 1, 1993. Ultimately, the Chinese government
honored its obligations stipulated in the MOU by amending its relevant IP laws
and joining the Berne Convention in October 1992 and the Geneva Phonograms
Convention in November 1992. In addition, it amended the Patent Act in 1992
and the Trademark Act in 1993. The amendments to the Patent Act in 1992 added
several subjects that had not been protected by the 1984 Patent Act and provided
21
The Open Door policy describes the economic policy initiated by Deng Xiaoping in 1978 to open up
China for foreign investments.
22
See Art. 6 of the Agreement on High Energy Physics between the U.S. and the PRC signed on January
31, 1979.
23
Sgambati (1992), pp. 139, 152–154, 159–161.
24
Ibid. pp. 160–161.
123
patent protection for medicine, chemical materials and food. Moreover, the right
to import patented embodiments was granted exclusively to patent holders,
protection for process patents was extended to the product attained through the
process, the term of protection for invention patents was extended to 20 years, and
the term of utility model and design patents was extended to 10 years. Post-grant
patent proceedings were also improved. The amendments to the Trademark Act in
1993 provided protection for service marks and added revocation procedures,
which were absent in the 1983 Trademark Act. In 1993, the Unfair Competition
Act, which provides protection for trade secrets, was also enacted. These efforts
brought China’s IP legislation more in line with international standards. However,
the U.S. soon found that China’s IP laws had not been effectively implemented. In
1994, the U.S. government again included China in the Special 301 Report and
urged China to improve its enforcement of IPRs. The subsequent negotiation
resulted in another MOU in 1995, which required China to open its markets to
certain U.S. copyrighted products and to create a mechanism guaranteeing the
effective and sustained enforcement of IP laws in China. Based on the 1995
MOU, China took actions to crack down on the piracy of U.S. companies’ movies,
music and software and implemented the Regulation on Customs Protection of
Intellectual Property Rights.
Another significant event that profoundly affected the development of China’s
IP law was China’s accession to the WTO. During the lengthy process of
negotiations regarding China’s accession, the U.S. and other countries actively
blocked China’s membership in the WTO because of its deficiencies in protecting
IPRs. The WTO TRIPS Agreement establishes minimum standards for the
availability, scope, use and enforcement of IPRs based on preexisting international
IP conventions. To facilitate its accession to the WTO, the Chinese government
amended the Patent Act, Trademark Act and Copyright Act from August 2000
through October 2001 to fulfill the requirements delineated in the TRIPS
Agreement. These amendments significantly improved the scope of protection and
standards stipulated in China’s IP laws and brought China’s IP laws more in line
with international standards. After these amendments, a modern IP regime based
on a Western model was established in China. China’s accession to the WTO in
2001 thus represented a turning point after which the external influence on China
regarding IPR protection switched from diplomatic pressure to legal pressure.
Foreign countries can use the WTO dispute settlement mechanism to encourage
China to improve its standards for IP protection. As a recent example, in 2007, the
U.S. filed complaints against China concerning its failure to protect and enforce
IPRs pursuant to the TRIPS Agreement.25 After the WTO Panel’s decision in WT/
25
The United States pointed to ‘‘the thresholds that must be met in order for certain acts of trademark
counterfeiting and copyright piracy to be subject to criminal procedures and penalties; goods that infringe
IPRs that are confiscated by Chinese customs authorities, in particular the disposal of such goods
following removal of their infringing features; the scope of coverage of criminal procedures and penalties
for unauthorized reproduction or unauthorized distribution of copyrighted works; and the denial of
copyright and related rights protection and enforcement to creative works of authorship, sound recordings
and performances that have not been authorized for publication or distribution within China.’’ See WTO
(2014).
123
DS362, the Chinese government immediately amended its IP laws to fully comply
with the WTO TRIPS Agreement. This process shows that external pressure
induced China to develop its IP laws in a way that was more compatible with
international IP norms.
2.1.2 The Internal Demand for an IPR Regime
The legal transplantation of IP laws in China is not exclusively a passive response to

external pressure. External pressure alone could not have forced China to transplant
IP rules into its legal system; internal demand for a new IP regime was an essential
factor in the establishment of China’s IPR regime. This internal demand resulted
from the reform of China’s economic system and the opening up to the outside
world starting in 1978.
With respect to patent law, China first considered introducing a patent system in
1973 when the Chinese Council for the Promotion of International Trade was
invited to attend a WIPO conference as an observer. During the conference, the
delegation studied the latest developments in IP law and visited the Patent Offices in
Switzerland and France. When the delegation returned to China, it submitted a
proposal to the State Council to recommend the establishment of a patent system
and accession to the Paris Convention. However, because of the political
environment in China at that time, this recommendation was put aside.26 When
the Chinese government later initiated market-oriented economic reforms in 1978,
building a patent and trademark regime became necessary. First, competition
appeared among enterprises. Technology that used to be shared by state-owned
enterprises now became important to competition. Some enterprises that had
realized the value of technology tended to keep their advanced technology secret
from competitors, who could imitate or even steal it. Additionally, the authority
took all measures necessary to provide incentives to stimulate innovation. Patent
law was one such measure. Furthermore, technology now became an exchangeable
commodity. However, the law lacked a means to define the ownership of technology
and to provide protection for technologies at that time. In international cooperation,
the lack of protection for patents had become an obstacle to foreign trade and
foreign direct investment.27 Therefore, in 1978, the leaders committed the State
Science and Technology Commission and other relevant ministries to investigate
the possibility of establishing a patent system.28
With respect to copyright law, after the beginning of the Cultural Revolution in
1966, the idea of copyright disappeared, and the rights of authors were abolished.29
After the 3rd Plenary Session of the 11th Central Committee of the Communist
Party of China, nationwide economic reforms were initiated in 1978 and the idea of
protecting authors’ rights was revived. Many authors’ dissatisfaction with not
receiving remuneration for their work had resulted in obstacles and difficulties
26
Zhao (2003), pp. 15–16.
27
Ibid., pp. 33–41.
28
See Chinese State Council [Guowuyuan] (1980).
29
Li and Chang (2007), pp. 89–90.
123
regarding incentives for these creations. Many famous scientists and writers called
for copyright protection. Some of them wrote letters to the authorities.30 The
authorities found that remuneration issues were crucial for encouraging scientific
research and for promoting literary and artistic creation and cultural prosperity. In
1977, the State Publication Administration decided to restore the remuneration
system to encourage creation in the form of administrative instructions.31
The decision-makers also realized some advantages of copyright law. First,
copyright law could promote intellectual creation and could contribute to the
development of productive forces. Second, it could support the economic reforms
and opening up policy that were occurring at this time. Third, the establishment of a
copyright system could help to resolve the increasing disputes regarding publica-
tions and authors’ interests and could contribute to the development of a socialist
legal system. Fourth, copyright law could promote national science and cultural
prosperity and international cultural exchanges. In addition, copyright law could
create a positive image of China as respectful of the rights of intellectual creators.32
There was increasing demand within Chinese society to establish an IP regime to
reward inventive and creative activities and to promote economic prosperity.
Because a sufficient source for IP law was lacking in the Chinese legal tradition,
legal transplantation has been a natural solution to establish an IP system. In a
context where the national political, economic and social structures experienced
significant reforms but where domestic law could not provide a sufficient basis for
the necessary reforms, legal transplantation has been an unavoidable shortcut.
2.2 The Resistance to Transplantation of IP Law in China
The transplantation of IP laws in China has encountered considerable resistance.

Social institutions are interconnected systems. Williamson notes that informal
institutions33 in which norms, customs, morals and traditions are located, impose
constraints on the development of formal institutions, which consist of formal legal
rules.34 Roland distinguishes between slow-moving, informal institutions, which
include culture, values, beliefs and norms, and fast-moving formal institutions,
which include legal rules that can change overnight.35 In China, local social norms
inherently conflicted with the idea of IPRs, which had grown and developed in a
completely different cultural environment. We thus identify three elements that
have contributed most to the resistance to the transplantation of IP laws in China:
cultural, political and economic elements.
30
Ibid., pp. 113,143–166.
31
Ibid., p. 113.
32
Ibid., pp. 179–180.
33
Helmke and Levitsky define informal institutions as ‘‘socially shared rules, usually unwritten, that are
created, communicated, and enforced outside of officially sanctioned channels.’’ See Helmke and
Levitsky (2004), pp. 725, 727.
34
Williamson (2000), pp. 595, 596–97.
35
Roland (2004), pp. 109, 116–117.
123
Perceptions surrounding intellectual creation in traditional Chinese society might

