Measures on Exporting Intellectual Property Rights (Trial Implementation) (Mainland China)

Joline Chen

To thoroughly establish the overall national security philosophy, improve the national security institution and system, maintain national security and major public interests, and regulate the order of exporting intellectual property, the General Office of the State Council has issued the Measures on Exporting of Intellectual Property Rights (Trial Implementation) (the “Measures”) pursuant to relevant laws and regulations for national security, external trade, intellectual property rights, etc. to stipulate the relevant requirements for exporting key intellectual property involving national security and core technology of important fields in China.  With the trial beginning on March 18, 2018, the Measures include provisions on the scope, specifics and mechanisms of the review process as well as other matters; the key points are highlighted below:

1. The Measures stipulate that a review shall be conducted for export of technologies, mergers and acquisitions of domestic enterprises by foreign investors and other activities to the extent that they involve outbound transfers of intellectual property in relation to national security and core technologies of important fields in China. Types of review include patents, exclusive rights over integrated circuit design, computer software copyright, and new plant species. The transfer includes three major scenarios such as a change of rights holders, change of the persons who has actual control of such intellectual property rights and the exclusive licensing of intellectual property rights.

2. The review will include the impact of the export of the intellectual property right on national security and the innovative development of core technologies of important fields in China.

3. The Measures specify two review mechanisms. The first is the review of the outbound transfers of intellectual property rights in the technology export. The corresponding competent authorities depending on the intellectual property rights in question are required to conduct the review ex officio.  The second is the review of the outbound transfers of intellectual property rights involved that is part of the review in the merger and acquisition of domestic enterprises by foreign investors.  The opinions of relevant competent authorities are solicited based on the types of the intellectual property rights to be transferred, and the review decisions are rendered pursuant to applicable requirements.

4. The relevant competent authorities shall formulate detailed review regulations. After the final decision on the outbound transfer of intellectual property is rendered, if ownership will be changing as well, the parties to the transfer shall handle the required formalities for the change pursuant to relevant laws and regulations.