On March 13, 2025, the State Council of the People's Republic of China announced the "Provisions of the State Council on the Handling of Foreign Related Intellectual Property Disputes" (hereinafter referred to as "these Provisions"). This regulation is issued against the dual background of the continuous growth of Chinese enterprises' exports and investments, as well as the expansion of opening up to the outside world and the introduction of foreign-funded enterprises to invest in China. With the changing global situation, Chinese enterprises are facing increasing intellectual property disputes and escalating international trade frictions in the process of "going global". This regulation aims to guide and assist Chinese citizens and enterprise organizations in handling foreign-related intellectual property disputes, while also protecting the legitimate interests of foreign-funded enterprises operating in China. It is a legal guarantee to serve the new development pattern of "dual circulation". This regulation will officially come into effect on May 1, 2025. Prior to its implementation, based on the interpretation of the main highlights of this regulation, the author analyzes the possible impacts from the perspectives of both Chinese and foreign enterprises.

1、 Interpretation of Main Highlights

Clarify the division of government responsibilities

Articles 2-6 establish a management system of "central multi departmental coordination+local cooperation" for government departments to handle foreign-related intellectual property disputes, clarify the leading positions of the State Council's intellectual property management department and the commerce department, and build a cross departmental coordination mechanism. At the same time, local people's governments at or above the county level and their relevant departments are responsible for specific dispute resolution.

Building a government service system for intellectual property rights

Article 4 and Article 5 require relevant departments such as the intellectual property management department and the commerce authority of the State Council to establish a mechanism for promoting foreign intellectual property laws and risk warning, which can provide accurate compliance guidance for domestic citizens and organizations. Article 6 requires relevant departments of the State Council to further refine the process of handling intellectual property disputes and provide assistance to domestic citizens and organizations in safeguarding their rights.

Establish a diversified dispute resolution mechanism

Article 7 innovatively introduces commercial mediation organizations and arbitration institutions to participate in the resolution of intellectual property disputes involving foreign parties, which echoes the successful experience of the Singapore International Mediation Centre (SIMC). Compared to litigation, mediation and arbitration usually have lower costs and shorter time periods, which saves time and costs for the parties involved.

Internationalization of Professional Institution Services

Article 8: Encourage legal service institutions to "go global" and promote the establishment of branch offices in foreign markets. Through this approach, it is more convenient to provide legal assistance to domestic citizens and organizations when conducting business overseas, and it also helps to enhance China's intellectual property image.

Explore intellectual property support mechanisms within the industry

Article 9: By encouraging the development of relevant insurance businesses and supporting the establishment of mutual aid funds for rights protection, the cost of rights protection can be reduced. Article 10: By encouraging organizations such as chambers of commerce, industry associations, and cross-border e-commerce platforms to establish foreign-related intellectual property rights protection assistance platforms, it can provide legal advice, guidance on rights protection strategies, integrate industry resources, promote communication and industry self-discipline among enterprises, enhance the overall image of the industry, and strengthen international competitiveness.

Enterprise Compliance Guidance Mechanism

Article 11 innovatively requires enterprises to establish an "intellectual property overseas compliance system", including: improving internal rules and regulations, appointing dedicated intellectual property compliance officers, and establishing an overseas legal risk assessment system. At the same time, Article 11 also requires government departments to carry out foreign-related intellectual property training and legal publicity for enterprises, aiming to improve the level of intellectual property protection in China through the "enterprise self-discipline+government guidance" model, and help enterprises achieve stability and success in global competition.

Uphold procedural justice

Article 12 stipulates that documents shall be served and evidence collected within the territory of China in accordance with domestic laws and international treaties concluded or acceded to by China. Article 13 stipulates that when providing evidence or relevant materials to overseas parties, they shall comply with the provisions of laws and administrative regulations. These two regulations provide clear compliance guidelines for citizens and organizations to safeguard their rights in intellectual property disputes, ensuring national security, personal information and data security, and safeguarding procedural justice.

