US, China Weaving Closer Trade and IP Cooperation; Focus On Innovation

The United States and China are strengthening their relationship on innovation and intellectual property rights as the global economy is slowly taking an upward turn. This may come as a sign of positive collaboration on the delicate issue of IP rights in the face of ongoing questions by US industry and government about the impact of China’s IP rights infringement on American jobs.

Intensive expert and high-level bilateral discussions about innovation policy will be held this summer, according to US government sources. The meetings will be held under the auspices of the Sino-US Joint Commission Meeting on Scientific and Technological Cooperation, according to a recent fact sheet from the US Department of the Treasury. “These meetings will include all relevant US and Chinese agencies,” it said. “The United States and China will take into account the results of these discussions, in formulating and implementing their innovation measures.”

[Update: The U.S.-China Economic and Security Review Commission will conduct a public hearing in Washington, DC, on Wednesday, 9 June, on “Evaluating China’s Past and Future Role in the World Trade Organization.” A live audio feed of the hearing will be streamed on the Commission website, www.uscc.gov.]

On 19 May, the US and China intellectual property offices signed a memorandum of understanding (MoU) on bilateral cooperation on patents. A primary focus will be to build worksharing programmes, including bilateral Patent Prosecution Highway (PPH) agreement, according to a release from the US Patent and Trademark Office (USPTO).

The PPH provides collaboration between patent offices to achieve accelerated patent prosecution procedures. Since 2006, the USPTO has implemented PPH programs with several patent offices. The participation in the PPH programme was conditioned by the payment of a $130 petition fee, which the USPTO eliminated on 20 May, according to a press release. “We expect to see more applicants take advantage of PPH,” USPTO Director David Kappos said.

The MoU aims at facilitating bilateral cooperation between the USPTO and China’s State Intellectual Property Office (SIPO). It was signed by Kappos and SIPO Commissioner Tian Lipu.

Tian Lipu also was guest on 19 May of the American Intellectual Property Law Association (AIPLA) meeting aimed at encouraging a discussion between Tian Lipu and representatives of AIPLA and industry, according to an AIPLA press release.

Francisco Sánchez, undersecretary for international trade, and Demetrios Marantis, deputy US Trade Representative, in published remarks during an official visit to Beijing in May encouraged China “to create an open environment for innovation and make progress on other priority trade issues.” They made the remarks during the “first-ever” mid-year review meeting for the US-China Joint Commission on Commerce and Trade (JCCT), according to a 26 May USTR release. The 2010 JCCT plenary meeting will be held later in the year.

The JCCT was established in 1983 as a forum to address bilateral trade matters and to promote commercial opportunities between the US and China. According to the USTR, in 2009, China was the United States’ third-largest export market and “remains a critical destination for US manufactured goods and services.”

The second joint meeting of the US-China Strategic and Economic Dialogue also took place in Beijing on 24-25 May. The dialogue was established by President Obama and Chinese President Hu in April 2009, according to the US Treasury Department’s website.

According to the Treasury Department fact sheet on the “Joint US-China Economic Track,” both countries agreed that it was “critical to follow” the WTO rules strictly “when initiating trade remedy investigations and imposing trade remedy measures, to prevent their abuse.” The two countries also confirmed that their innovation policies would follow the principles of “non-discrimination, support for market competition and open international trade and investment, strong enforcement of intellectual property rights; and consistent with WTO rules, leaving the terms and conditions of technology transfer, production processes and other proprietary information to agreement between individual enterprises.”

Innovation and intellectual property rights were highlighted in the post-meeting press conference of the top-level Cabinet officials from both governments, available here.

Following the close of the meeting, US Trade Representative Ron Kirk said that this second dialogue was a very useful and “I am pleased that we have been able to make some progress on the important issue of China’s indigenous innovation policy,” he said in a press release.

One of the reasons China appeared in the 2010 so-called “Special 301” report, is that the US trade office deemed worrisome the “development of policies that may unfairly disadvantage US rights holders by promoting ‘indigenous innovation’, including … preferential government procurement and other measures that could severely restrict market access for foreign technology and products.”

Also this week, China is under scrutiny at the WTO as it is undergoes its periodic trade policy review.