The General Office of the State Council of the People's Republic of China has released pilot guidelines to regulate the (re-)assignment of intellectual property rights overseas.

The move appears to be a clamp down on the assignment of intellectual property rights overseas in a move the office states is concerned with protecting the country’s “national security”, according to a recent post on the website of China’s State Intellectual Property Office (SIPO). Other regulations govern technologies that impact national defense, however, so national security, as listed in the guidelines, is taken in a very broad sense to refer more to economic and developmental stability.

All assignment of patent rights, IC design patents, software copyright and plant varieties rights overseas, in the case of technology being exported or a foreign investor acquiring a local Chinese company will be subject to an examination. Intellectual property rights subject to this requirement include the right of application for intellectual property rights.

The guidelines apply to Chinese companies, state organs or individuals who intend to assign intellectual property to a foreign firm, individual or other organization, including the re-assignment of patent rights, changes to the actual controller of intellectual property rights, or the exclusive licensing of intellectual property rights.

The examination is designed to consider the impact of the assignment of rights overseas on the national security of China as well as its impact on the creative development of important or core industrial fields.

Format of examinations:

1) Examination of technology exports involving the assignment of intellectual property rights overseas

Any patents, integrated circuit design patents or software copyright relating to technologies listed by the government as restricted technologies (links to Chinese content), must be subjected to examination.

When the commerce departments of local governments receive an application for export of a restricted technology from a company which concerns the assignment of patents, integrated circuits designs or other intellectual property rights overseas, they should send the relevant information on it to the local intellectual property government agency. After receiving this information the intellectual property office should issue a formal opinion document after making an examination of the rights to be assigned, and provide feedback to the local commerce authority, as well as forwarding a copy to the intellectual property office of the State Council. The local commerce department should make a decision on the basis of the Regulations on Technology Import and Export Administration of the People's Republic of China and with reference to the opinion of the local intellectual property department.

With regards to software copyright assignments, the local commerce department and the technology department should carry out an examination with reference to the Regulations on Technology Import and Export Administration of the People's Republic of China and the Regulation on Computers Software Protection. If the software has already been registered at a software registration agency, the local commerce authority should inform the agency at which it was registered. If the application to re-assign the rights is denied, the software rights registration agency should not make any changes to the registration ownership.

When it comes to plant species variety rights assignment overseas, the local agriculture department and forestry department should make a decision based on the Regulation of the People's Republic of China on Protection of New Varieties of Plants and the examination should consider national agricultural security and food security.

2) Examination of reassignment of intellectual property rights during a foreign acquisition of a local business

When the government agency reviewing the security of foreign investments is reviewing a foreign acquisition of a local business, they should seek opinions from the relevant departments on the security examination concerning the acquisition and intellectual property rights, where intellectual property rights are being re-assigned and depending on the type of intellectual property rights. Where patent rights or integrated circuit design patents are concerned the Intellectual Property Office under the State Council should take responsibility; where software copyright is involved, the National Copyright Administration should take responsibility; for plant species varieties, the Ministry of Agriculture and Rural Affairs under the State Council and the State Forestry Administration are responsible.

The respective intellectual property agency should carry out an examination promptly and issue an opinion, providing feedback to the agency carrying out the foreign investment security review.

Each department should issue further details of documents required, examination procedure, time limits and duties.

China has imposed tight controls on the flow of capital out of China over recent years, so this can be seen as an attempt to clamp down on those who try to get around these capital controls by using intellectual property as a method of exchange.

Author: Conor Stuart Current Post: Senior Editor, IP Observer Education: MA Taiwanese Literature, National Taiwan University BA Chinese and Spanish, Leeds University, UK Experience: Translator/Editor, Want China Times Editor, Erenlai Magazine

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