Political scientist Martin Dimitrov's Piracy and the State is a major contribution to the literature on intellectual property rights (IPR), and governance more generally, in China. Arguing, sensibly enough, that state capacity varies by issue area, he finds that the Chinese state is simultaneously weak and strong even within the IPR area. As is well known, China has one of the world's highest piracy rates, and yet as is decidedly less well known, China also has the highest per-capita volume of enforcement. The key to this puzzle is that the volume of enforcement is high for trademarks and copyrights, but the quality of enforcement (measured by consistency, fairness and transparency) is low. The opposite is true for patents: the quality is high but the volume is low.
One of the main strengths of the book is its comprehensive approach, covering trademark, copyright and patents, and the main mechanisms for enforcement, including administrative remedies, customs controls, civil and criminal litigation, police raids and government-led campaigns. In general, Dimitrov finds that litigation has provided the highest quality enforcement, albeit at relatively low volumes, notwithstanding concerns over the low amount of damages awarded in most civil cases and the high thresholds for punishment in criminal cases. In contrast, police raids are of limited effectiveness, and subject to capriciousness and corruption, while campaigns, which often arise in response to a crisis such as the tainted milk scandal, are generally a waste of administrative effort, delivering a high volume of low quality enforcement. Administrative remedies fall somewhere in between. The main problem is that there are multiple competing bureaucracies with poorly defined and overlapping jurisdictions, resulting in enforcement being unco-ordinated, duplicative, inefficient and unaccountable.
Whereas many studies focus on the IPR of foreign investors, Dimitrov examines both foreign and domestic IPR. This is important for two reasons. First, as the author notes, although China has been unusually responsive to foreign pressure, domestic pressure matters more, with pressure coming from consumer protection groups and Chinese companies with increasingly valuable intellectual property of their own to protect. Some 90 per cent of copyrights, trademarks and patents are owned by Chinese entities, which are by far the main initiators of lawsuits and administrative actions. Second, Dimitrov finds that foreign pressure leads to high volume but low quality enforcement. In contrast, he claims civil litigation and patent administration enforcement have been relatively free from foreign and domestic pressure to provide a high volume of enforcement, thus allowing the state to create a regulatory system from scratch that supplies a reasonable volume of higher quality enforcement. His discussion of the special IPR tribunals within courts, including the qualifications of IPR judges, is particularly welcome as this has remained a little known area even for China-law specialists.
Another major strength is the placing of China's IP performance within a broader comparative framework. Dimitrov is the first to take advantage of a wide range of statistical data that has become available in recent years, creating ten new databases, which he then draws on to make detailed comparisons of enforcement in China, Russia, Taiwan, the Czech Republic, France and the US. He also makes good use of national and provincial data to indentify patterns and variations within China, finding, for example, that wealth matters: rich provinces have higher levels of inventive activities; more applications for patents, copyrights and trademarks; greater demand for IP protection; and more IPR cases. The statistical data is complemented by insights and information obtained from hundreds of interviews, newspaper reports on enforcement and various other public and proprietary sources of information.
The comparative studies sometimes reconfirm what is generally known. For example, per capita GDP is the best predictor of piracy rates. But at other times they provide new insights. Thus, China relies much more heavily on administrative remedies as opposed to civil litigation than other countries. Conversely, the US is an outlier in the opposite direction, relying primarily on civil litigation. Use of criminal law to enforce IPR is rare, in China and elsewhere. The exception is Taiwan, where an astonishingly high percentage of cases are processed through the criminal justice system. However, sentences are often commuted to a fine, thus resulting in a much lower rate incarceration rate (3.5 per cent) for IPR infringement than in China (41 per cent).
Dimitrov also finds that agency overlap exists in other countries, without the adverse affect on enforcement found in China. From this he draws three lessons to improve enforcement in China: enforcement mandates must be clearly defined; centralized bureaucracies are preferable to decentralized ones; and agencies must be subject to strict accountability standards.
This book deserves a wide audience. Lawyers, law and development scholars, international trade specialists, politicians and pundits should read this book to learn more about intellectual property protection in China. But the book provides many more general theoretical and practical insights for those interested in governance, neo-institutionalism, Chinese law and comparative legal studies.