have a long-term and far-reaching effect in Chinese society. Although the original
conditions have changed, traditional culture may still unconsciously influence
people’s thinking on every level of life, including behavior, attitudes, beliefs and
commitments.36 Throughout China’s history, Confucianism has exerted a profound
influence on both political institutions and spiritual life. The Confucian value
system was not created out of thin air by a few ancient sages and then imposed on
the Chinese people; instead, this value system existed latently in Chinese lifestyle
and culture, and the sages discovered and reorganized it. Since the Confucian value
system became part of Chinese people’s daily life, it has had a far-reaching impact.
Indeed, Confucianism developed as a social ethic, a political ideology, a scholarly
tradition, and a way of life in Chinese society for thousands of years. It has provided
guiding principles for human interaction at all levels (i.e. individual, communal and
national) and has left an ‘‘indelible mark’’ on Chinese culture and society.37
Confucianism attaches particular importance to the function of education because it
advocates for the role of education rather than punishment in teaching people to
behave in conformity with societal requirements. With respect to state governance,
Confucianism emphasizes benevolent government, rule by virtue, and the impor-
tance of ritual instead of law in a political system.38 Confucian thinking has thus
affected the transplantation of IPRs in China in several respects. With respect to the
broader meaning of the emergence of civil rights in China, Handong Wu notes that
the core values of Confucianism denied the concepts of individualism, creation and
innovation and therefore blocked the opportunity for civil rights and freedom to
emerge in China. Moreover, traditional Chinese culture is based on an agricultural
society and takes a clan rather than an individual as the basic social unit.
Confucianism is the core value of this culture and supports the individual’s
obligation to the clan and the obligation of the clan to the state. Hence, individual
rights do not have a place in traditional Chinese culture, and traditional Chinese
society lacks a conception of private property rights in its legal ideology.
Traditional Confucian culture advocates education and sharing knowledge. This
value was further strengthened by the dominant socialist ideology in China, which
also regards intellectual creation as the common good of society.39 A monopoly on
knowledge would thus be difficult to justify in traditional Chinese culture. Indeed, in
Chinese society, stealing another’s tangible goods would generally be considered an
act worthy of blame, but copying another’s book for purposes of study would
generally be considered an acceptable act because it shows an effort to learn
something. IPRs have thus been transplanted into an environment characterized by
substantial historical and cultural differences with no domestic counterpart to the
Western concept of IPRs. The legal transplantation of IP law in China to some
extent reflects a lack of cultural recognition.40 Consequently, the legal
36
Tu (1990), p. 137.
37
Ibid., p. 113.
38
Chen (1997), p. 31.
39
Alford, supra note 11.
40
Wu (2007), pp. 5, 56.
123
transplantation of IPRs has inevitably led to the adoption of legal solutions that are
either undesirable or in tension with Chinese society.
The Confucian view of intellectual creation is also in conflict with the concept of
IPRs. Some researchers have reported that the unauthorized reproduction of books,
symbols and products was prohibited in China as early as during the Song Dynasty
(CE 960–1279). These researchers have asserted that copyrights and trademarks
were historically protected in China.41 However, Alford notes that the Western
understanding of IP law has had no roots in China and that there was no protection
of IPRs in China before the introduction of Western notions of IP law in the late
19th and early 20th centuries.42 Certainly, China has a long history of being one of
the most scientifically and technologically advanced countries in the world; this
status could not have been gained and maintained if Chinese culture had not
provided sufficient factors to encourage intellectual creation and innovation.43
However, this does not necessarily mean that China developed a legal regime to
systematically protect intellectual creation equivalent to the modern IP system,
which is based on private property rights and is applicable to an industrial society.44
It is generally recognized that current IP law in China is based on the Western
notion of IPRs, and in the 20th century, China had to transplant IP laws from the
Western world due to external pressure. Indeed, the proprietary right to intellectual
creations is not an indigenous concept in Chinese history and culture.
In Confucian society, intellectual creation is regarded as a process of self-
cultivation, and the outcome of intellectual creation is not supposed to be for selfish
purposes.45 In Confucian society, when a scholar’s work is broadly imitated,
reproduction is considered a demonstration of honor and respect.46 In a famous
story, Mr. Si Zuo’s poem ‘‘San du fu’’ was highly renowned upon its release, and it
later became so popular that many people copied his work; as a result, the price of
paper in Luoyang City was said to have risen. These events gave rise to the popular
Chinese idiom Luoyang zhigui (‘‘Paper is expensive in Luoyang City’’), which is
used today to praise literary works. The dissemination of one’s works to the greatest
extent possible might inform the public that the author’s thoughts were so valuable
and popular. This dissemination would not provide any economic benefit to an
author, but it would enhance an author’s reputation, which was regarded as a
respectful achievement in Confucian society. The dissemination of one’s works
could even provide political benefits to an author, such as an important position in
the government.47 Thus, within this cultural context, the idea of IPRs does not fit
well in Confucian society.
41
Zheng (1998), p. 14.
42
Alford, supra note 11, pp. 1–3.
43
Ken Shao finds that there was certain level of protection for an author’s reputation and investment in
publishing in ancient China. See Shao (2005), pp. 400, 417–425.
44
Shao (2012). p. 115.
45
Wu, supra note 40, pp. 55, 56.
46
Montan (2001), p. 23.
47
Li (2006), pp. 57, 63, 64.
123
Since the beginning of the 20th century, Confucianism has drawn fierce
criticisms from revolutionary thought. When the PRC was established in 1949,
Confucianism as a political institution was destroyed. However, spiritual Confu-
cianism and popular Confucianism, despite being damaged, have been revived in
contemporary China and remain a valuable ethical and enlightening influence in
society.48 While Confucianism may have influenced the transplantation of IP law in
China, the ideology of socialism in China has had a real and evident impact. Since
1949 when the CCP began ruling China, socialism was established as the political
norm. Between 1949 and 1958, the newly established government took measures to
gradually abolish private property rights. During this period, to rebuild the capacity
for intellectual creation, the government provided a certain level of remuneration to
authors and inventors to spur the intelligentsia to meet the demand for technological
and intellectual creation to recover from decades of war.49 The legal system largely
followed the model of the Soviet Union, which could also be regarded as a legal
transplantation. Intellectual creation was regarded as an outcome of human
intellectual labor and therefore the common wealth of human society, which also
was in line with the Confucian view.50 In 1950, the government made several
provisional regulations on intellectual creation, including the Provisional Regula-
tions on the Protection of Invention Rights and Patent Rights (1950), the Decisions
on Reward for the Invention, Technological Improvement and Rationalization
Proposal in Relation to Production (1950), the Resolution on Improvement and
Development of Publishing Works (1950), and the Provisional Regulations on
Trademark Registration (1950). However, these regulations did not concern IPR
protection; rather, they encouraged people to develop technological inventions and
to regulate commercial activities to maintain market order.51 By 1963, when the
1950 Patent Regulation was abolished, only four patents had been granted under the
regulation.52
By 1958, the socialist transformation of the economy essentially eliminated
private ownership and IPRs became useless. In 1963, the Chinese government
promulgated the Invention Reward Statute and the Technology Improvement
Statute to replace the Provisional Regulations on the Protection of Invention Rights
and Patent Rights of 1950. Patent rights were thereby completely eliminated.
Concerning trademarks, the Trademark Governance Statute was promulgated, in
which trademark legislation became a vehicle for supervising quality, not for
granting exclusive rights. Since 1966, increasingly radical political movements had
led to attacks on private property rights and, more generally, to assaults on the
48
Fei Ye has defined a three-level framework to analyze the Confucian tradition: the official system of
Confucian tradition, the grass-roots level of Confucian tradition and the intellectual level of Confucian
tradition, namely, politicized Confucianism, popular Confucianism and spiritual Confucianism. The fates
of the three Confucian traditions are different in modern China. See Yu (2010), pp. 243–249; Ye (2011),
p.70.
49
See Zhao, supra note 26, pp. 9–10; Li and Chang, supra note 29, pp. 1–42.
50
Alford, supra note 11.
51
Wang (1996), p. 15.
52
Zhao, supra note 26, p. 10.
123
intelligentsia and the formal legal system itself. Consequently, patent and copyright
protection was completely abolished in China.53
The traditional socialist ideology in China ensured that intellectual creations
were not considered property. Indeed, in socialist China, when developing
intellectual creations, individuals were considered to be engaging in social activities
that drew on a repository of knowledge that belonged to all members of society,54
and any scientific and technological achievements were regarded as public goods for
free public use. This notion was reflected in Art. 23 of the Invention Reward Statues
in 1963: ‘‘Any inventions belong to the state; any individual or entities shall not
have monopoly on them; any entities throughout the nation shall be entitled to
exploit inventions as needed.’’
The third factor that contributed to resistance against IPRs was the economic
conditions in China at the time. At the end of the 1970s, China still relied heavily on
agriculture. Most industrial output was generated by state-owned enterprises, which
were managed in a planned economy. In such an economy, property rights are not
necessary because the distribution of resources relies on planning and order rather
than market exchanges. The administrative authority for state-owned enterprises
considered the imitation of foreign technology to be important to improve the state’s
technological development.55 Moreover, at that time the overall income of the
population was very low. In 1979 in Beijing city, the average annual spending for
municipal residents was 408.72 yuan, with 368.4 yuan being spent on tangible
goods. Furthermore, less than 10% was devoted to non-commodity expenditures,
and more than 72% was devoted to food and clothing.56 Cultural products such as
movies and books were provided either free of charge or at extremely low prices by
their work units (danwei). In this context, an IP regime may not be necessary.
The real challenge was whether these unfavorable conditions could allow for the
establishment of a Western-style IP regime.
2.3 Conflict and Adaptation in Transplanting IPRs in China
When China transplanted the IP system through legislation, it did not introduce the
entire system from a specific source without screening and adapting the
implemented laws. When transplanting Western IP rules, Chinese legislators were
very cautious, and they carefully modified relevant rules according to the specific
context in China. First, Chinese lawmakers had to address ideological conflicts.
Second, the lawmakers had to consider how a foreign model would fit the specific
context in China so that the regime would serve state interests rather than harm
economic development. Here, we discuss the establishment of patent law as an
example to demonstrate how lawmakers addressed these problems in transplanting
IP laws in China.
53
Ibid. pp. 11–13; Li and Chang, supra note 29, pp. 89–95.
54
Alford, supra note 11, p. 56.
55
Zhao, supra note 26, pp. 68–70.
56
Beijing Municipal Bureau of Statistics [Beijing Shi Tongjiju] (1980), pp. 210, 211, 215, 216.
123
When China first attempted to introduce patent law, there were controversial
debates over whether China should establish a patent system. The first concern
was that the patent system might not be compatible with the socialist system. In
the traditional socialist view, intellectual inventions and technological improve-
ments should belong to the state representing the people; thus, these may be
exploited by all state-owned enterprises free of charge. Because patents grant
private ownership to individuals, they created conflicts with traditional socialist
norms for many policymakers, who questioned whether a socialist country
could have a patent system. Instead, an alternative was proposed: the state
would award inventors, but their inventions would belong to the state.57 The
second concern was that the patent system would protect the monopoly interests
of only foreign companies in China; therefore, domestic technological
development would be restricted because foreign companies would own most
of the patents. Under such a regime, it would be difficult for Chinese state-
owned enterprises to imitate foreign technologies. Another concern was that the
patent system would block the distribution and implementation of new
technology,58 which would place China at a disadvantage. The third concern
from the industry side was that patent law was not necessary for China because
even without patent protection, China was still able to import technology from
foreign countries.59 Those advocating for a patent system responded to these
concerns and defended arguments in favor of China’s implementation of a
patent system. In 1979, a few translated articles introducing foreign patent laws
began appearing in some journals in China, and these articles provided initial
basic knowledge of patent laws in China.60 In 1980, a few articles published in
Chinese journals began to advocate for China to establish a patent system.61
These articles argued that enacting a patent system could stimulate technolog-
ical development, promote the dissemination and implementation of technology,
foster international communication and international trade, and serve as an
effective tool to realize the goal of ‘‘the Four Modernizations.’’62 Among these
articles, Chengsi Zheng systematically refuted several arguments against the
establishment of a patent system.63 However, the debate ended in a deadlock.
The arguments of both sides were submitted to higher-level policymakers for
consideration.64 Meanwhile, Dr. Árpád Bogsch, then director general of WIPO,
had approached the Chinese government to encourage China to join WIPO and
to establish a patent system, providing comprehensive information regarding
57
58
Ibid. pp. 57–58.
59
Ibid. p. 79.
60
See Duan (1979), p. 47.
61
See Zheng (1980), p. 26; Yi (1980), p. 43.
62
See He, supra note 61, p. 44. The Four Modernizations were China’s strategic development goals
starting in 1978 to strengthen the fields of agriculture, industry, national defense, and science and
technology in China.
63
Zheng, supra note 61.
64
123
how a patent system functions.65 In 1979, WIPO concluded an agreement with

