Australia signs Free Trade Agreement with China – important implications for IP owners and healthcare providers

After years of negotiation and months of drafting, Australia signed the Free Trade Agreement between the Government of Australia and the Government of the People’s Republic of China (ChAFTA). The Agreement addresses a number of important IP related issues and also sets out bilateral obligations to promote trade and investment in healthcare.

Intellectual Property
Chapter 11 of the ChAFTA aims to promote trade, investment and innovation by establishing transparent IP systems and maintaining adequate protection and enforcement mechanisms. Each party affirms its commitment to the TRIPS Agreement and other multilateral agreements relating to IP to which they are a party as well as agreeing to further obligations.

National Treatment and Transparent Systems
Under the ChAFTA, China agrees to provide Australian nationals no less favourable treatment than is provided to Chinese nationals so far as the protection of IP is concerned. China will also make its IP databases publicly available on the internet, provide opportunities to oppose and seek revocation of registration and communicate reasons for any refusal to grant or register IP rights.

Australia has reciprocal obligations and each country has agreed to cooperate to improve examination procedures.

The ChAFTA requires that patent applicants be provided opportunity to amend applications and make corrections. Patent applications must be published promptly after 18 months from the earliest claimed priority date.

Trade Marks
Each country agrees to cooperate on appropriate means to protect trade marks and to provide for the protection of collective marks, certification marks and well known trade marks. The parties also recognise that geographical indications may be protected through trade marks.

Plant Breeders’ Rights
Agencies of each party are required to cooperate to encourage and facilitate the protection and development of plant breeders’ rights, to harmonise administration systems and reduce unnecessary procedural duplication.

Each party must establish appropriate bodies to collectively manage copyright and encourage those bodies to operate efficiently, transparently and accountably. Further, appropriate measures must also be taken to limit the liability of internet service providers (ISPs) for copyright infringement by users of their online facilities in circumstances where the ISP takes action to prevent access to materials infringing copyright in accordance with domestic laws.

Each country also agrees to protect commercially valuable confidential information.

Enforcement and Border Control
ChAFTA requires the implementation of effective IP enforcement systems to eliminate trade in goods and services that infringe IP rights. Each nation must provide criminal procedures and penalties consistent with TRIPS to apply at least for wilful trade mark and copyright infringement on a commercial scale. Penalties must include imprisonment and monetary fines sufficient to provide deterrence.

The parties to ChAFTA must ensure IP owners are able to initiate procedures to suspend the release of goods suspected of infringing trade mark rights or copyright and where a determination is made that goods are infringing, authorities must be permitted to disclose at lease the name and address of the consignor and consignee and the quantity of goods in question. Customs authorities must also have power to initiate border protection measures for goods suspected of infringing trade mark rights or copyright.

Technical Regulations
Under the ChAFTA, Australia and China are required to use international standards and guidelines as a basis for technical regulations and conformity assessment procedures in an effort to avoid inconsistent technical regulations providing technical barriers to trade. Where the other party’s technical regulations adequately fulfill domestic objectives, the parties are required to consider accepting regulations of the other as equivalent (even if they differ from domestic regulations). Each party must exchange information on conformity assessment procedures (testing, inspection, certification etc), encourage domestic bodies to work closely with the domestic bodies of the other and recognise the others’ conformity assessment bodies on no less favourable terms than their own.


Traditional Chinese Medicine Services
Chapter 8 of the ChAFTA requires the Australian Department of Health and the Chinese State Administration of Traditional Chinese Medicine to cooperate to encourage collaboration between regulators and registration authorities for traditional Chinese medicine services (TCM), including by exchanging information and discussing policies for the regulation of TCM and complementary medicines. These obligations have the objective of fostering trade in traditional Chinese medicines and complementary medicines.

Other Health Services
A Memorandum of Understanding under the ChAFTA indicates that Australian doctors will be permitted to provide short term (up to one year) medical services after obtaining a licence from the National Health and Family Planning Commission of the People’s Republic of China. Australian qualified service providers will also be permitted to establish wholly foreign owned hospitals (other than Chinese traditional medicine hospitals) in Beijing, Tianjin, Shanghai, Jiangsu, Fujian, Guangdong and Hainan province. These hospitals will be governed by Chinese laws relating to establishment, practice registration, diagnosis and treatment activities. Australian owned medical and dental service providers will also be permitted to establish joint venture hospitals and clinics with Chinese partners.

What does the ChAFTA mean for you?
The ChAFTA has the potential to greatly assist Australian companies doing business in China, particularly those with valuable intellectual property portfolios. The ChAFTA aims to promote the protection of Australian owned intellectual property in China and simplify IP prosecution procedures. Arrangements under the ChAFTA are also likely to simplify access to Chinese intellectual property databases to promote trade in innovation. The anti-counterfeit and piracy provisions under the ChAFTA will also assist to curb the problems associated with the efflux of potentially infringing goods from China.

Australian healthcare providers will also benefit from improved access to Chinese markets for healthcare services and both Chinese and complementary medicines.