Transfers of IPRs concerning national security to foreign interests is explicitly regulated after the recent release and instant effectiveness of the Measures on Transfers of IPRs to Foreign Entities (Trial) by the Office of the Chinese State Council.

In an effort to enforce the concept of national security, improve relevant system, safeguard national security, vital public interests and regulate transfers of IPRs to foreign interests, the Measures, based on the laws and regulations pertaining to national security, foreign trade and IPRs, provides details on the scope, content, protocols of security scrutiny.

Under the Measures, transfers of IPRs concerning national security to foreign interests during technology export and mergers/acquisitions of domestic companies by foreign investors shall be scrutinized. The kinds of IPRs under scrutiny include acquired rights of patents, layout designs of integrated circuit, software copyrights and new varieties of plants and the application rights thereof.  The acts of transfers include change of right holders, change of actual controllers of IPRs and exclusive licenses of IPRs. The scrutiny focuses on the impact of the transfers upon the country’s national security and innovative strength of essential technologies of key technological fields.

Two types of scrutiny protocols are provided by the Measures. The first type governs transfers of IPRs concerning national security to foreign interests during technology export. The scrutiny shall be performed by relevant authorities competent for administration of the specific kind of IPRs in question. The second type relates to transfers of IPRs concerning national security to foreign interests during mergers/acquisitions of domestic companies by foreign investors. The scrutiny shall be done by a centralized security scrutiny agency after hearing comments from relevant IPR authorities. (Translated from Xinhua Chinese Version)