a Chinese official delegation to provide training and information exchange
regarding patent law.66
A breakthrough ultimately occurred on January 14, 1980, when the State Council
approved the State Science and Technology Commission’s proposal on the
establishment of a patent system, and a patent office was subsequently established
according to the proposal.67 A team composed of eight experts was established to
prepare a draft of patent legislation in March 1979. However, the drafting process
was interrupted several times due to objections among high officials of the CCP, and
the Director of the patent office at the time had to devote substantial effort to
persuade these officials and push the legislation through.68 In 1980, a Deputy
Minister in charge of industry wrote a letter to the highest leadership and opposed
the patent system. He stressed that the proposal exaggerated some benefits of a
patent system and noted that using a Western model to solve problems regarding
scientific and technological development in China was very unrealistic. He also
stated that although China had established a patent office, caution was still
necessary in establishing a patent system.69
Ideological obstacles were ultimately surmounted on November 17, 1983, when
an article published in the CCP’s official newspaper the People’s Daily claimed that
technology as a product of labor is a kind of commodity that should be
exchangeable on the market. The draft of the Patent Act was revised more than
20 times, and many questions concerning terminology, technical problems, terms of
protection, procedures and the structure of the organizations were submitted to
universities, governmental departments, and industry for consultation before the Act
was ultimately passed by the NPC in 1984.
Once the decision to establish a patent system in China was made, the next
challenge concerned how to maintain a socialist character of the patent law while
granting a private monopoly on inventions. To make the patent system compatible
with the socialist ideology in China, scholars developed a theory regarding the
essence of a patent to justify patent rights. According to this theory, a patent was a
means to protect the interests and rights resulting from labor. The theory
emphasized that knowledge should belong to society, and IPR protection should
first serve the state and public interest. In this way, IPR protection is only a means to
promote the dissemination of creations, inventions and art.70 In the end, the socialist
characteristics were justified based on patent ownership. According to Art. 6 of the
Patent Act of 1984, in a state-owned entity or a collectively owned entity where an
invention was made by its staff while carrying out a task assigned by the entity
through the use of the entity’s material conditions, the patent should belong to the
state in the case of a state-owned entity; accordingly, the state-owned entity was
65
Ibid. pp. 20–26.
66
Ibid. pp. 26–30.
67
Ibid., p. 54.
68
Ibid. pp. 174–175.
69
Zhang (2010), p. 3.
70
Wang, supra note 51, p. 16.
123
entitled to hold and exploit the patent. In the case of a collectively owned entity, the
collectively owned entity was entitled to own the patent. Because most inventions
require huge investments and because individuals generally do not have such
resources, in China, most inventions would be invented in either a state-owned
entity or a collectively owned entity. Consequently, most patents would belong to
state-owned or collectively owned entities. Therefore, the socialist character of
patent law was maintained. Individuals could create inventions and own patents, but
the private ownership of patents would be complementary to the public ownership
of patents.71
One concern was that the patent system, which originated from capitalism and
allowed patentees to extract monopoly profits, would not be compatible with the
socialist principle of distribution according to labor. To address this concern, the
Patent Act established several restrictions in granting and exploiting patents.
Specifically, the Act provided for compulsory licenses for patents that were not
exploited,72 and Art. 51 of the Patent Act stipulated that patentees were obliged to
make patented products or to utilize their patented process to make products in
China or to license others to do so in China.
Since the planned economy held an important place in China, the Patent Act also
allowed for the exploitation of patents by government order. Specifically, Art. 14 of
the 1984 Patent Act stipulated that the competent department of the State Council
and a provincial government had the power to decide that the patents owned by
state-owned entities could be exploited by designated entities and that the
designated entity would pay a royalty to the patent holder. The government also
had the power to grant a compulsory license for the use of patents owned by
collectively owned entities or individuals in cases involving significant state or
public interests.
The 1984 Patent Act aimed to establish a balance between complying with
international norms and reflecting the conditions of the country.73 The draft of the
Patent Act had been discussed for five years, and the draft had undergone 22
revisions before it was passed by the legislative body.74 The drafting group of the
Patent Act reviewed the patent laws of many countries and the model law issued by
WIPO as well as international treaties such as the Paris Convention and European
Patent Convention. They also visited the patent offices of various countries. The
legislators considered adopting several models from different countries. Ultimately,
they classified patent systems around the world into five categories: the German
system, French system, American system, British system, and Soviet Union
system.75 The group abandoned the alternative of establishing the invention reward
system that had been adopted in the Soviet Union, for which many had advocated,
and chose to establish a patent system. Concerning the patent application and
examination procedure, the drafting group adopted the first-to-file principle and the
71
Tang (1984), pp. 25, 27.
72
Lü (1983), pp. 57, 57.
73
Lü, supra note 72.
74
Feng (2003), p. 20.
75
Zhao, supra note 26, p. 47–48.
123
requirement to conduct a substantial examination of the patent application after the

