Privatization of IP Firms

The privatization program of the intellectual property profession launched in July 2000 by the government met unexpected problems from its beginning. It was in April 2002 that the State Intellectual Property Office (SIPO) announced the completion of the privatization of the majority of patent firms (some patent firms are also trademark firms), but still with the exception of a few large sized state-owned firms, which, due to the complexity and difficulties, have been permitted to complete the privatization process at a later stage.

According to SIPO's announcement, 249 patent firms had been privatized. Those firms now have their own new names (they used to name themselves by using geographic locations or by taking the names of governmental organizations or universities who owned them) and have re-registered themselves as private firms owned by individuals. Other 72 firms chose to stop their practice, basically due to their inability to support themselves without government subsidy after privatization. Still 93 firms were announced to have been de-registered and canceled due to various reasons.

The privatization of trademark firms has been slower. The Trademark Office (TMO) reported that by the end of 2001, among about 100 state-owned trademark firms, only 9 of them had been privatized. TMO has now set the deadline of 1st August 2002 for all state-owned firms to be privatized, failing which will result in the waiver of their practice licenses (TMO Order No. 16, dated 22nd February 2002).

Up to now, only 23 patent firms hold official practice licenses to represent foreign individuals and companies, the rest are only qualified to represent domestic clients. During the privatization, SIPO suspended the approval of new patent firms. On 1st June 2002, it promulgated "Approval Measures for Setting-up Patent Firms" which would then facilitate the approval of patent firms. These measures specify the qualification, sponsorship, formalities and approval procedure for setting up patent firms and for general practice law firms to obtain patent practice license. According to the Measures, two patent attorneys can set up a partnership patent firm. If a general law firm wants to start patent practice, it should have at least three lawyers with patent attorney's qualifications. However, before these Measures, SIPO requires five patent attorneys to set up a patent firm. Besides, SIPO is likely to lift the control over the so-called "foreign-related practice license" stepwise or completely, which means in a not long time to come, once a firm is given practice license, it will be able to represent both domestic and foreign clients, as hinted by one official at the SIPO.