China’s "Hyper IPR Environment"

Richard Suttmeier and Xiangkui Yao have just published a new and excellent paper on China’s intellectual property (IP) rights transition. It is well worth the read, and, until September 8, you can download it for free from the National Bureau of Asian Research’s site.

There is much good analysis of the 2006 Medium- to Long-Term Scientific and Technological Development, the 2008 National Intellectual Property Strategy, as well as the 2010 National Patent Development Strategy and how these and other policies fit into and help shape China’s emerging IP regime.  Suttmeier and Yao’s main argument seems to be that outside observers (and probably the Chinese themselves) have no idea which way China is going to go. We could be at the beginning of "harmonization", with Chinese laws and, more importantly, practices increasingly coming to look more like the rest of the world’s. Alternatively, the rise of strategic behavior and techno-nationalist policies could promote "tit for tat behavior" and create "an IP security dilemma that would undermine China’s aspirations and make international cooperation much more difficult."

Suttmeier and Yao keep their cards pretty close to their chests. After reading the report, it was hard for me to guess which outcome they thought was more likely. I have been pretty firmly in the second camp, believing that China’s strong state direction of technology policy, desire for autonomy from the West, and historical distrust of international IP regimes are a recipe for continued conflict and strife. But the report gave me plenty of data points to make me at least question that position.

The most interesting discussion in the paper is about the explosion of patents in China.  Questioning how innovative these patents actually are is well-trod ground. Suttmeier and Yao point out that China has become the most litigious society in the world, in terms of intellectual property. In 2009, there were 30,626 IP civil cases, and the number rose to 42,902 in 2010. Of those, there were 24,700 copyright cases, 8,460 trademark, and 5,785 patent. This can be compared to the United States where, in 2009, there were 2,192 copyright, 1,792 trademark, and 1,674 patent cases. Suttmeier and Yao argue that while the creation of well-defined property rights and a smoothly operating legal system are usually pluses for building an effective innovation system, the Chinese may in fact be creating a "hyper IPR environment" that undermines trust and cooperation.  Given how competitive Chinese markets are, it is not surprising that firms would seek advantages in the court. Yet all of this "legal combat" may make it more difficult to build cooperation among universities, firms, and research institutes--networks essential to promoting innovation.

People always point to litigation and lawyers as one of the great weakness of the U.S. innovation system, so it is interesting to think that China, which is always held up as the model of policy efficiency, may have similar "problems."  At any rate, go read the paper, it is well worth it.