expiration of a period of 18 months from the date of filing, which largely followed
the German patent system. The system covered three types of patents: invention
patents, utility model patents and design patents. The adoption of such a system
shaped the future trajectory of Chinese patent law. Because China was still a
developing country and the level of industrial and technological development
remained very low at that time, the system did not provide protection for foodstuffs,
drugs and materials attained through chemical methods.
Subsequently, during the several updates to the Patent Act through amendments,
many provisions brought patent law in China more in line with international
standards, and many additional rules that reflect China’s own ideas and standpoints
have been incorporated in the Patent Act. As an example, Arts. 5 and 26 of the 2008
Patent Act originally established a requirement that genetic resources be declared in
patent applications:
If an invention relies on genetic resources, the patent applicants have to either
indicate the origin of the genetic resources in their application or give a reason
why this is not mentioned. A patent is denied if the attainment or utilization of
the genetic resource on which the invention relies is against the law, or
administrative regulations.
With respect to establishing a Western-style copyright law in the 1980s and
1990s, the first obstacle was to switch from an administrative control system on
the publication of content to a private rights system for authors’ rights
protection. China had a long tradition of government regulation of publication
and copying.76 When the PRC was established, authors’ rights were protected by
administrative measures. In 1949, the State Publication Administration was
established, which was merged in 1954 into the Ministry of Culture. The newly
established authority had taken measures to prevent unauthorized reproduction
and to determine methods of calculating remuneration for authors.77 The
Ministry of Culture imitated the Soviet Union model and attempted to enact
‘‘Provisional Regulations on Safeguarding the Copyrights of Publications’’ in
1957. During the early period of the PRC, authors mainly enjoyed the rights to
publish and to receive remuneration. Authors received remuneration for their
works based on the number of copies, which followed the former Soviet Union’s
approach.78 The contracts between authors and publishing houses defined the
authors’ remuneration and other rights.79
In the planned economy, all intellectuals worked in state-owned institutions. The
Federations of Literary and Art Circles, the Writers Associations and the Musician
Associations were established at the central and local levels, and many writers,
musicians and other intellectuals worked as full-time members in these associations.
The institutions paid them salaries and provided apartments, childcare, clinics and
76
See Shao, supra note 43, pp. 405–411.
77
Li and Chang, supra note 29, pp. 6–10.
78
Ibid. pp. 46–47.
79
Ibid. pp. 14–17.
123
many other public services. In a planned economy, the creations of intellectuals did
not belong to the intellectuals themselves; instead, they belonged to the institution
and state. Creation and publication became part of the output of a state-planned
system.80 Therefore, there was no need to protect any creations as private property.
The idea of authors’ rights as private rights became odd in this context.
The beginning of the economic reforms in 1978 revived the idea of the protection
of authors’ rights. The system of remuneration for authors was restored to encourage
creation in the form of administrative instructions. For example, the State
Publication Administration put forth the Provisional Measures on Remuneration
and Allowance for News and Publication in September 1977. The restoration of the
remuneration system stimulated the passion for creation again. With the further
development of the Chinese market economy in the 1980s, disputes concerning
publications and remunerations increased. The development of a Western-style of
copyright law had been discussed since 1979. Due to both external pressure and
internal demand for the protection of authors’ rights, the decision-makers decided to
create a copyright law. Nonetheless, the dilemma at that time was that no one knew
what copyright law was. Therefore, in 1980 a copyright study panel was established
to investigate how to establish copyright law.81
From 1980 to 1989, copyright experts from the U.K., the U.S., Japan, and WIPO
and the United Nations Educational, Scientific and Cultural Organization organized
at least six sessions of copyright training in China. The Chinese government
dispatched copyright officials and researchers to study copyright protection in the
U.K., the U.S., Germany and Japan.82 These activities enlightened copyright
personnel in China and provided necessary resources for the development of
copyright law in China. Before a copyright law was enacted, the administration
made administrative regulations to regulate emerging issues with respect to
publication and copying. In 1984, the Ministry of Culture created the ‘‘Trial
Regulation on Protection for Book and Journal Copyrights.’’ In 1987, the Ministry
of Broadcasting, Films and TV created the ‘‘Provisional Regulation for the
Protection for Copyrights of Audio and Video Publications.’’
The draft of the Copyright Act underwent 19 versions prior to 1987, when the
draft was sent for comments and, unsurprisingly, received severe criticisms. The
main concern was that if China enacted a copyright law, the expense of purchasing
foreign publications would increase, costing a large amount of the scarce foreign
currency deposits. The State Science and Technology Commission, the State
Education Commission, Academy of China and the China Association for Science
and Technology proposed postponing the development of copyright law or, if a
copyright law had to be enacted, to avoid joining any international copyright
treaties. They argued that the enactment of a copyright law would impede the use of
foreign books and journals, thus causing difficulties for scientific research and
education in higher education institutions. A copyright law would make reproduc-
tions of foreign works difficult and costly. They exaggerated estimations that the
80
Ibid. pp. 78–82.
81
Ibid. pp. 170–171.
82
Zhao (2008), pp. 15, 15–17.
123
expense for the purchase of foreign copyrights would exceed 600 million USD.
Moreover, many famous scientists submitted a joint letter to postpone the
development of copyright law. In the end, the submission of the Copyright Act
draft to the NPC had to be suspended.83
To justify the development of copyright law and to dismiss the concerns,
advocates summarized several benefits of copyright law. First, to improve the
scientific and cultural quality of the nation, it was necessary to fully mobilize the
enthusiasm and initiative of the majority of literary, artistic and scientific
creators as well as creators of spiritual wealth. Because a copyright law could
recognize and protect the legitimate rights and interests of authors and creators
in terms of both moral and economic rights, it was an important means to
mobilize the enthusiasm of authors and creators to serve the goal of improving
the scientific and cultural quality of the public and to promote the development
of social productivity. Second, a copyright law could serve as a means of macro-
control to regulate the publication business. Specifically, copyright law could
protect the dominant culture and could select imported foreign works with an
aim to restrict ‘‘unhealthy’’ foreign motion pictures, television broadcasts,
audiovisual works, books and journals from being reproduced and distributed in
China. Third, a copyright law would be good for developing international
cultural exchange and cooperation in science and technology. The development
of a copyright law could change the situation in which China was isolated from
the international copyright society and could improve China’s international
image in terms of copyright.84
One significant development was the enactment of the General Principle of Civil
Law in 1986, which was the first abridged version of the civil code in the PRC. The
General Principle of Civil Law includes one section on IPRs. Article 94 of the
General Principle of Civil Law provides that any citizens and legal persons shall
enjoy copyrights and shall be entitled to the rights of authorship, disclosure and
publication and to receive remuneration in accordance with the law. Accordingly,
Art. 118 provides liabilities for infringing a copyright. Thus, copyrights were
protected as a private right for the first time in the PRC. The implementation of the
General Principle of Civil Law raised awareness about copyright. The copyright
provisions in the General Principle of Civil Law also provided a legal basis for
enacting a copyright law and promoted progress in enacting such a law.85
Ultimately, the Copyright Act was passed in 1990 after 11 years of debate and more
than 20 revisions.86 The 1990 Copyright Act included many provisions that
conformed to international copyright treaties; however, it also included provisions
that reflected its socialist character. Article 1 of the Copyright Act stated that one of
the purposes of the Act was to encourage the creation and dissemination of works
beneficial to the building of socialist spiritual civilization and material civilization
and to promote the development and prosperity of socialist culture and science.
83
Li and Chang, supra note 29, p. 167–169.
84
Ibid. pp. 179–181.
85
See ibid. pp. 199–205.
86
Ibid. p. 207.
123
Some provisions were in favor of state-run radio and TV stations.87 For example,
Art. 43 of the Act provided that a radio or a television station could broadcast a
published phonogram for non-commercial purposes without the permission of the
copyright owner, performer or sound producer and could not remunerate the right
holders. In addition, the Act imposed more restrictions on authors’ rights. For
example, Art. 46 of the 1990 Copyright Act provided that reproduction and
distribution works for the purpose of making profit without the permission of the
copyright owner should constitute copyright infringement. It established the purpose
of making profit as a precondition for copyright infringement. This provision placed
restrictions on copyright owners’ rights. All these deficiencies were fixed in the
Amendments to the Copyright Act in 2001, when China attempted to join the WTO.
Compared with patent and copyright law, the development of trademark law has
experienced less resistance. The PRC made a Provisional Regulation on Trademark
Registration in 1950. Trademark registration had long been regarded as a means of
controlling the quality of products. For example, to obtain trademark registration, an
applicant had to submit a certificate to show the product fulfilled the quality
standards.88 The development of the 1982 Trademark Act considered international
practice, international treaties and comparable legislations in Western countries. It
was the first Western-style trademark law in the PRC despite strong administrative
governance.89 It provided the exclusive right to use a trademark. Therefore, the
function of the trademark changed from a tool for administrative control to an
exclusive right. The amendments to the Trademark Act in 1993 and 2001 updated
the trademark law to be fully in line with international standards.
3 The Shaping of IP Norms in China
Legal transplantation through legislation was the first step toward the establishment
of IP norms in China. The law is not only a body of rules or institutions but also a
social practice within a legal community that shapes the actual meaning of such
rules and institutions, their relative weight, and the way in which they are
implemented and embedded in society.90 Once IP law was introduced in China, the
operational legal norms in terms of IPRs were further shaped by the administrative
authorities’ actions and judicial process.
3.1 The Role of Administrative Authorities in Shaping IP Norms in China
Administrative authorities are usually not considered to play an essential role in

creating legal norms. Nonetheless, in China, administrative authorities have played
a key role in the transplantation and establishment of IP norms as the hierarchical
administrative system has used its power to push the implementation of an IP
87
Shen (2001), p. 3, 3.
88
Shen (1980), p. 37, 39–40.
89
Deng and Yuan (1983), p. 24, 24–26.
90
Mousourakis (2010), p. 87, 90.
123
Table 1 IPRs and the Responsible Department in China

