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New Situation of IP During 11th Five-Year Plan
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During the 10th Five-Year Plan (2001-2005), China made some remarkable achievements in IP, laying a solid foundation for the further development in the 11th Five-Year Plan period (2006-2010).

The first 20 years of this century are strategically crucial for China, with the 11th Five-Year Plan period the most important, during which we must grasp opportunities, work hard, and keep a clear head for the challenges we face. We must study and follow carefully the development trend of international IP in full consideration of China's reform, the development strategy to build an innovation-oriented country, reviewing our work from higher standards and dedicate to our work for even greater progress than before.

In the contemporary world, economic globalization is a dominating factor and science and technology are progressing day by day. The importance of IPR protection becomes ever more important, and the international system of IPR protection is undergoing a series of reforms and changes to meet this new situation. Information, biotechnology and new material technologies have made outstanding breakthroughs and help to create new industries and drastically transform traditional industries.

These, on the one hand, lead to the development of a knowledge-based economy, adjustment of the economic structure, modal change in economic growth and the redistribution of roles within the world economy. The changes and adjustment of productive power and productive relation, on the other hand, have helped stimulate reform of the intellectual property system. The establishment of the IPR protection system enables IPR to extend into intangible assets, quite different from the traditional concept of material assets such as machinery, land or factory buildings. The connotation and extension of IPR are obviously being expanded.

IPR protection has become a key aspect of civil legislation in many countries, with expanded coverage, improved protection quality and strengthened enforcement. WTO trade-related aspects of intellectual property rights (TRIPS) promote IPR protection to an unprecedented level, and the new Doha round of talks will have IPR protection high on the agenda. It is obvious that IPR protection has become an important part of the new world trade system, indeed a precondition and basis for its development.

IP is now the core element of a country's competitive capacity, an important means of upgrading productivity and increasing the added value of products, the competence advantages of individual enterprises and a route to widening market share. Mastering and controlling the core IP of technology in key fields and in regard to key equipments are already the focus of much international competition. Developed countries, such as United States and Japan, have created and implemented their own national IP strategy, attempting to consolidate and enlarge their dominance, vitalize their domestic economies and enhance their competence advantages. The IPR protection system will promote the development of science and technology, and transformation of productive elements, and stimulate industrial upgrading and independent innovation. Domestic and international resources and markets complement each other, and, generally speaking, they will benefit the Chinese economy to bypass several traditional development periods, and realize healthy and sustainable development. Meanwhile, as differences in economic and technical levels continue to exist, developed countries will enjoy a long-term superiority in IP, and the imbalance in the international IP structure and in market competition will remain somewhat severe. Some countries will take IP as a new means of trade protection, so that China will face new challenges in its development of IP and its overall economy.

To enhance IPR protection is the great need of China's social-economic development and socialist market economic system, which are entering a new phase after many years of careful progress, and is an absolute necessity for China's further opening up and reform. The strategy to build China into an independently innovative and innovation-oriented country was clearly stated in both the 5th plenary session of the 16th Party Central Committee and at the National Conference on Science and Technology held in the January 2006. This strategy indicates that much higher demands are being made on China's IP work. Thus, the nation will continually enhance and enforce IPR protection, build a sound environment for innovation, and seriously combat and punish any IPR infringements. One of the principal targets in the 11th Five-Year Plan of National Economy and Social Development is to see the emergence of a group of enterprises with their own IP, brands and international competence advantages. As Premier Wen Jiabao pointed out at the National Conference on Science and Technology in January of this year, "IPR protection is an important issue and we must repeatedly stress its vital role. IPR protection is of great significance in encouraging independent innovation and optimizing a favorable environment for innovation and invention, and is also beneficial to reducing international IP conflicts.

Hence, China must set up and complete its IPR protection system and enhance enforcement. All important policies and arrangements made by the Chinese government in the new period represent its correct understanding and knowledge of the development trend and the internal working rules of the world economy, science and technology, and also meet the demands in IP work during this new period for stimulating ability in independent innovation, speeding up economic development, changing the economic growth mode and increasing China's competence advantages".

In the past two decades, China's IP work has made remarkable progress, but there is still much room for improvement in the following aspects:

--- Although the IP legal system has been basically established, there are many imperfections in practice because, due to the rapid development of the socialist market economy, its operating mechanism has not been completed, supporting measures have not completely carried out as expected, law enforcement remains weak in some aspects, infringements and piracy cases remain high in some areas and industries.

--- IP applications, registration and approval have increased very fast, but the technological means for handling this work needs further upgrading. Let us take invention patents as an example. In such key fields as life sciences and biotechnology, information technology, new materials, developed countries still enjoy absolute dominance; maintaining a ratio of effective patents and their operating life far beyond anything China can achieve. By the end of 2005, the effectiveness maintenance ratio of China's invention patents was 58.9 percent and the operating life was 6 years, while the figures for foreign patents registered in China were 78.8 percent and 8.5 years respectively.

--- IP management in China is unfocused, the information flow is still not smooth, and the coordination ability is weak. All these factors are not in line with the overall development of the economy, trade, science and technology.

--- Enterprises, forming the main body of market, have obtained an increasing number of patents in recent years, but the quantity is still insufficient and is especially rare in regard to core technology, key equipment and well-known brands or trademarks. Intangible asset accumulation still goes slowly, IP system management levels in the process from research through production to sales remain unsatisfactory, and the ability to settle IP disputes is weak.

--- Although public awareness of IP has increased, and a sound environment for independent innovation, conducting foreign trade, introducing foreign capital and technology has been established, China's exported commodities comprise few with IP rights, and even fewer that have been registered in foreign countries. So, China's IP exports are more backward than its products and its industry and product added-value remains at a low level and under great pressure from developed countries in IP field.

--- An IP personnel team has been formed in various departments, but China still lacks specialists commanding good knowledge and working experience; the existing team also needs more people, especially those with wide knowledge.

--- The platforms for IP information exchange and distribution and services are not yet complete although they do exist, especially in IP information publicity facilities and public information services, two basic requirements for establishment of an IP system.

--- China needs to improve its ability to deal with international IP affairs and enforce its influence as there continues to be much pressure from abroad.

Thus, we must fully realize the importance of IP work, try our best to deal with all challenges, seriously solve all contradictions and problems so as efficiently serve China's economic and social development, China's strategy of building innovation-oriented country and harmonious society, and promoting sustainable development.


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