Beijing also hopes, analysts said, to protect domestic companies to boost the Chinese economy that has been affected by the China-US trade war and global supply chain decoupling.

“We are on our way from being a large intellectual property country to a strong intellectual property country, but we’re in between big and strong now,” said He Jing, founder of the Gen Law Firm in Beijing, a former US patent lawyer who specialises in intellectual property issues.

“China will link intellectual property to national security.”

Eyeing international competition, China considers protection of intellectual property – – that covers trademarks, patents and copyrights – “critical for innovation”, he added.

Squatting involves registering a well-known trademark before the original brand owner, while hoarding entails filing large numbers of registrations to stop others from using the names and logos.

US says China has failed to crack down on copyright infringement, IP piracy

Internet searches of new but popular foreign brands allows trademark “pirates” to file in China for rights to use their names domestically, said Joe Simone, a partner with Simone Intellectual Property Services in Hong Kong.

The original owner must then pay from US$100,000 to US$1 million to obtain the trademark before they can conduct business in China, Simone added.

Apple lost a trademark case in 2016 over use of the name “IPHONE” on handbags sold in China after the vendor had secured the trademark in 2010, three years before Apple registered its smartphone brand in the country.

The practice of squatting is “victimising some real brand owners”, Simone said, given China’s first-to-file system.

Proposed changes to China’s Trademark Law would ban repeat applications by a single owner and limit the number of trademarks per applicant. They would also ban the imitation or translation of known existing trademarks.

China’s Trademark Law has already been revised four times since entering into force in 1983, and it is under its fifth revision this year, in part because of pressure from foreign trade groups.

“The general feeling is that it’s a step in the right direction, as it further clarifies ambiguous concepts about the law and therefore makes it easier to interpret in a case or trial situation,” said Guilherme Campos, a Shenzhen-based international business advisory manager with professional services firm Dezan Shira & Associates.

China had more than 4.2 million patents as of 2022, according to data from the National Intellectual Property Administration, with domestic media outlets claiming it is the first country to pass 3 million registrations.

Two decades ago, foreign governments, multinationals and industry groups regularly asked Chinese officials for tougher punishments for violations.

Pirated software and DVDs were often openly sold in public, and foreign firms complained of barriers to filing intellectual property lawsuits.

China has addressed many concerns, analysts said, with guidelines issued in 2019 by the State Council calling for overcoming the high costs of suing, small damages awarded by courts and barriers in providing legal evidence of violations.

Foreign companies can freely sue in China, but multinationals may be comfortable with “more of a process” in court compared to their Chinese peers, He from Gen Law Firm in Beijing added.

The US Trade Representative (USTR) called out China in April over “bad faith trademarks”, as well as counterfeiting and online piracy.

China targets trademarks violations, but unlikely to satisfy US demands

In its annual Special 301 Report on intellectual property protection and enforcement, the USTR cited amendments last year to three intellectual property rights laws but said “the pace of reforms” had slowed.

The USTR embodies the worries of American companies that are afraid to come forward on their own, Simone said.

Officials are focusing on Chinese companies largely for domestic reasons, analysts said.

China “produces a lot of intellectual property”, said Dexter Roberts, director of China affairs with the University of Montana’s Mansfield Centre.

“One recent change is that China patents everything, even stuff you wouldn’t expect,” Roberts said.

Intellectual property lawsuits are becoming more common, and around 85 per cent are filed by Chinese companies, the HG.org Legal Resources website estimated.

It said thousands of intellectual property cases surfaced after 2010 and the number is “increasing exponentially”.

China, though, remains under an international glare because many of its citizens do not see copying as a violation and believe that legally protected material should be shared, said Tan Loke-khoon, a partner with the international law firm Baker & McKenzie in Hong Kong.

The National Intellectual Property Administration did not respond to a request for comment on the latest changes to China’s Trademark Law.

But in January, it said the proposed Trademark Law changes would “promote the high-quality development of the socialist market economy”.

“The ultimate aim of the changes is to improve the consumer experience by strengthening the legitimacy of registered trademarks and improving the business environment by stamping out anticompetitive trademark practices,” professional services firm Dezan Shira & Associates said in February.