No. IPR The responsible governmental department
1 Patents, integrated circuit State Intellectual Property Office

layout
2 Trademarks The Trademark Office of the State Administration for Industry and
Commerce
3 Copyrights National Copyright Administration
4 Trade secret State Administration for Industry and Commerce
5 Geographical indications General Administration of Quality Supervision, Inspection and
Quarantine
6 Agricultural plant varieties Ministry of Agriculture
7 Forestry plant varieties State Forestry Administration
8 IPR matters in international Ministry of Commerce
trade
9 IPRs across border General Administration of Customs
system in Chinese society through a top-down approach. The hierarchical

administrative system constitutes a network that covers the entire state at different
levels (Table 1).
Several governmental departments at the central level are responsible for IPR
matters. At the local level, there are four levels of government in China: (1)
provinces, autonomous regions and directly controlled municipalities; (2) munic-
ipalities or prefectures; (3) counties, cities or municipality districts; and (4) towns.
China has 22 provinces, five autonomous regions, and four directly controlled
municipalities. At this level, each province, autonomous region and municipality
has a corresponding department that is responsible for the administrative work
concerning IPRs in their respective administrative areas. At the municipality or
prefecture level, which is lower than the level of provinces, autonomous regions,
and directly controlled municipalities, a corresponding department is usually
responsible for the concrete work concerning the relevant IPRs in its administrative
areas. These hierarchical administrative bodies constitute a network that exists
throughout China. This powerful network has secured legal transplantation through
a top-down approach and has had a strong influence in reinforcing the IP regime in
China.
In China, the driving force of legal transplantation through legislation has been
administrative authorities. At the end of the 1970s, the government realized the
importance of the intelligentsia in the modernization of the state and decided to
establish rules to provide protection and rewards for intellectual creations. Before a
Copyright Act was enacted, several governmental departments had already made
provisional regulations to provide protection and remuneration for certain works
123
including books, journals, audio and video recordings, and artistic works.91 The
content of all these administrative regulations constituted the basis for the
establishment of the subsequent Copyright Act. Administrative authorities have
performed concrete work in promoting the transplantation of patent law in China. In
1978, several ministries, including the Ministry of Foreign Affairs and Ministry of
Foreign Trade, recommended the establishment of a patent system.92 The State
Science and Technology Commission, under the State Council at that time, was a
leading administration in charge of developing a patent law. The State Science and
Technology Commission reviewed the patent legislation of many countries and
visited more than ten countries to study their patent laws. In 1979, the Commission
submitted the Proposal for Establishing a Patent System to the State Council, which
listed and analyzed the rationale for establishing a patent system in China.93 The
State Council approved the proposal, which led to the establishment of a patent
office. In 1980, the newly established patent office took over the job of preparing a
draft of the Patent Act and combating the opposition against patents. These efforts
ultimately led to the enactment of the Patent Act in 1984.94
Administrative authorities have affected the formation of IP norms through the
development of IP administrative regulations and the administrative enforcement of
IP law. Because the texts of Chinese IP legislation are usually simple and lacking in
detail, it has been a general practice when the NPC enacts an IP law for the law to
authorize the State Council to make administrative regulations to elaborate the
provisions in the law and to stipulate certain matters that should be stipulated by law
but were not. These implemented regulations have a binding effect; specifically,
when a court arrives at a judgment in an IP case, it should apply these administrative
regulations. For example, in the 1984 Patent Law, Art. 68 authorizes the State Patent
Office to enact an implementing regulation. Therefore, the State Patent Office issued
the ‘‘Implementing Regulation of Patent Law’’ in 1985. This implementing
regulation has regulated very broad matters. For instance, Art. 6 of the 1984 Patent
Law defined the ownership of an employee invention, but it did not provide a
definition of an employee invention. The implementing regulation thus further
clarified the definition of employee inventions. This is also the case for copyright
law, trademark law and other IP laws. This practice has granted administrative
authorities substantial power in creating IP administrative rules. These rules reflect
the respective administrative bodies’ thinking and interests concerning many
important issues.
91
For example, in 1977, the State Publication Authority issued ‘‘the Notice on Provisional Measures for
Implementation of Remuneration and Subsidy for a Publication’’, which provided remuneration for
authors or translators based on calculating the numbers of words in their works. Many other regulations
were included by the Ministry of Broadcasting and Television, e.g. ‘‘the Provisional Statute on the
Governance of Audio and Video Recordings’’ of 1982, and the department of publication in Ministry of
Culture revised old rules and issued ‘‘the Provisional Regulations on the Remuneration for Books,’’ and
‘‘the Criterion for Remuneration for Artist Publications.’’ In 1984, ‘‘the Provisional Regulation on
Protection for Copyrights of Books and Journals’’ was issued.
92
93
See Chinese State Council [Guowuyuan], supra note 28.
94
123
Moreover, Chinese IP law has granted relevant IP administrative authorities

