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China’s State Council releases new rules on external intellectual property rights transfers

The State Council of China recently issued a notice on the approval of trial working rules on external transfers of intellectual property rights (IPR). The new guidelines tighten scrutiny over IP transfers to foreign investors.

Technology exports and international acquisitions will be subject to checks under new guidelines to safeguard China’s key public interests.

According to the official announcement, the new rules are made to “improve the national security system, protect the public interest, and regulate external transfers of IPR”.

The document listed an investigation mechanism that covers external transfers of IPR such as patent rights, exclusive rights to layout designs of integrated circuits, computer software copyrights, and new plant variety rights. These may occur in the process of technology export, and foreign investors’ acquisition of Chinese enterprises.

"To establish and perfect the review mechanism for IP transfers overseas is not a move to upset foreign investors,”  said Zhang Zhicheng, Director of the Protection and Coordination Department at the State Intellectual Property Office of China (SIPO), as reported by Xinhua news agency.

“The guideline has rather formulated concrete measures to secure a better business environment," he added.

The external transfer of IPR mentioned in the document means Chinese units or individuals can transfer their domestic IPR to foreign enterprises, individuals or other groups. This includes the transfer of IPR owners, actual IPR controllers, and the exclusive license of IPR.

The influence of external IPR transfers on China’s national security and the core technology innovation in China’s key fields will be investigated, according to the document.

The working rules do not apply to cases involving national defense security.

When China joined the World Trade Organization (WTO) in 2001, it entered into the Agreement on Trade-Related Aspects of Intellectual Property Rights to bring its IP laws to an international level.

The official document can be read here (Chinese only).

Feature image: Nick Youngson CC BY-SA 3.0 ImageCreator

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