Intellectual property accounted for a fifth of the 86-page US-China phase one trade agreement signed on January 15, 2020. The agreement covered a wide IP landscape, with provisions on trade secrets, trademarks, patents, geographical indications, e-commerce infringement, and enforcement against pirated and counterfeit goods.
China will "probably do a decent job" on implementing the agreement because "to a very large extent, those commitments are consistent with China's with initiatives, and China's efforts to develop IP regime and be an IP superpower," said Mark Cohen, Director and Senior Fellow at UC Berkeley China, who served as the first IP attaché in China for four years. He spoke on an episode of Pinduoduo's IP Matters podcast.
E-commerce companies have a significant role in combatting illegal businesses exploiting global online platforms to sell and deliver goods that infringe on intellectual property. A high level of cooperation across e-commerce platforms and jurisdictions is needed to trace and tackle the counterfeit problem at the source.
Given the rapidly evolving nature of the digital economy, e-commerce companies will have to keep improving their IP protection regime by combining technology and working closely with brand owners and consumers.
The following is a condensed and edited transcript of the podcast:
Podcast host (01:01)
Today we are speaking with Mark Cohen, the man responsible for setting up the US-China IP dialogue that has been going on for eight years now. Mark was also the first IP attaché in China, where he served for four years. He is currently Director and Senior Fellow at UC Berkeley.
I just want to put the spotlight on US China IP relations and kick off our conversation. Of course, you know, there's the backdrop of the trade war, as well as the pandemic that you just mentioned. Tell me what's your outlook for 2020.
Mark Cohen (MC) (03:35)
So you know, as we entered into 2020, we had the Phase One Agreement, January 15.
Thus far, I'm hearing from friends in DC that only China seems to be living up to its commitments. And then IP, we had, again a range of commitments. Some of them a little bit of old wine in a new bottle. We've seen some of them in prior years. But some of them are working.
And just a few weeks ago, the Chinese government came out with an action plan to implement those commitments and others. It's kind of a two-track evolution because China was already reforming its IP regime, its IP laws, and then you have this Phase One Agreement, which adds to it.
But if you're looking ahead, particularly on IP, I can say with a fair degree of confidence that reforms in China's IP regime will continue, and China will probably do a decent job on implementing the Phase One agreement. That's because to a very large extent, those commitments are consistent with China's own initiatives, and China's efforts to develop its IP regime and be an IP superpower.
Podcast host (07:34)
What are your thoughts about the US-China trade agreement and IP protection when it comes to e-commerce platforms?
Mark Cohen (MC) (07:55)
For e-commerce, or more broadly speaking, markets for counterfeit and pirated goods, and export and trade in counterfeit goods, has been a topic bilaterally, between the US China in its broadest sense, for well over 25 years. Before there was e-commerce, there was a discussion around the underlying issues.
There's a lot of concern about the exports of counterfeit goods from China. And if we were having this discussion 10 or 15 years ago, we'd be talking about container shipments. And there were some very big, high-profile cases. That's not the focus anymore. We're really talking about a business-to-consumer e-commerce online platforms delivering counterfeit pirated goods, patent infringement goods, sub-standard goods, etc. through a global marketplace.
This has always been an area that demanded a higher level of cooperation between the US and China. And now that we have an online environment where it's largely small package shipments, not containers, that means that in most cases, you have to cooperate between customs and law enforcement. Let the goods get delivered to their ultimate user and then trace it back to the original source. That means in a cross-border environment, you need both countries to cooperate.
It's almost like a half-a-glass, half-empty half-full kind of environment. You want to accuse China of being a major export of counterfeit goods, the data in the US suggests the overwhelming majority of counterfeit goods seized by US Customs (originated from China) and you can make that accusation.
You want to accuse China of doing the most of any country in the world, and Chinese companies are doing the most of any country in the world. And applauding those efforts, you can do that as well. And you're lucky because you're looking at an order of magnitude, a big problem, technologically enabled infringements of various kinds, new ways of booking and shipping the goods, new ways of disguising the goods.
This is a pretty tough area, it demands in many cases, great technological resources and commitments. And I think China's generally showing a lot of those commitments. I hear people increasingly praising some of the Chinese e-tailers for the steps they're taking. But again, if you want to say it's half-empty, you can do that too.
Podcast host (14:28)
With the IP protection initiatives by digital economy platforms, there are social platforms, livestreaming platforms, short-video platforms. Is the initiative enough? Or is there more to be done as things keep innovating?
Mark Cohen (MC) (14:54)
First of all, what we see with online infringement of any kind is that a lot of the responsibility, the lion's share of the enforcement is not by the court. It's not by all the agencies. It's by the companies themselves.
The e-tailer has to undertake certain actions to protect itself against being accused of selling infringing goods. And that's where the lion's share of the infringement is occurring. So improving those mechanisms using technology, working with brand owners, working with affected parties, working with consumers, who may say they've been defrauded. All that is really, really important. And most of the enforcement activity does not occur under the guise of government agencies or the courts. It is so dependent upon the companies themselves and their good faith effort.
Podcast host (24:16)
If you can just give me some more examples of how different are e-commerce companies in the US and in the China? How different is their approach based on case studies you may have done?
Mark Cohen (MC) (24:48)
We have seen with some Chinese companies, efforts to establish safe channels, where you're a trusted brand owner, a trusted provider. Pinduoduo does this, as well as do others - where you could work proactively with an e-commerce platform, and identify how your goods typically infringe, dealing with larger damages, dealing with products that don't currently exist, Chinese language versions of your product, even designs and the like. And through those mechanisms, get a quicker response from the platform to help deal with the big issues.
The other part that I think we see evolving, I think is true in both China and the US but we may be seeing a little bit more of it in China, is the use of AI and other computer enabled techniques to identify and spot infringing. And to be more proactive. And this gets back to my earlier point about if we can find better ways of information sharing, I think it would benefit everybody.
I think where China has stepped out a bit ahead of the US, one area is implementation of some new technologies.
Podcast host (32:12)
What are the potential areas for industry and government collaborations when it comes to both countries?
Mark Cohen (MC) (32:23)
I'm a big fan of collaboration, let me just put that out there. If you can do something collaboratively in addressing a problem, that is so much better than having a trade war, or a WTO case, or some other mechanism that frequently creates a lot of ill will.
In the year ahead and in the years ahead, I would like to see a return to some form of self-interested engagement in China. Not because we're the Peace Corps of intellectual property, not because China is a bunch of savages on intellectual property, they understand what they need to do pretty well. But because it's in our mutual self-interest.
I don't think that IP has been as confrontational an issue, as much of the media makes it out. It's often been an area for really good collaboration between our countries.