How a Foreign Partner Secures its IPR Transfer in China

June 05, 2018 | BY

Susan Mok

Fang Qi, partner at Fangda Partners, discusses the impact of the newly issuedMeasures on Work Relevant to the Assignment of Intellectual Property Rights toForeign Parties (Trial Implementation) (知识产权对外转让有关工作办法 (试行））(the Measures), the legal reforms it brings and mechanisms for its enforcement.

 

CURRENT AND FUTURE LAWS

The Measures aim to bring about strengthened IPR protection in China. Fang agrees that the new Measures bring clarity for businesses at a time when the Chinese government is bringing about initiatives to step up efforts for protection of intellectual property rights (IPRs), and that the Measures will be properly enforced in China. The new Measures cover the assignment of intellectual property, as well as change of control of the owner. Examinations under the new Measures will focus on whether or not the intellectual property transferred to foreign entities will have any influence on China's national security interests, and whether or not the IPR transferred to foreign countries will have a negative or positive influence on China's key technology areas of innovation and development. This is a clear indication that China seeks to enhance the protection of national security as well as create a better environment for technology development in China.

 

 

THE PROCESS OF TRANSFERRING TECHNOLOGY INTELLECTUAL PROPERTY RIGHTS

For the transfer of IPRs to take place, the PRC Regulations for the Administration of Technology Import and Export (revised in 2011) (中华人民共和国技术进出口管理条例) (the 2011 Regulations) identify three categories of IPRs with different influences on national security interests. Technology exports from China are divided into “freely exportable”, “restricted”, and “prohibited” technologies. The first is the broadest of all categories, which is identified as the free transfer of IPRs. The second is the restricted category, whereby the government needs to take a closer look in order to determine whether the rights can be transferred or not. The third is the prohibited category: if your business or IPR falls into this category, it can only be kept by the local domestic entity and the IPR can only exist locally with the domestic entity and cannot be given away to any foreign entity.

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