Intellectual Property and Technological Standards

1. Intellectual Property and Technological Standards By Han Run Technology Division, Ministry of Industry and Information Technology of the People’s Republic of China Sep, 2011

2. Main content The integration of intellectual properties and standards has become the obvious trend for the adjustment and upgrade of global industrial structure 1 The integration of intellectual properties and standardshas formed new interests relationship, which greatly influences industrial development and market competition pattern 2 Practice and understanding on the integration of intellectual properties and standards 3 Prospect on the next step 4

3. 1. The integration of intellectual properties and standards has become the obvious trend for the adjustment and upgrade of global industrial structure

4. 1. The integration of intellectual properties and standards has become the obvious trend for the adjustment and upgrade of global industrial structure • Against the backdrop of fast technological development and increasingly fierce market competition, grasping the commanding height for industrial development and the advantageous opportunity of market competitionby the integration of intellectual properties and standards has become the very means and measures for different countries and multinational companies in competition strategy. • International, local, association standard organizations and industry alliances have brought intellectual property into standards systematically with great efforts, formulated and improved the policies for intellectual property disposal successively, and established new order and new pattern for technological standard in the world at large. • Some enterprises even regard it as one kind of means to promote global strategy onintellectual propertyand grasp the world market.

5. 2. The combination of standard development and intellectual property system has formed a technology-patent- standard- industrialization- market scale “ecological” development system and it is an inevitable choice for our country to realize industrial transformation, upgrade and development. • Technologiesintraditional industryis with a very slow development; technological standard mainly aims to guarantee the interchangeability and popularity of products but the relationship between technological standard and patent is not that closed to each other. • Emerging industryis short in technologicalalternate cycle and high in technological innovation degree; the combination of intellectual propertyand technological standard mainly focuses on high-tech field. • During the process of industrial transition and upgrade, independent technological standard system is constructed by taking the cooperation of intellectual properties and standards formulation as tie, so as to promote the creation of intellectual property and industrial application, and enhance the status of our country in global industrial division system; it has become the consensus and critical practice of the government and enterprises in our country.

6. 3. Under the background of economic globalization, the relationship among creation, intellectual properties, standard, industry and market becomes closer. Industry emerging Implementation of technological standard has formed market scale Results of technological innovation Production of intellectual property Bringing into technological standard • intellectual property result from technological innovation • The patented technologies are adopted in standard • The expansion of technological application, formation of market scale and realization of industrial emerging by implementing standard; • The relation chain has become thebasic path and featuresfor the development of emerging industries

7. 3. Under the background of economic globalization, the relationship among creation, intellectual properties, standard, industry and market becomes closer. Point of view: the combination of intellectual propertysystem and standardization has become an important part for the innovation development system of the nation, region and enterprise; it includes the issues on theintellectual propertyprotection as well as industrial development and market competition. • On one hand, the creation and accumulation of new technology entail the protection and encouragement of intellectual propertysystem • On the other hand, the application and promotion of new technology need excellent industrial order and standard. • To combine standards and intellectual properties strategically and dispose issues on intellectual propertyin standards tactically will directly affect the development of industrial development in our country as well as the capacity and level of the enterprises to participate in international competition.

8. 4. Disposals of intellectual property within technological standard in industrial and information field will exert influence on the development of relevant industry. • Currently, there are more than 3,000 standards to be formulated or revised in industrial and information industry each year, with technological standards accounting for 1/5. A majority of standards get involved in intellectual properties. 。 • Wheather disposals of intellectual property are proper or not will exert great influence on the continuous promotion and application of these standards. • It is of great necessity to standardize the procedures on the disposal of intellectual propertyinvolved in the standard timely, establish evaluation mechanism on the disposal of intellectual propertyin standard and develop disposal and evaluation of intellectual property at due time. • To promote different interested parties in the standard to properly deal with issues related to intellectual propertyduring the process of formulating it will effectively reduce the risks of intellectual propertyof the agency to issue the standard.

