- Since China announced its Indigenous Innovation policy in 2006 there were a lot of protests from foreign intellectual property rights holders that would be completely excluded from China's government procurement in certain product categories. According to the USITC intellectual property and indigenous innovation challenges cost the US economy 48.2 billion dollar in 2009, see here.
- Then this June 2011, it became clear that China's central government revoked three laws that link indigenous innovation with IP rights, allegedly because of the external pressure. See here.
- Good news for a level playing field ... but wait. Professor Stanley Lubman (University of California, Berkeley) warns IP holders to be not too excited, yet. As professor Lubman explains the question is whether provincial and municipal governments take heed to the revocations, given their opposite interests when they allow foreign competition. To stay in the playing field metaphor: there might be many smaller fields where you cannot play as a foreigner. Read professor Lubman's Wall Street Journal article here (no subscription needed).
|"The Mountains Are High, |
but you can always find a way through"
Yangsho, Guangxi Province
Photo: Danny Friedmann
China is no monolithic state. And as the saying makes clear substantial power is shared with the governements of provinces and municipalities. So the confusing situation can exist that some revoked laws have a "second life" in the province or municipality if it can give local players preferential treatment, and foreign IP holders cannot really get a good overview of what is happening where. The central government better think twice before they promulgate regulations if there is a chance that they will revoke it later, especially if that regulation gives the local government some advantage. And if they do revoke a regulation the central government should control whether the local government is following up on their instructions.