substantial power in enforcing the law. Each IP governmental authority has the
power to initiate actions to prevent the infringement of IPRs and the power to
impose administrative penalties on infringers. When an IPR holder’s rights are
infringed, it may petition a competent IP department at the provincial or a lower
government level to stop the infringement and to impose a fine on the infringer. This
procedure provides an alternative to bringing a lawsuit before a court to prevent
infringement and thus constitutes an effective way to crack down on IPR
infringement and reduce the cost for IP owners to stop infringement. In the 1984
Patent Act, administrative authorities were granted the power to issue an injunction
in patent infringement cases and the power to decide on the establishment of
infringement. With respect to trademark and copyright law, the administrative
powers are even stronger, and the administrative authorities have the power to
investigate infringements as well as to impose administrative penalties on
infringers.95 Because relevant administrative departments that initiate the amend-
ments to IP laws are in charge of preparing drafts for such amendments, the power
of IP administrative bodies tends to be strengthened and secured. The strong
position of IP administrative bodies in enforcing IP law is a distinctive characteristic
of China’s IP legal system. Granting strong power to IP administrative bodies may
facilitate the implementation of IP law in China, where there is still considerable
resistance to the new system. The administrative bodies can also help IP owners
protect their IPRs because IP owners may not understand how the IP system works,
at least at the early stage. Nonetheless, granting administrative authorities power in
implementing IP laws comes with drawbacks. The system has been criticized for its
inadequate and non-transparent procedures as well as the inconsistency between
different levels and regions of government in implementing laws, local protection-
ism and corruption, insufficient training and financial resources, conflicts of
interests, tedious procedures in government bodies, and poor coordination among
different government agencies.
Recent developments show that the government’s intervention in IP matters has
increased. In June 2008, China’s State Council published the Outline of the National
Intellectual Property Strategy, which provided a roadmap of China’s plans to
become one of the world’s most innovative countries by 2020.96 The IP Strategy
committed the government to take measures to improve its IP regime in accordance
with its ambitious industrial and technology policies. The office of the Inter-
Ministerial Joint Meeting for Implementation of the Strategy, which was composed
of 28 ministries and departments, was established in 2008.97 Each year, the meeting
assigns concrete tasks for each responsible ministry to fulfill, and each ministry
makes its own plan and policy to implement the specific tasks. For example, the
2011 Promotion Plan contained 176 concrete measures and 13 key measures.98 In
95
Article 48 of China Copyright Act 1990 amended in 2010; Arts. 60, 62 of China Trademark Act 1982
amended in 2013.
96
Chinese State Council [Guowuyuan] (2008).
97
National IPR Strategy Network [Guojia Zhishichanquan Zhanlue Wang] (2014).
98
See Office of the Inter-Ministerial Joint Meeting for Implementation of National IPR Strategy (2011).
123
total, the State Council and its ministries have issued more than 300 official
documents, including industrial policies and guidelines to elaborate on the National
IP Strategy and to commit or guide lower level governments, entities and/or
companies in taking measures to implement the strategy. For example, the Ministry
of Industry and Information Technology issued the Guidelines for Industrial
Enterprises on the Management of IPRs, and it aimed to promote these guidelines in
approximately 1000 industrial enterprises to improve their capacity to exploit IPRs
and to selected model enterprises in managing IPRs for others to follow.99 These
guidelines also encourage the lower governmental departments to take practical
measures to implement the guidelines as such. In addition, the Ministry of Industry
and Information Technology devised ‘‘the Twelfth Five-Years Development Plan
for Software and IT Services Industry’’ to implement the National IP Strategy to
promote the development of high-tech and new-tech sectors.100 Moreover, relevant
governmental departments have established national patent, trademark, and
copyright strategies as well as IPR strategies in the fields of agriculture, forestry,
national defense, industry and technology. At the local level, local governments
have been encouraged to promulgate local IP strategies by following the instructions
of the National IP Strategy based on their practical situations. In all, 28 provincial
and 159 municipal governments have created official documents to guide the
implementation of the National IP Strategy in their respective administrative areas
by 2012.101 Several model provinces and model cities were recognized for
implementing the National IP Strategy based on certain criteria, with the aim of
providing a model for other local governments to follow.102 With respect to the
enforcement of IP law, the relevant governmental departments have made plans and
launched special campaigns to combat IPR infringement. The special campaign
aims to gather personnel and resources from all relevant departments to crack down
on certain kinds of infringement over a short period. A broad range of infringing
activities, such as producing and distributing counterfeit goods, pirating audio-
visual media and trading in infringing goods are covered. These campaigns may be
national or regional. In one recent example, the Leading Group for Cracking Down
on Counterfeiting Goods and Infringing on IPRs under the State Council issued a
work plan to fight the manufacture and sale of fake and shoddy goods in the online
environment on June 18, 2014. The plan involved a range of agencies to undertake
joint actions, including Customs, the General Administration of Quality Supervi-
sion, Inspection and Quarantine, General Administration of Press, Publication,
Radio, Film and Television, State Administration for Industry & Commerce,
Ministry of Agriculture, and the Chinese Food and Drug Administration.103
99
Ministry of Industry and Information Technology [Gongye He Xinxihua Bu] (2013).
100
Ministry of Industry and Information Technology [Gongye He Xinxihua Bu] (2012).
101
See The 2012 National Local Intellectual Property Strategy Implementation Meeting Opens (2014).
102
Wu and Xiao (2012).
103
‘‘Notice on Issuing the Work Plan for Fighting IP Infringement and the Manufacturing and Sale of
Fake and Shoddy Goods in the Internet Field,’’ the leading group for Fighting IP Infringement and the
Manufacturing and Sale of Fake and Shoddy Goods, (18 June 2014).
123
The examples above show the profound and extensive governmental intervention
in the enforcement of IP law and IPR governance.
3.2 Judicial Decision-Making in Shaping IP Norms in China
As in continental legal systems, Chinese courts are merely institutions that apply the
law rather than forums that make law. Nonetheless, courts in China play an
important role in forming IP norms. Courts’ discretion has shaped IP norms in
several respects. When courts and judges hear cases and arrive at decisions based on
IP rules, they have to face multiple conflicts between IP rules and other factors that
result from actual social customs and practice. IP rules are further interpreted and
applied to match requirements resulting from societal conditions. Because IP laws
in China have been established without their cultural and historical roots in society
and because they do not entirely match demands for industrial development, one
concrete problem involves how courts manage the possible tension and interaction
between formal IP rules and individualized justice in the context of the local culture,
customs and economic interests. In fact, Chinese IP laws at the early stage were
basic and simple; therefore, they left considerable room for courts to interpret the
laws and to apply them to concrete cases. Particularly in the IP field, technology
evolves quickly, which creates many challenges for IP rules.
The Supreme People’s Court (SPC) is entitled to issue judicial interpretations,
which resemble statutes that elaborate and interpret provisions stipulated by law.104
Since 2000, 23 judicial interpretations in IP law have been issued. Many of these
judicial interpretations are very broad, and they already exceed the interpretation of
the law as such; thus, they more closely resemble legislation. In addition to
providing judicial interpretation, the SPC issues model IP cases in its official
journal. In theory, the SPC’s precedent does not have a binding effect; however, its
model cases are usually considered guidelines when lower-level courts rule in
similar cases.
Both IP laws and state policy considerations have a significant influence on the
SPC’s judicial interpretations and orders. When a judge makes a judicial decision,
he/she usually faces a complicated situation in which he/she does not merely apply
the law as a benchmark; rather, the judge is also guided by political and judicial
policies.105 Applying IP laws while also considering political factors to achieve
results consistent with a particular public policy or ideology is referred to by some
commentators as ideological discretion.106 As one example, the SPC issued an
official document titled ‘‘Opinions of the Supreme People’s Court on trials of IPR
shall serve the overall interests under the current economic situation’’ on April 21,
2009.107 In this document, the SPC requires all lower courts to follow the
document’s guidance in IP trials. Its purpose is
104
The Organic Act of the People’s Courts of 1980 grants the SPC the power to interpret law. From 1980
to 2012, the SPC made approximately 1446 judicial interpretations. See Zheng (2013), pp. 49, 49.
105
Kong (2008), pp. 24, 26.
106
Woo (1999), pp. 581, 586.
107
Supreme People’s Court [Zuigao Renmin Fayuan] (2009).
123
in fully implementing the spirits of the ‘‘two Congresses,’’ and carrying out
national IP Strategy, to make the IPR trials serve the overall interest of an
effective response to the international financial crisis and promoting steady
and rapid economic development and to make a more positive contribution to
maintaining growth, people’s livelihood and stability.108
The document mandates courts to establish a subtle balance between conforming
to legal requirements and following state policies. For example, Sec. 14 of this
document delineates guidelines regarding the granting of a preliminary injunction
before a plaintiff files suit. The section provides that the preliminary injunction
should be granted with caution and that a court should establish a balance between
effectively enjoining infringement and maintaining the normal operation of an
alleged infringing enterprise.109
Local courts also play an active role in legal transplantation and shaping of IP
norms in China. In the IP field, many new legal issues have continuously emerged
with the rapid evolution of technology. When a court decides a case that cannot be
addressed by direct interpretation of existing law, it is natural for the court to
consider how the same or similar issues have been solved in other countries. The
court can then use the thinking and principles that it considers appropriate to
interpret and apply Chinese IP law to a specific case. For example, the doctrine of
equivalence in patent infringement cases, which has been developed in different
forms in Germany and the United States, was introduced in Zhou Lin v. Aomei &
Huaao by the Beijing Municipal Intermediate People’s Court.110 Subsequently, in
2001, this principle was incorporated into a judicial interpretation issued by the SPC
and achieved a binding effect throughout China.111
In addition, courts have played an important role in improving IPR protection.
Specifically, courts have created precedents in which IPRs have been extended to
cover a broad subject or have granted strong protection that could not be read into
formal IP rules. This is especially the case when the interpretation involves
complicated technological problems and emerging issues. In TV Guidance, the
question was raised whether the unauthorized publication of a TV guide constituted
infringement even though TV guides were not included in subject matter
enumerated in the Copyright Act. The court of first instance held that the TV
guide was not included in the subject matter enumerated in the Copyright Act,
therefore, no infringement was found. The plaintiff appealed. The court of second
108
Ibid.
109
Ibid.
110
Gongsi Beijing Huaao Dianzi Yiliao Yiqi Youxian Gongsi Qinfan Zhuanli Jiufenan, Beijingshi
Zhongji Renmin Fayuan (1993) Zhong Jing Zhi Chu Zi Di 704 Hao Minshi Panjueshu. [Beijing
Municipal Intermediate Court Decision 1993 Zhongjingzhichuzi No. 704, Zhoulin v. Beijing Aomei
Mechanic and Electronic Joint Development Ltd, Beijing Huaao Electronic Medical Equipment Ltd. on
Infringement of Patent].
111
See Art. 17 of SPC’s Regulations on the Application of Laws in Trials of Patent Infringement cases,
Fashi [2001] No. 21. The SPC is entitled to issue judicial interpretations, which are more like statutes, to
elaborate and interpret the provisions of the law with a view toward facilitating the application of IP law.
Many of those judicial interpretations are very broad and, because they are already beyond the
interpretation of law as such, are more like legislation.
123
instance then held that the plaintiff had a legitimate civil right to the TV guide;
hence, the unauthorized publication of the TV guide constituted infringement.112 In
this way, the court extended the scope of copyright protection, indicating that the
subject matter enumerated in the copyright law is not exclusive. Moreover, courts
have been pioneers in solving many legal problems that could not be settled by the
direct interpretation of the existing IP law. In the case Ownership of the Patent Pile
Formation by Drilling Hole and Pressurizing Mortar, the Beijing Municipal High
People’s Court clarified and established rules on how to determine employee
inventions.113 In HongKong Meiyi v. Patent Re-examination Board, the Beijing
Municipal High People’s Court established a principle on how to examine the
standards for the inventive steps test for an invention.114 In DuPont v. Guowang
Domain Name, the Beijing Municipal High People’s Court held that the court
should have the power to rule on whether a trademark is a well-known mark, which
used to be the exclusive power of the State Administration for Industry and
Commerce. The court also established the applicable rules to address conflicts
between trademarks and domain names.115 Many such decisions have subsequently
been incorporated into legislation through amendments to the laws or judicial
interpretations issued by the SPC.
4 The Divergence Between IP Laws and IP Norms in China
The transplantation of an IP law does not necessarily lead to the establishment of the
