Why do Guangdong Province and Guangzhou matter to IP practice in China?

Feynman Z. LIANG | Aug 25, 2016

For decades, Guangdong Province plays an important role in economy in China. For IP practitioner and IP proprietor, Guangdong Province may be a strategic area that decides the success of nationwide IP enforcement campaign.

1. Overview

A. Guangdong Province
Guangdong province is a Chinese province on the South China Sea coast of the P. R. China. As the most populous province in China with the total population was 107,240,000 in the 2014 census, Guangdong province account for 7.79 % of Mainland China's population.

Since late 90’s, Guangdong province has topped the total GDP rankings among all provincial-level divisions, with Jiangsu province and Shandong province second and third in rank. According to state statistics, Guangdong province’s GDP in 2015 reached CNY 7,281 billion, or USD 1,092.62 billion. Guangdong has the eighth-highest GDP per capita among all provinces of Mainland China. The province contributes over 10% of the PRC's national economic output, and is home to the production facilities and offices of a wide-ranging set of Chinese and foreign corporations. Guangdong also hosts the largest import and export fair in China called the Canton Fair in Guangdong's capital city Guangzhou every year.



B. Guangzhou, the capital city of Guangdong Province

Guangzhou, historically named as Canton is the capital and largest city of Guangdong Province in southeastern China. Located on the Pearl River about 120 km (75 mi) north-northwest of Hong Kong and 145 km (90 mi) north of Macau, Guangzhou was a major terminus of the maritime Silk Road and continues to serve as a major port and transportation hub.

Guangzhou is the 3rd-largest Chinese city, behind Beijing and Shanghai, holds sub-provincial administrative status, and is accounted one of China's five National Central Cities. In 2015 the city's administrative area was estimated to have a population of 16,670,000 and forms part of one of the most populous metropolitan agglomerations on Earth. For the last 30 years, Guangzhou is best known for its annual Canton Fair, the oldest, highest-level, largest-scale and most complete trade fair in China.



C. Shenzhen, the Silicone Valley of China
Shenzhen was fishing village near Hong Kong back in 1970s. That changed in 1979 when Shenzhen was promoted to city-status and in 1980 designated China’s first Special Economic Zone. Nowadays, Shenzhen had transformed to a city with population of 10,770,00. Shenzhen was one of the fastest-growing cities in the world during the 1990s and the 2000s. Shenzhen has become home to some of China’s most successful tech companies, such as smartphone makers Huawei and ZTE and social media group Tencent. Thanks to its history as the cradle of China’s manufacturing industry, it is a centre for developers of smart consumer products, designed to plug into the internet of things. In term of GDP, Shenzhen ranks no. 4 in 2015 among cities in China after Shanghai, Beijing and Guangzhou.



D. Pearl River Delta Area and other cities
The Pearl River Delta (PRD) in southern China is the low-lying area surrounding the Pearl River estuary where the Pearl River flows into the South China Sea. It is among the most densely urbanised regions in the world and an economic hub of China, with Guangzhou, Shenzhen and Zhuhai as the centers of the area. Cities in this area is the more developed than the rest of Guangdong Province.



2. Intellectual Property in Guangdong Province
A. Patent Filing
a. Invention Patent
Guangdong Province has been active in terms of intellectual protection. In 2015, applicants in Guangdong Province filed 103,941 invention patent applications, ranked no. 2 in the nation after Jiangsu Province, accounting for 9% of the total number of invention patent application (around 1,102,000) in China. Shenzhen and Guangzhou, which are two major cities, rank no.3 with 40,028 and no. 7 with 20,087 among top 10 invention patent filing cities in China.

For number of granted invention patent in 2015, Guangdong Province ranks no. 3 in the nation with 33,477 patents, after Jiangsu and Beijing. Shenzhen and Guangzhou, rank no.1 with 16,956 and no. 5 with 6,626 among top 10 granted invention patent cities in China.

b. PCT Filing
Among the top 10 PCT applicants in 2015 in China, 6 of the applicants are from Shenzhen. Among these applicants, Huawei and ZTE ranked no. 1 with 3,898 PCT application and no.3 with 2,155 applications.



B. Patent litigation
With huge number of granted patents and bustling business activities in the area, Guangdong Province is naturally the most likely area where IP litigations and other IP enforcement acts occur. As mentioned above, Canton Fair, which is held twice a year attracting tens of thousands of buyers from all over the world, as well as other international trade show in different cities of Pearl River Delta Area, offers tremendous business opportunities while infringements do happen from time to time. Different alternatives of effective IP enforcement are available for trade show. Ports in Guangdong area are among the busiest ports in China. Proprietors frequently take the measure of custom seizure to stop infringing product from exporting through ports. While administrative route is an alternative of enforcement in China, litigation is still the most frequent way of IP enforcement in Guangdong Province. In 2015 alone, 2,880 complaints on IP infringement were filed before Guangzhou IP Court as 1st instance cases, among which 1,339 cases are related to patent infringement, accounting for 11.5% of the total number of patent infringement cases (11,607 cases) instituted nationwide.



C. IP Court system
Guangzhou IP Court was established on December 16 as one of the three IP Courts in China (Guangzhou, Beijing and Shanghai). These three specialized courts make up China's first batch of pilot IP courts.

Guangzhou IP Court commenced operation on December 21, 2014. It has jurisdiction over the following cases:

a. First-instance IP civil or administrative cases relating to patents, new varieties of plants, integrated circuit layout designs, technological know-how, or computer software as well as first-instance civil cases involving recognition of well-known trademarks within Guangdong province with the exception of Shenzhen (i.e. courts of Shenzhen retain jurisdiction over IP-related cases);

b. First-instance administrative cases brought against copyright, trademarks or unfair competition related administrative acts taken by Guangzhou municipal government or district governments of Guangzhou;

c. Other IP civil or administrative cases of the first instance which should otherwise be heard by intermediate courts in Guangzhou, and appeal cases brought against first-instance judgments or rulings of IP civil or administrative cases relating to copyright, trademarks, technology contracts, unfair competition, and other intellectual property rights made by basic courts in Guangzhou.

Guangzhou IP Court houses four tribunals, comprising a case filing chamber, a patent tribunal, a copyright tribunal, and a trademark and competition tribunal, as well as a general office, a technical research office, and a judicial police team. It has appointed 10 judges through a province-wide open selection process.

As of December 21, 2014 when Guangzhou IP Court started operation, the basic and intermediate courts in Guangdong province (with the exception of those in Shenzhen) have ceased accepting first-instance IP civil and administrative cases relating to patents, new varieties of plants, integrated circuit layout designs, technological know-how, or computer software as specified in paragraph 1, item 1 of the Provisions of the Supreme People's Court on the Jurisdiction of Intellectual Property Courts of Beijing, Shanghai and Guangzhou. However, for any of the aforementioned cases lodged or appealed to any of the said courts on or before December 20, 2014, where the case has been accepted but is still pending, it remains to be handled by the respective court.