Innovation of trade remedy mechanism

Article 14 refers to the intellectual property protection provisions (Articles 28 to 30) in the Foreign Trade Law of the People's Republic of China. By establishing a fast circuit breaker mechanism for imported infringing goods, anti-monopoly review of intellectual property license abuse rights, and the principle of equal international treatment for intellectual property protection, on the one hand, this law provides clear operational standards for law enforcement agencies to more accurately judge and handle foreign trade issues involving intellectual property rights; On the other hand, enterprises can have a clearer understanding of the intellectual property rules that should be followed in foreign trade, avoid violations caused by ambiguity, and reduce legal risks.

Establish intellectual property countermeasures mechanism

The establishment of the "List of Anti Foreign Discriminatory Measures for Intellectual Property Rights" system in Articles 15-16 is the first time that China has applied the "Anti Foreign Sanctions Law of the People's Republic of China" in the field of intellectual property rights. This mechanism effectively safeguards the legitimate rights and interests of enterprises by blocking unilateral foreign sanctions.

Intellectual Property Security Review

Article 17: Establish a linkage review mechanism between intellectual property and national security, and clarify the initiation of special investigation procedures for intellectual property behaviors that endanger national security. Moreover, the article also specifies the basis for taking legal measures against different behaviors. For those who endanger China's sovereignty and security, corresponding measures shall be taken in accordance with the Foreign Relations Law and the Anti Foreign Sanctions Law; Those who abuse intellectual property rights to exclude, restrict competition or engage in unfair competition shall be dealt with in accordance with the Anti Monopoly Law or the Anti Unfair Competition Law.

2、 The impact on Chinese enterprises

For Chinese enterprises, this regulation provides important institutional guarantees for their international development. Firstly, with the multi-channel support of the government, society, and industry, enterprises can obtain more comprehensive and timely foreign intellectual property information and warning services, which helps them to plan their intellectual property strategies in advance and avoid potential risks. Secondly, diversified dispute resolution mechanisms and professional service organizations support enterprises in dealing with foreign-related intellectual property disputes more calmly, reducing the difficulty and cost of dispute resolution. Once again, the development of mutual aid funds for rights protection and insurance business also provides economic support for the protection of intellectual property rights of enterprises. In addition, when providing evidence to overseas institutions, attention should be paid to following relevant domestic legal procedures.

3、 The impact on foreign enterprises

For foreign enterprises, the following provisions of this regulation need to be noted:

1. Article 7: Due to the increasing number of ways to resolve cross-border intellectual property disputes in the future, which may involve the application of laws in multiple countries, it is necessary to resolve them through mediation, arbitration institutions, or judicial procedures, making the process more complex. It is necessary to further understand the processes of various resolution methods in China, which increases the difficulty of compliance management;

2. Article 12: For the service of documents or investigation and evidence collection within the territory of China, it is necessary to comply with the legal provisions of our country. Therefore, it is recommended to entrust a legal service agency in China that understands the legal provisions of our country to serve documents or conduct investigations and evidence collection within the territory of our country.

3. Article 14: When signing a licensing contract with a Chinese enterprise, foreign enterprises need to negotiate equally with Chinese enterprises, decide on the intellectual property rights to be licensed based on their true intentions, and retain evidence of negotiation during the negotiation process to avoid licensing disputes in the future. In addition, it is necessary to pay attention to whether the country where the enterprise is located has implemented discriminatory intellectual property protection measures against Chinese enterprises, whether it grants national treatment principles to Chinese citizens and organizations, timely tracks the countermeasures list and related measures issued by the Chinese government, adjusts business strategies, and reduces losses caused by reciprocal retaliation.

4. Article 15 and Article 16: Enterprises cannot cooperate with foreign governments to implement discriminatory intellectual property restrictions, otherwise they may be included in the list of anti foreign discriminatory measures. They not only face countermeasures such as restrictions or prohibitions on transactions, freezing of assets in China, and prohibition of entry, but also may be sued by Chinese citizens or organizations in court and face high compensation risks.