China's Smartphones

Topics: Intellectual property, World Intellectual Property Organization, Intellectual property law Pages: 9 (3192 words) Published: May 28, 2013
Abstract The production of copycat phones manufactured in China has a massive impact on the sales of major smartphone players. This paper will evaluate whether products have intellectual property (IP) rights to protect their designs in China in comparison to Australia. There are IP rights to protect designs in China – the patent law for outward design. However, even with the existence of IP laws, applicants are not fully protected because of: the weak IP law enforcement; the corruption that exists within the political structure; and the legal history and culture in China. Introduction Smartphones have become an essential part of many lives in this day and age. Therefore, to cater to the demands of the public, companies like Apple and Samsung manufacture and produce different types and designs of smartphones to meet the needs of consumers. As smartphone sales increase, this creates many opportunities for copycat phones to enter the markets. These copycat phones look almost identical on the exterior but run on an operating system of inferior quality leading to secondrate product specifications. These copycat phones are mainly manufactured in China and sold at a cheaper price. The low price offered offsets the drawbacks of the copycat phones. As a result, major players in this industry face threats such as falling sales of genuine smartphones and lower market share. To ensure that the major players are not disadvantaged, China will have to bring the production of copycat phones to an end by imposing the law of intellectual property (IP) rights. This paper will evaluate whether products have intellectual property (IP) rights to protect their designs in China in comparison to Australia. The scope of the paper will be limited to the following: 1. The design IP rights laws in China. 2. The design IP rights laws in Australia. 3. The analysis of World Intellectual Property Organisation for design IP. 4. The analysis of World Trade Organisation for design IP.

Both China and Australia are governed by different legal systems. Both countries have different design IP laws to protect industrial designs. Australia has Design Act 2003 whereas China has patent law for outward design. Background “Shanzhai” (山寨),literally translated as “mountain village” or “mountain stronghold”, means mountain stocks of bandits far beyond the control of officials. In this context, it refers to Chinese imitation and piracy of electronic brands and goods in particular (Copycat). The existence of “Shanzhai” came about because of the transition period in the Chinese manufacturing industry where China started to manufacture its own Western-like products. This decision is made because many believed that Western countries are the leaders in product innovation and China is not as strong in this area. Therefore, they create look-alike products to cater to the population of China mainly made up of peasants. As peasants are not wealthy, prices of the products are an important factor to them and therefore "Shanzhai" products grew in popularity. Figures from market research show that China produces almost 600 million mobile phones and 145 million were “Shanzhai” replica1. It is almost 25 percent of the local mobile phone market. Another reason for the existence of "Shanzhai" products is the weak IP protection in China. Design Intellectual Property rights laws in China The Chinese legal system The formal law of People’s Republic of China (PRC) has a continental style legal system that is based on codes and statutes 2 . There are mainly four groups: the Central Committee of the Communist Party of China (CPC), National People’s Congress (NPC), State Council, and the Chinese People’s Political Consultative Conference (CPPCC) that forms China’s government structure. The CPC is the highest governing body among the four groups followed by the NPC and it is China’s fundamental political system. The State Council comes next in hierarchy and is the highest administrative limb of...
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