Last week, China formally issued the “Regulations of the State Council on the Handling of Foreign-related Intellectual Property Disputes”, which aim to help Chinese enterprises be better prepared in the face of foreign-related IP disputes (March 19, 2025 Order of the State Council of the People’s Republic of China).
The rules, which are due to come into force on May 1, 2025, come as Chinese companies have become increasingly active in overseas markets – and therefore face increasing IP challenges.
Dong Ning of GEN Law tells ip fray that the Chinese government believes Chinese companies are experiencing unfair treatment abroad (i.e., numerous United States International Trade Commission (ITC) Section 337 investigations targeting Chinese enterprises). These Regulations are to boost their position, as well as protect national interests, he adds.
The new Regulations aim to, in summary:
- Counter “unfair treatment”: under Article 14, the foreign trade department of the State Council may conduct investigations and take necessary measures where an IP right holder engages in acts such as preventing the licensee from challenging the validity of the IP rights in the license contract, imposing a mandatory package license, or stipulating exclusive grant-back conditions in the license contract. Those companies and any relevant individuals can be included in a so-called “countermeasure list”.
- Address the “suppression” of Chinese companies: under Article 15, when foreign countries use IP disputes as a pretext to constrain or suppress China or impose discriminatory and restrictive measures on Chinese citizens and organizations, the relevant departments of the State Council can take appropriate countermeasures and restrictive measures in response.
- Undo any undermining of China’s sovereignty and security: under Article 17, measures will be taken against those that undermine China’s sovereignty, security, and development interests by taking advantage of IP disputes to exclude or restrict competition.
- Increase national IP dispute training: certain units within the State Council will be required to carry out publicity and training for businesses around key areas and key links of foreign IP disputes and introduce the experience and practices of handling foreign IP disputes in combination with typical cases. Companies will also get access to foreign IP protection and rights protection mutual assistance funds, while insurance providers will be encouraged to provide foreign IP-related insurance services.
- Enhance general IP awareness: the regulations will also help strengthen foreign IP information query services and early warnings, improve the guidance work institutions and work procedures for handling foreign IP disputes, and provide response guidance and rights protection assistance for dispute handling. Businesses will also be encouraged to pay better attention to the rule of law, strengthen IP talent reserves, strengthen IP protection and use, and actively safeguard their legitimate rights and interests.
A perceived response to IP discrimination
Initial reactions to the new regulations have started to come in, although most market participants are still digesting them. Several well-known sources have published their analysis online, including policy research team Trivium, which described the new regulations as China “preparing for IP lawfare” (March 20, 2025 Trivium China post).
Others include Aaron Wininger, a U.S.-based Principal and Director of the China Intellectual Property Practice who writes for the English-language blog China IP Law Update. He wrote that the new regulations may be in response to Secretary of Commerce Howard Lutnick’s comments regarding Chinese IP at his confirmation hearing (March 20, 2025 China IP Law Update blog post). “They don’t give us protection in China, and they come in and use our patent office against us. This is going to end, we are going to study that, and we are going to work on ending that and making sure our American inventors get taken care of quickly and effectively,” he said at the time.
One of the overarching issues is what constitutes “foreign-related” IP disputes – which, in Chinese IP litigation, is “not easy to answer”, wrote Mark Cohen, a senior fellow at the IP Insitute, The University of Akron Law School, and the Asia Society of Northern California, who runs his own blog on Chinese IP, last week (March 23, 2025 China IPR blog post). The meaning in an overseas context is ambiguous and the drafters “most likely” left it unclear to afford maximum flexibility, he believes.
Mr. Cohen highlights Articles 12 to 17 as a potential indication of a stronger response from China to perceived IP discrimination in the future. Those specific provisions were also not included in an initial draft published for feedback last July.
They may have been written in response to the Trump Administration’s stance on IP, as well as potential actions by European courts, the US, and the UK to extend their authority over litigation involving Chinese parties, he suggests, adding that U.S. Congress has also been considering legislation that targets China’s IP practices (such as Secretary of State Marco Rubio’s proposed legislation that would have “prohibit[ed] the export to the People’s Republic of China of any national security sensitive technology or intellectual property subject to the jurisdiction of the United States or exported by any person subject to the jurisdiction of the United States.”)
A confidence-booster for Chinese companies in overseas IP disputes
On LinkedIn, Ping Gu of Zhong Lun Law Firm wrote that the regulations establish a comprehensive “service + prevention + response framework”, aligning with international norms to demonstrate China’s “commitment to openness while safeguarding national interests and corporate rights.”
The move, she believes, will “bolster high-standard opening-up and foster high-quality economic development.”
Four sources that ip fray interviewed have also taken a similar stance.
Yannan Li of Sitao IP, for example, says the regulations “reflect China’s commitment to strengthening its IP framework and play a more proactive role in cross-border IP issues.”
As well as encouraging the lawful resolution of disputes and safeguarding the legitimate rights and interests of stakeholders, the regulations also outline possible responses when foreign entities use IP disputes to unfairly pressure or restrict Chinese parties – especially when such actions go against international norms, Mrs. Li says. “Articles 15-17 give China a clearer legal basis to push back in those scenarios, which could have implications for international IP litigation and enforcement strategies,” she notes.
According to GEN Law’s Dong Ning, the regulations can be divided into two aspects:
- Guidance and support for enterprises: “These measures are designed to assist companies in navigating foreign IP disputes more effectively,” he says.
- Emphasis on national sovereignty: “This involves standardizing procedures for foreign institutions serving documents and collecting evidence in China and preventing unfair IP restrictive measures,” he explains.
The second part was not included in the draft version released last year.
Mr. Ning believes the informational and financial support is “meaningful” – chiefly because it is common for Chinese companies facing ITC Section 337 investigations (or complaints on platforms like Amazon) to choose not to respond due to lack of experience and concerns about litigation costs, “even when these investigations and complaints are not well-founded”.
One Shanghai-based attorney speaking on the condition of anonymity tells ip fray that this is “the most significant step” by the Chinese government to help local companies improve their abilities in handling foreign IP disputes. They highlight Articles 8-11 as particularly interesting.
“This [move] is music to my ears because I focus on acting for Chinese companies in handling their IP disputes overseas [and] this may mean more Chinese companies will respond to IP suits overseas,” they say.
The attorney adds:
“It appears that there will be some funds for this purpose in the future. It is a hugely important regulation in my career.”
Only one source is uncertain. LexField Law’s David Huang says the original draft published last year was merely calling for guidance and help for Chinese companies involved in IP disputes overseas – but then Articles 12-17 appeared in the final text with no prior hint. A lot has happened in the last year, and it may be difficult to identify what exactly triggered these additions, he notes.
But when put together and given their “sudden promulgation”, the regulations project a “very assertive and even confrontational” image, Mr. Huang says. He adds that some have said Article 14(1) will be the start of an active Chinese version of the U.S. Section 337 mechanism.