same or a similar IP norm as the norm in the originating country. Accumulating
evidence shows that there is a clear divergence between formal IP law ‘‘on the
books’’ and operational IP norms in practice in China. This divergence between IP
laws and IP norms means that members of society do not entirely abide by IP laws,
and that IPRs are thus generally not respected. This divergence can be identified in
several respects. First, society is generally tolerant of piracy and counterfeiting; for
example, a great number of consumers would still like to buy counterfeit or pirated
goods.116 Second, companies striving to create and utilize IP lack substantial
112
Guanxi Guangbo Dianshibao Su Guangxi Meikuang Gongren Baoshe Dianshi Jiemu Yugaobiao
Shiyongquan Jiufen An, Zuigao Fayuan Gongbao, 1996.1. [Guangxi Broadcasting Newspaper Office v.
Guanxi Coal Mine Worker’s Newspaper Office on TV List Right Dispute, Supreme People’s Court
Gazette, 1996.1].
113
Taoyi Su Beijingshi Ditie Diji Gongcheng Gongsi Faming Zhuanli Quanshu Jiufen An, Zuigao
Renmin Fayuan Gongbao, 1992.3. [Taoyi v. Beijing Municipal Subway Foundation Engineering
Company on Patent Ownership Dispute, Supreme People’s Court Gazette, 1992.1].
114
Hong Kong Meiyi Jinshu Zhipin Chang Su Zhongguo Zhuanliju Fushen Weiyuanhui Queren ‘‘Duo
Qian Shi Men’’ Faming Zhuanliquan Jiufen Shangsu An, Zuigao Renmin Fayuan Gongbao, 1992.2.
[Hong Kong Meiyi Metal Products Factory v. Board of Patent Appeals of Patent Office on ‘‘Idler Clamp
Door’’ invention Patent Dispute Appeal, Supreme People’s Court Gazette, 1992.2].
115
Meiguo Dubang Dongsi Su Beijing Guowang Xinxi Youxian Gongsi Jisuanji Wangluo Yuming
Qinquan Jiufen An, Zuigao Renmin Fayuan Gongbao, 2002.3. [DuPont v. Beijing Guowang Information
Co., Ltd. on Domain Name Infringement Dispute in Computer Network, Supreme People’s Court Gazette,
2002.3].
116
Wu (2009), pp. 51, 63.
123
knowledge of IPRs. Indeed, a survey has shown that even in more developed
regions, only 25% of companies take IPRs seriously and take measures to protect
their IPRs.117 Third, enforcement authorities fail to take effective measures to
prevent IPR infringement. Enforcement of IP law has been regarded as ineffective
and lax in China.118 The effects of such an approach can also be observed outside of
China. For instance, the U.S. government has included China on the priority watch
list of the Special 301 Report for many years, and it has asserted that
China’s IPR enforcement regime remains largely ineffective and non-
deterrent. Widespread IPR infringement continues to affect products, brands
and technologies from a wide range of industries, including movies, music,
publishing, entertainment software, apparel, athletic footwear, textile fabrics
and floor coverings, consumer goods, chemicals, electrical equipment, and
information technology, among many others. The share of IPR-infringing
product seizures at the U.S. border that were of Chinese origin was 79 percent
in 2009, a small decrease from 81 percent in 2008.119
The Chinese government itself also recognizes that ‘‘public awareness of
intellectual property is still weak …; infringement of intellectual property is still
fairly serious’’ in China.120
The divergence between IP laws and operational IP norms leads to obvious and
serious negative consequences. As a result of such divergence, people may perceive the
law to be unjust or irrelevant, and they may feel reluctant to comply with IP law and may
comply with the law largely out of fear of punishment. In such an environment, state
enforcement of the law will not gain public recognition and support.121
Professor Handong Wu notes that cultural factors may have contributed to the
divergence between IP norms and IP laws.122 However, he does not indicate how
cultural factors have actually affected this divergence. Because cultural factors are
not static, especially given that Chinese society has experienced significant changes
since the 1970s, the value of and preferences for IP law among the public have also
changed significantly. Furthermore, the law has shaped Chinese culture and norms.
Law backed by legal force can deliver a powerful signal to the public regarding
what should and should not be followed. This legislation can change the public’s
perception of IPRs. Moreover, cultural factors alone cannot completely explain why
the problem of IP enforcement is less acute in countries where Confucianism also
has a profound influence on society. Thus, other factors must have contributed to
this divergence.
117
Ibid.
118
According to research by Chunming Xu and Xiaoguang Shan, the intensity of enforcement of IPRs
was much lower than the intensity of the legislation of IPRs in China. See Xu and Shan (2008), pp. 715,
719.
119
Special 301 Report. Washington, D.C.: Office of the United States Trade Representative, 2010, p.19.
Internet resource.
120
Chinese State Council [Guowuyuan], supra note 96, p. 719.
121
Cooter (1996), p.192.
122
Wu, supra note 40; Wu, supra note 116.
123
North noted that institutions are ‘‘the constraints that individuals impose on
themselves.’’123 How do individuals choose which institutions to impose upon
themselves? Why does IP law in China, as a formal institution, not impose sufficient
constraints as it should? Amir Licht identifies several factors that may contribute to
compliance with laws and norms, which include the preferences, emphases and
orientations that are shared by the societal group as a whole. The way in which they
interact with the law may reflect why there is divergence between laws and
norms.124
Thus, it is crucial to determine which factors have shaped the public’s
preferences, values and perceptions regarding IPRs in society. The process of
transplanting and enforcing IP rules in China shows that the most powerful and
significant force is administrative power, which may also impose the greatest
influence on the public’s preferences and values with respect to IPRs. Further, the
means of IP governance in China may imply that the formation and evolution of the
informal institution regarding IP governance has been distorted by unnecessary
intervention through administrative power. In particular, administrative authorities
have substantial power in implementing IP laws.125 As inherited from the previous
planned economy, the ruling party and government body have become accustomed
to intervening in economic and social matters via direct order through a hierarchal
bureaucratic system. Daily operations regarding economic and governance issues
rely not only on the law but also on designation from a superior authority. The
higher-level government body usually issues so-called ‘‘red headline documents’’ to
instruct lower-level governments in carrying out their activities. On the one hand,
the red headline documents are not legally binding because they do not have a legal
basis; on the other hand, for all agencies implementing the law, the red headline
documents provide the most effective and direct instruction regarding the law.126
The law as such may not be implemented automatically by agencies implementing
the law without instruction from the red headline documents. Higher-level leaders
may offer written instruction on these documents to further clarify their opinion on
how matters should be handled.127 Given this practice, people may respect power
over the law. Bikhchandani, Hirschleifer and Welch suggest that norm conformity
may result from the economization of information search costs. In particular, if
information is costly, it may be rational to follow others on the assumption that their
information is more than likely accurate. People follow others’ behavior because
they treat this available information as an indication of its reliability.128 When the
daily consumption of pirated and counterfeited goods is not effectively prevented,
negative information with respect to compliance with IP law will be signaled, and
this information will spread to the more general public. People may then perceive a
conflict between compliance with the law and the behavior of others. With respect
123
North (1990), p. 5.
124
Licht (2008), pp. 715, 726–731.
125
See Sect. 3.1.
126
Liu (2005a), pp. 3, 4.
127
Qin and Chen (2013), pp. 9, 78–80.
128
Bikhchandani et al. (1992)., pp. 992
123
to such conflicts, people must know which approach may benefit them more than
others in their particular social environment. In this case, the public makes a choice
based on the available signals in deciding to obey laws or social norms. When the
information indicates that noncompliance with the law may produce a benefit and
that no effective punishment would result from noncompliance with the law, the
choice is self-explanatory. As a result, the legal consequences of such behavior will
be ignored. Noncompliance with the law in such an environment can easily become
a social preference and value.
The administrative power has also exerted an influence on the judicial process,
and this practice further distorts the public’s perception of IP law. The discretion of
courts and judges has led to the divergent local application of IP rules. First, the
level of economic development in different regions of China varies considerably.
Thus, it is reasonable for each region to have different preferences regarding IPR
protection. Many high people’s courts in provinces have issued guidelines or
opinions regarding the interpretation and application of IP laws to guide lower level
courts in the province in interpreting and applying the law in IPR cases. The content
of these guidelines or opinions on the same issue may vary from region to region.
For example, the Patent Act, Trademark Act and Copyright Act all stipulate
statutory damages. With regard to the base unit for calculating damages, the
guidelines issued by the Beijing Municipal High People’s Court state that damage
shall be calculated based on each work in terms of the extent of copyright
infringement129; whereas, the guidelines issued by the High People’s Court in
Jiangsu Province state that damage shall be calculated based on each right
infringed.130 In practice, discrepancies between different regions’ guidelines or
policies could even be magnified. In addition to differences in regional policy,
another factor, as indicated by Liu Sida, is that the operation of Chinese courts is
influenced by hierarchical administrative systems. In China, the court system is not
independent and is a bureaucratic organization with a clear administrative hierarchy,
which is similar or identical to corresponding administrative authorities.131 It is thus
difficult for the court and judge to resist the influence of administrative bodies.
Officials within the court with different levels of hierarchy and power may exert
influence in specific cases, and the political party, local administrative body and
other entities may also exert an influence.132 Judges are typically selected by the
129
See Art. 10 of ‘‘Beijing Shi Gaoji Renmin Fayuan Guanyu Queding Zhuzuoquan Qinquan Sunhai
Peichang Zeren de Zhidao Yijian.’’ (Beijing Municipal Higher People’s Court Guidance on the
Determination of Copyright Infringement Liability for Damages).
130
See Art. 15 of ‘‘Jiangshu Sheng Gaoji Renmin Fayuan Guanyu Zhishichanquan Qinquan Sunhai
Shiyong Dinge Peichang Banfa Ruogan Wenti de Zhidao Yijian.’’ [Jiangsu Provincial Higher People’s
Court’s Guidance on the Determination of Fixed Amount of Damage for Intellectual Property
Infringement].
131
Liu (2005b), p. 36.
132
Ibid. p. 38.
123
local CCP authority and appointed by the local congress.133 The local CCP officials
may then exercise direct or indirect influence in individual cases through the
Political-Legal Committees at each level of government.134 Moreover, the budget
for each court is determined and allocated by the local government in which the
court sits. Local governments are able to exert influence on judges in judicial
decisions to protect local industries or litigants.135 Hence, a judge may rule in favor
of local litigants by either intentionally taking jurisdiction over such cases and
issuing rulings favorable to local litigants or impeding the enforcement of decisions
that are detrimental to local litigants.136 This situation has led to varying levels of
protection for IPRs between regions.
As a natural consequence, the role and efficacy of IP social norms and laws have
varied at different levels of society and across different regions. At the local level,
IP norms are far more dominant. At the national level, IP rules rather than actual
norms are more important. Usually, small players and individuals prefer to follow
social norms. In the business community, both norms and laws, including ‘‘soft’’
laws, work to shape the behavior of different classes of players. In the economically
prosperous coastal areas of China, IP laws are more respected; whereas, in the less
developed inland areas of China, local norms are more respected.
Improving the enforcement measures of IP law alone is not sufficient; rather, the
significant improvement of IP protection in China also relies on the systematic
improvement of the rule of law. When compliance with a specific law is not
sufficient, it may mean that there is a systemic problem with noncompliance with
the law. Hence, noncompliance with IP law in China may be part of a systemic
problem, and improvement in compliance with IP law may be impossible without
the improvement of the entire system. Ultimately, the congruence between IP laws
and IP norms will rely on China’s ability to develop a rule-of-law state. Licht
indicates that with the rule-of-law state, social institutions must have systemic
consistency; namely, the law must be aligned with social norms so that the public is
able to use morality as a guide for legality. The rule-of-law norm thus provides a
link between the informal institution of social norms and the formal institution of
legal norms.137 In a society where the rule-of-law norm is lacking, divergence
between laws and operational norms is a natural consequence.138 The rule-of-law
norm should thus have two profound characteristics: first, people should obey the
law voluntarily; and second, private enforcement should play an important role or
133
See Sec. 7 of Zhonggong Zhongyang Guanyu Jinyibu Jiaqiang Zhengfa Ganbu Duiwu Jianshe de
Jueding, April 15, 1999 [Decision of Central Committee of Communist Party of China Decision on
Further Strengthening the Development of Cadres Group of Politics and Law] (promulgated by Central
Committee of the Communist Party of China, April 15, 1999); Sec. 24 of Zuigao Renmin Fayuan Guanyu
Jiaqiang Faguan Duiwu Zhiyehua Jianshe de Ruogan Yijian, July 18, 2002. [Supreme People’s Court’s
Opinions on Strengthening the Development of Professional Team of Judges] (promulgated by Supreme
People’s Court, July 18, 2002).
134
Wang (2013), pp. 10, 19–20; Yin (2012), pp. 3–11, 6–7.
135
Zuo (2015), pp. 17, 257.
136
Woo, supra note 106, p. 591.
137
Licht, supra note 124, p. 734.
138
Ibid. p. 736.
123
China 652777
United States 542815
Japan 342796
South Korea 188915
European Patent Office 148560
Germany 61340
Russia 44211
India 43955
Canada 35242
Brazil 30116
Australia 26358
United Kingdom 23235
France 16632
Mexico 15314
0 100000 200000 300000 400000 500000 600000 700000