9. 2.The integration of intellectual properties and standards has formed new interest relationship, which greatly influences industrial development and market competition pattern

10. Overview: It is of great importance to properly handle the relationship between intellectual properties and standards. • The combination of standards and intellectual properties not only promotes the industrialization of new technology but also causes the abuse of intellectual propertyand inhibits the development of technological innovation; it can strengthen the core competitiveness for industrial development as well as forming industrial monopoly. • If the combination of both is neglected, the favorable opportunity for the industrial development may be lost. If intellectual propertyis brought into standard without any restraints, it may easily cause the abuse of intellectual propertyin standard and affect the normal industrial development environment and market competition order. Presentation from the following five aspects: 1. To promote the development of innovative system of production, learning, research and application 2. To support the development of industrial innovative strategic alliance 3. To promote the interaction between innovation chain and industry chain 4. To win the advantageous status in market competition 5.To deal with requirements of newinternational pressure

11. 1. To promote the development of innovative system of production, learning, research and application • Production, learning, research and application are a kind of new mode for the research and development of intellectual propertywhile intellectual propertysystem has provided excellent legal environment for innovation system. • Work on the disposal of intellectual propertyinvolved in the standard is the important link in the mode of production, learning, research and application. • The integration of intellectual properties and standards has exerted great influence on the development of innovation system of production, learning, research and application.

12. 2. To support the development of industrial innovative strategic alliance • The combination of standards and intellectual properties is the important bridge and tie for the development of industrial innovative strategic alliance. • The enterprises can not be developed in the long run if they are loose but only cooperate in form. • The powerful tie such as intellectual properties and standards makes enterprises unite, which easily obtains competition advantage on the market and realize the shared target. Note: industry alliance represents the interests of the enterprises after all. During the process, we shall take advantage of the guidance and supervision of the government and establish system for mutual check and balance to prevent industry alliance from abusing intellectual propertyand pursuing for the maximum local interest excessively.

13. 3. To promote the interaction between innovation chain and industry chain • For many years, the cohesion among innovation system, industrialization and application scale has not been realized yet. It is difficult for the mere innovation resources to become effective driving force. • Innovation results will be made as standard by combining standard and intellectual properties; innovative resources are effectively utilized and expanded by implementation and expansion of standard and transaction and distribution of intellectual propertyto establish industrial system with higher additional value and form industrial cluster. • This is a tangible ecological chain for intellectual properties,enabling the industrialization of technologies.

14. 4. To win the advantageous status in market competition • The standard alone cannot help the enterprises obtain favorable market competition status. • The enterprises with new technological standards must enhance their core competitiveness by intellectual propertyif they want to establish favorable market competition status. • intellectual properties in standards can become a favorable tool to win market competition. • If serious industrial monopoly occurs, it will pose threats to the development and progress of the relevant enterprise or industry and even limit market competition.

15. 5.To deal with requirements fromnew international pressure • Our country remains in the low end of global industry chain and value chain , fundamentally due to the low end of knowledge chain. • The accumulation of intellectual propertyis the essence for the enhancement of knowledge competitiveness while technological standard is the critical vector to effectively promote the application of intellectual propertyindustrialization. • Domestic industries need to face the status quo of domestic industry with weak technological foundation and knowledge baseon one hand and focus on the increasinglyfierce standard competition rule in the international market on the other hand. • The enterprises in our country need to enhance the competitiveness of intellectual propertyin critical standard and realize the industrial transformation from being “made in China” to being “created by China”.

16. 3. Practice and understanding on the integration of intellectual properties and standards

17. Overview As the main department for the formulation and management of industrial standard, Ministry of Industry and Information Technology of the People’s Republic of China highly stresses “the problems of intellectual propertyin standard” and its influence on industrial development. In recent years, our division focuses on the main line of industrial structure adjustment and transformation of development way and insists on the principle of “market-oriented, serving for the industry, independent customization, proper promotion and timely revision” to earnestly implement the function of standardization management. The enterprises are guided to participate in domestic and foreign standardization activities, research and explore work on the disposal of intellectual property in standard, further improve the current standard system, enhance the competitiveness of intellectual property in standard and exert the critical support and guarantee of standards and intellectual properties to the industrial upgrade and transformation.

18. Three levels: System level: standardizing the disclosure obligation of intellectual propertyin industrial standardization work Planning level: highly stressing and strengthening the research and demonstration of issues on intellectual propertycarried out for the critical technological standard affecting the upgrade and transformation of industrial structure. Operation level: researching and exploring the disposal mode of intellectual propertyin standards suitable for the development of Chinese industry.

19. 1. System level • Practice on the Formulation and Management of Industrial Standard of Ministry of Industry and Information Technology of the People’s Republic of China (provisional) was formulated and promulgated, and brings “provided patent gets involved in standard, obvious description of intellectual propertyshall be available” into the content of drafting standard; it also lists “whether the patent situation in standard is clear” into the contents to be reviewed in standard approval standard. • It effectively guides the relevant institutions participating in standard formulation to stress and implement the issues on intellectual propertyduring the formulation process, which guarantees the orderly development of standardization work in the industry.

