Beijing Abolishes Mandatory IP Transfers in Gov’t Procurement Projects

July 4, 2011 Posted by China Briefing Reading Time: 2 minutes

Jul. 4 – China has abolished three policies that required foreign businesses involved in tendering for government procurement projects in China to transfer their IP in order to participate. The government procurement business in China is worth an estimated US$1 trillion, and the policies of insisting that foreign companies transfer patent and IP to China in order to tender has long been a sticking point.

The three policies – the Innovation Product Government Procurement Contract Measures, Indigenous Innovation Product Government Procurement Budget Measures, and Indigenous Innovation Product Government Procurement Evaluation Measures – were all abolished on Friday July 1, 2011. They had originally come into effect in April 2007.

Designed to encourage domestic Chinese innovation, the policies also had the effect of barring foreign companies from tendering for lucrative contracts unless the technological know-how (including patents and related IP allowing them to compete) were also transferred to Chinese state-owned enterprises. The issue has long garnered criticism of trade protectionism.

“Extensive lobbying has taken place over the past couple of years to have these policies removed,” says Chris Devonshire-Ellis, principal of Dezan Shira & Associates in China. “Although just part of a broader widening that is required, it is a welcome step. However, the Central Government also needs to ensure that regional governments also follow these new guidelines and do not just sit back and protect their own companies. If they do not open up to greater participation, such activity will actually slow innovation in China.”

Related Reading
Intellectual Property Rights in China
From covering protocol for dealing with trade fairs, to the application processes for trademarks, patents, copyright and licensing, as well as dealing with infringements and enforcement, this book is a practical reference for those concerned with their IPR in China.