Number of patent applications
Fig. 1 Ranking of the 20 national patent offices with the most patent applications in 2011. Source:
WIPO, 2013 World Intellectual Property Indicators, page 53
even replace state enforcement.139 Therefore, the solution to the divergence

between IP norms and IP laws cannot be expected to be found within IP fields alone.
In recent years, increasing demand from within Chinese society for improved IP
protection, which has resulted from increasing R&D expenditures and changing
modes of economic development, has provided a great opportunity for China to
achieve congruence between its IP laws and social norms. At the early stages of
industrialization, imitation is a common means to catch up with advanced countries.
To some extent, counterfeiting, piracy and IP infringement may be tolerated by
policymakers. However, when domestic innovators have increasingly gained
achievements in innovation and have achieved concrete results in the market,
policymakers may realize that the strict enforcement of IP laws may serve national
interests rather than only the interests of foreign companies. The dynamics of
domestic innovation may thus motivate policymakers to narrow the gap between IP
laws and IP norms. As shown in Fig. 1, 2012, China ranked among the 20 national
patent offices with the most patent applications. Among these patent applications to
the SIPO, domestic applicants constituted approximately 82% of all applications, as
shown in Fig. 2. Meanwhile, the copyright industry in China is also growing
quickly. Statistics show that the output of the copyright industry constituted 6.8% of
China’s GDP and that the copyright industry provided more than 12 million jobs in
2012.140 In this context, support for IPRs in China is growing as well. Many
domestic stakeholders, including scientists, engineers, entrepreneurs, creative
artists, designers and political leaders, have come to associate a stronger IP regime
with their personal and national interests, and they have pushed the government to
139
Ibid. p. 738.
140
Zhang (2014).
123
China 18 82
United States 50.5 49.5
Japan 16.3 83.7
South Korea 21.6 78.4
European Patent Office 50.9 49.1
Germany 24 76
Russia 35.1 64.9
India 78.3 21.7
Canada 86.6 13.4
Brazil 84 16
Australia 90 10
United Kingdom 33.8 66.2
France 12.6 87.4
0 20 40 60 80 100 120
Percentage of applications in %
Non-resident Resident
Fig. 2 Nonresident share of patent applications of the top 20 national patent offices in 2012. Source:
WIPO, 2013 World Intellectual Property Indicators, page 53
change its approach toward IPRs. In response, the government has considered the
improvement of the judicial system a key goal of reform. As one concrete step, three
specialized IP courts were established in 2014, and measures aiming to prevent the
unjust intervention of judicial decision by officials have recently been adopted.141
Therefore, there is great potential for China to take active measures to realize
congruence between its IP laws and IP norms.
5 Conclusion
The transplantation of IP laws in China has been successful. Between 1979 and
2001, China developed a complete IP system that has permeated Chinese society
and affected China’s economic development. The transplantation of IP law is
significant for the introduction of an effective norm for the protection of IPRs in
China. Once IP legislation has been established through legal transplantation, it
becomes the starting point for the further development of IP norms in China. The
forces in support of a stronger IP system in Chinese society continue to grow with
China’s social and economic development. Whether legal transplantation can create
the same effect as in the originating countries cannot be used as a benchmark to
judge the success of the legal transplantation of IP laws in China. IP law in China
has been an impetus for the emergence of beneficial social norms, and IP norms in
141
Zhonggong Zhongyang Bangongting, Guowuyuan Bangongting, ‘‘Lingdao Ganbu Ganyu Sifa
Huodong, Chashou Juti Anjian Chuli de Jilu, Tongbao he Zeren Zhuijiu Guiding’’ (March, 2015).
[Provisions on Record, Notice and Accountability of Leaders’ Interference with the judicial activities and
intervening in specific cases], (Promulgated by General Office of the Central Committee of the
Communist Party of China and General Office of State Council, March, 2015).
123
China have been shaped by the convergence of political, economic, cultural and
legal factors that may differ from those in other countries. Therefore, the process of
transplanting foreign IP rules in China has also been a process of creating new legal
and social norms that diverge from those of the originating source of
transplantation.
In the process of legal transplantation, three milestones can be identified: the end
of the 1970s, when China began its socialist market economy reform that led to the
legal transplantation of modern IP laws; 2001, when China’s accession to the WTO
indicated that China had developed an IP legal system in line with international
standards; and 2008, when China launched its National IP Strategy, which indicated
that the development of IP laws had become predominantly an internal demand.
China’s experience in transplanting IP laws shows that this transplantation occurred
when China was experiencing a radical social reform at the end of the 1970s. Only
in this context could such legal transplantation had a chance of being successful.
Compatibility with the dominant ideology was a key element in the process of
introducing an IP law, and serving the state’s economic development was another
important consideration in transplanting IP law. Foreign pressure has served as a
helpful factor in the transplantation of IP laws in China. This pressure first served as
the impetus for the legal transplantation of IP laws. Subsequently, when the debate
on establishing or updating IP laws culminated in a deadlock between the advocates
and opponents of an IP regime among policymakers, advocates for such a regime
could use external foreign pressure as an excuse to push forward actions to establish
such a regime. Nonetheless, the internal demand from Chinese society, which
originated from the market economy reforms, is the basic reason that legal
transplantation could proceed and contribute to the continuing improvement of IP
protection.
The legal transplantation of IPRs in China has led to adaptation and rejection. In
particular, the legal transplantation of IPRs in China in such a short period has led to
a contradiction between the indigenization and internationalization of IP rules. The
indigenization of IP rules means that the scope and standards of protection of IPRs
should match the technological, economic and cultural situation of the state.
Therefore, the foreign rules need to be adapted to fit the concrete condition of the
state. The internationalization of IP rules means that IP legislation in a state should
be compatible with international standards. The process of internationalizing IP
rules in China does not fit entirely with national technological and economic
development, at least in the initial stage. Consequently, legal transplantation has
resulted in a divergence between IP rules and IP norms in practice. As Teubner
indicates, for the law to be successfully enforced within a social field, it must be
adjusted to the logic of the social environment it attempts to regulate.142 Divergence
thus leads to difficulty in the enforcement of IPRs.
There is increasing demand for sufficient IP protection within Chinese society,
and increasingly close trade relations with the outside world require China to
provide effective IP protection. These factors create an ideal environment for China
to take measures to improve its IP protection. The future development of IP law in
142
Teubner (1987), p. 25.
123
China should focus on dealing with the demands resulting from the concrete
practical situation. Improvement of the enforcement of IP laws is a way to induce
the emergence of favorable informal social norms. In this process, the judicial
system should play a more important role than administrative authorities. Success in
improving China’s IP protection will rely on its ability to improve IP governance
and, ultimately, the development of the rule-of-law system.
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IIC (2017) 48:4–41

Legal Transplantation of Intellectual Property Rights

Liguo Zhang . Niklas Bruun

Published online: 1 February 2017

will ultimately require improvements in IP governance and the establishment of

Keywords Comparative law Legal transplant Chinese law Chinese intellectual

2 Resistance to and Adoption of IPRs in the Process of Legal Transplantation

2.1 The Starting Point for Transplanting IP Laws in China

2.1.1 Pressure from the West

of high-energy physics, the U.S. insisted on adding an IP provision to the

2.1.2 The Internal Demand for an IPR Regime

The legal transplantation of IP laws in China is not exclusively a passive response to

2.2 The Resistance to Transplantation of IP Law in China

The transplantation of IP laws in China has encountered considerable resistance.

Perceptions surrounding intellectual creation in traditional Chinese society might

2.3 Conflict and Adaptation in Transplanting IPRs in China

how a patent system functions.65 In 1979, WIPO concluded an agreement with

requirement to conduct a substantial examination of the patent application after the

3 The Shaping of IP Norms in China

3.1 The Role of Administrative Authorities in Shaping IP Norms in China

Administrative authorities are usually not considered to play an essential role in

Table 1 IPRs and the Responsible Department in China

1 Patents, integrated circuit State Intellectual Property Office

system in Chinese society through a top-down approach. The hierarchical

Moreover, Chinese IP law has granted relevant IP administrative authorities

3.2 Judicial Decision-Making in Shaping IP Norms in China

4 The Divergence Between IP Laws and IP Norms in China

United States 542815

South Korea 188915

European Patent Office 148560

United Kingdom 23235

0 100000 200000 300000 400000 500000 600000 700000

even replace state enforcement.139 Therefore, the solution to the divergence

Zheng C (1998) Zhishichanquan Lun [On intellectual property]. Falu Chubanshe 14

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