Frontiers | Intellectual Property Rights in China—A Literature Review on the Public's Perspective

2. Chair of Behavioral Finance, WHU-Otto Beisheim School of Management, Vallendar, Germany

2. Chair of Behavioral Finance, WHU-Otto Beisheim School of Management, Vallendar, Germany

Despite significant advances in terms of the adoption of formal Intellectual Property Rights (IPR) protection, enforcement of and compliance with IPR regulations remains a contested issue in one of the world's major contemporary economies—China. The present review seeks to offer insights into possible reasons for this discrepancy as well as possible paths of future development by reviewing prior literature on IPR in China. Specifically, it focuses on the public's perspective, which is a crucial determinant of the effectiveness of any IPR regime. It uncovers possible differences with public perspectives in other countries and points to mechanisms (e.g., political, economic, cultural, and institutional) that may foster transitions over time in both formal IPR regulation and in the public perception of and compliance with IPR in China. On this basis, the review advances suggestions for future research in order to improve scholars' understanding of the public's perspective of IPR in China, its antecedents and implications.

“Property is ubiquitous” (Carruthers and Ariovich, 2004, p. 23). It is also powerful, in both the advantages it may confer to its owners and the disadvantages experienced by those who lack it. Increasingly, though, in a world characterized by means of labels such as “knowledge economy” (e.g., Powell and Snellman, 2004, p. 200) or “knowledge society” (e.g., Drucker, 1993, p. 52), in which data is hailed as the “new oil” (e.g., The Economist, 2017) and companies as well as countries strive for leadership in technologies such as Artificial Intelligence (AI), machine learning, or robotics, this property is “intellectual property” (IP). Consequently, intellectual property rights (IPRs) and their protection is a core concern of economic and political actors around the globe. It is also a highly contested issue, centering both on individual cases of possible infringement as well as more broadly on disagreements regarding the fundamental conceptualization of IPRs.

Over the past decades, China has emerged as a key factor in the global arena of IP, owing on the one hand to its economic power and ambition, and its importance for world economy. On the other hand, Chinese firms and institutions have frequently been at the center of accusations of IP violations [for an overview, see., e.g., Henningsen (2010)], as documented by media headlines such as The New York Times (2007)'s “China has a world-leading knack for churning out copies and counterfeits” or “How China's legal system enables intellectual property theft” (The Diplomat, 2020). Scholars have characterized China as “both the largest producer (International Anti-Counterfeiting Coalition, 2014) and the largest consumer of counterfeit products (Cheung and Prendergast, 2006)” (Bian et al., 2016, p. 4251), although some scholars disagree with the severity of piracy in China (Schwabach, 2008).

In the meanwhile, China has become more protective of their own IP rights. As the Financial Times recently reported, during the years 2019 and 2020, the Chinese government revised IP-related regulations, such as reducing the burden of proof for defendants for patent law and increasing maximum damages for copyright law infringements (Sagami, 2020). The number of IP-related lawsuits in China has increased more than three times from 2016 to 2020. Rather than dealing with potential infringements on the part of Chinese companies, as has traditionally been the case, foreign businesses in China increasingly have to be prepared to be sued by Chinese competitors. For example, a Tokyo-based company, Ryohin Keikaku, had to face a trademark lawsuit by two Chinese companies. Although the Japanese company won the case, the court process lasted for two and a half years (Sagami, 2020). On the other hand, overseas Chinese companies have gained more experience in dealing with lawsuits. A prominent example is the legal dispute between the Chinese technology company Huawei and French fashion house Chanel. In 2017, when Huawei applied for EU trademark protection for its computer hardware, Chanel opposed the bid by claiming that the logo was too similar. The EU General Court concluded that “the visual differences are significant,” and as a result, Chanel lost against Huawei after a long-running trademark fight (BBC, 2021).