Patents and Data: Extraterritorial Effect of Chinese Laws

China’s Five-Year Plan calls for the development of a Chinese-style socialist rule of law that also has an impact abroad. The country is to distinguish itself as a first-choice jurisdiction for resolving cross-border disputes and promote the application of Chinese law abroad. International legal and regulatory norms should be amended and the Chinese legal system should be given greater consideration in international affairs.

Intellectual property and cybersecurity are important areas of extraterritorial application of Chinese laws. In 2020, Chinese courts issued injunctions to prevent patent infringement lawsuits against Chinese smartphone manufacturers abroad. Chinese courts are to decide what royalties should be paid to foreign patent holders. Such injunctions will help Chinese companies reduce royalties in out-of-court settlements.

Also, the new regulatory system for data protection and cybersecurity applies to companies and individuals outside China once they are involved in China-related data activities that affect national security, the public interest, or other legal interests of Chinese citizens or organizations. The Personal Information Protection Law (PIPL) is particularly critical. It applies to overseas activities when a foreign company processes personal data of Chinese citizens for the purpose of providing products or services in China or analyzing and evaluating the activities of individuals in China.

Source: Economist

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