20. 2. Planning level • Special attention shall be paid to the function of major technological standard to industrial upgrade and transformation. • Key industry to be developed in different stages is determined by combining the integral planning direction of industrial development and the demand of industrial upgrade and transformation. • Standard items shall be ensured to be scientific, rational and feasible from the original source of standard project by combining with key points of industrial planning. • Experts within the organization and professional agencies shall be properly organized to focus on the issues on intellectual propertyin these major technological standards. • From the integral planning level, the demand for industrial upgrade and transformation shall be utmost satisfied, the requirements on technological progress shall be met and obligation on noticing intellectual property shall be executed.

21. 3. Operation level 1 AVS 2 Disposal of international intellectual propertyon digital TV terrestrial transmission 3 IGRS(Intelligent Grouping and Resource Sharing), etc. 2

22. 3. Operation level • AVS • The first typical example for the sound combination of intellectual propertywork and work on standard formulation; to go along the independent innovative road for the harmonious development of technology, standard and intellectual properties. • On one hand, the rules for the establishment of patent pool group in foreign countries shall be referred to explicitly advocate the principle of being fair, rational and against discrimination and standardize patent evaluation procedure and patent convention procedure; • On the other hand, the management mode and charge principle shall be designed according to the features of industrial development in China.

23. 3. Operation level • IGRS(Intelligent Grouping and Resource Sharing) The management work of intellectual propertyand industrialization promotion shall be closely combined and the core function of intellectual propertymanagement shall be actively exerted in the promotion of standard industrialization. • Disposal of international intellectual property on digital TV terrestrial transmission • The basic principle of maximum interest of digital TV industry in our country shall be guaranteed to well coordinate the interests among enterprises, colleges and research institutions in different links of industry chains. • The practice is the beneficial exploration on the disposal mode of intellectual propertyin standard and represents the protection and promotion to the integral interests of industrial development.

24. 4. Several understandings • The first one is to treat “the standard with independent intellectual properties” objectively. • The second one is to design or dispose intellectual propertyin standard according to law. • The third one is to prepare the layout of intellectual propertyin advance when formulating standard. • The fourth one is to that the disposal of intellectual propertyin standard shall refer to the existing practice as well as exploring the way suitable for the development of Chinese industry.

25. 4. Prospect on thenext step

26. Overall direction • To focus on Outline on the Twelfth Five-year Plan and key points for industrial development • To be based on the urgent, innovation and international features of the standard • To strengthen the research on industrial standard and improve standard system • To lay emphasis on the issue on intellectual propertyin standard and focus on the foundation on industrial development • To provide powerful technological support and intellectual propertysupport for the long-term stable and fast development of industry and communication industry from micro, moderate and macro levels.

27. Prospect on the next step From micro aspect: to further improve intellectual property policies and management system of standard organization. • To standardize the procedures on the disposal of intellectual propertyduring the process of formulating and revising standard from micro system aspect. • To encourage standard organization to formulate policies of intellectual properties, definite the rights and obligations of members of standard organization in intellectual properties, standardize obligee’s behavior and reduce the legal risks of intellectual propertiess faced by the ones to implement the standard when adopting the standard.

28. Prospect on the next step Moderate level: to promote the combination of standard in technological field and intellectual property and promote the fast development of industry. • Balance mechanism and leading mechanism to technological innovation and integration of standards and intellectual properties are researched and gradually formed by combining national science and technology major project, the “Twelfth Five-year Plan” development plan and State Council’s decision on strengthening the cultivation and development of strategic emerging industry. • Work on the disposal of intellectual propertyinvolved in major technological standard of strategic emerging industries such as new generation of information technology, biological pharmacy, new energy and new energy automobiles are encouraged and promoted. • The industry chain integrating market demand- technological research & development- patent application- development standard- standard promotion- market occupation is created by combining with key filed, so as to promote the fast development of industry.

29. Prospect on the next step Micro level: to encourage and lead the enterprises to grasp the practice and rule on disposal of intellectual propertyand actively participate in international standardization work. • The enterprises shall be led to treat the relationship among technological innovation, standards and intellectual properties objectively, and understand and research the basic procedures and rules for patent entry standard initiatively. • The enterprises shall be encouraged to actively participate in the work on disposal of intellectual propertyin technological standard, grasp the evaluation rules and disposal management of intellectual propertyin the standard and explore the construction and operation mode of patent pool in standard. • International communication and cooperation among enterprises shall be strengthened to accumulate experience in participating in the activities of international standard organization, strengthen enterprises’ competitiveness on intellectual propertyand expand the influence of our country on international standardization affairs.

30. Thank you! Division of Science and Technology of Ministry of Industry and Information Technology of the People’s Republic of China September 2011