China promulgated its revised Law on Promoting the Transformation of Scientific and Technological Achievements (the Law) on August 31, 2015. China’s NPC Standing Committee made a substantial amendment to its 1996 edition, including 44 modifications and an expansion of articles from 37 to 52, which fully reflects that China highly values the transformation of scientific and technological achievements. It will exerted an important and far-reaching influence on the significant improvement in the application level of IPR in China, full implementation of China’s innovation-driven development strategy and strong promotion of “public entrepreneurship and innovation”. There are six highlights in this amendment, which will be discussed in detail in the paper.
I. Release of Vitality by Rights Ascertainment
One of the important tasks of this amendment is to solve the question of state-owned capital administration in the process of scientific & techno l o g i c a l achievement s transformation and intellectual property rights application by research institution or university.

The administration questions, including the ownership, operation, etc., of scientific & technological achievements and intellectual property can be resolved by The Enterprise State-Owned Assets Law.

One of the highlights of the Law is to Yin Fenglin, School of Public Administration & Policy, University of Chinese Academy of Sciences, S.J.D., Columnist for China IP break the major systematic obstacles to the transformation of scientific & technological achievements and application of intellectual property.

Article 18 and Article 43 of the Law provides that: “A R&D institution or institution of higher learning established by the State may decide to transfer, license, or price the scientific and technological achievements it holds for investment at its discretion, provided that relevant prices shall be determined by agreement, by listing such achievements on technology trading markets, by auctioning off such achievements, etc. Where prices are determined by agreement, the said R&D institution or institution of higher learning shall announce the names of the scientific and technological achievements concerned and the proposed transaction prices on its premises.” (Article 18) “The incomes obtained by a R&D institution or institution of higher learning that is established by the State from transforming scientific and technological achievements shall be retained by the said R&D institution or institution of higher learning in full amount. Such incomes shall mainly be used for scientific and technological R&D, the transformation of scientific and technological achievements and other related work after being used to give rewards and remunerations to the personnel who have made outstanding contributions to the completion or transformation of service scientific and technological achievements.” (Article 43 ) The aforesaid two articles has the highest contents of gold in this amendment because they ascertain that scientific research institutions and universities have the rights to really and actually utilize, profit from and dispose of scientific and technological achievements.
II. Agreement Proceeds Statute and Remuneration be Increased
I t i s o f g reat s i gni f i cance f o r f u r t h e r p r omot i n g t h e transformation of scientific and technological achievements and realizing the market value of such achievements by the establishment and improvement of legal systems and measures for researchers and t ransformers to do such transformation. The Law improves the reward and remuneration system for service scientific and technology achievement from three respects. Firstly, it provides a significant increase of proportion of statutory remuneration, from no less than 20% of net income obtained from the transfer of the service scientific and technological achievement in the 1996 provisions to no less than 50% from the net income obtained from the transfer, licensing or investment after pricing of such achievement of the service scientific and technological achievement in 2015 stipulations.

Secondly, the entity that completes a scientific and technological achievement may agree with science and technology personnel on, the standards and amount of such rewards and remunerations, and such agreement shall proceeds the statutory provisions. However, there is one exception that the rewards and remunerations agreed by R&D institutions and institutions of higher learning established by the State and their science and technology personnel shall not be lower than the aforesaid statutory provisions. Thirdly, the expenditure spent by a State-owned enterprise or public institution for giving rewards and remunerations to personnel who have made outstanding contributions to the completion or transformation of service scientific and technology achievements in accordance with the Law shall be included in its total wages of the very year, provided that such expenditure is not bound by the total wage limit of the State-owned enterprise or public institution in the very year, and is not included as the base number of its total wages.

The exemption of the State-owned enterprise or public institution from the total wage limit in 2015 amendment makes it possible for the State-owned enterprise or public institution to really implement the rewards and remunerations systems for researchers and transformers without influencing the wages and interests of the entity and other personnel.
III. Market-oriented Amendment and Subsides for R & D
There have been difficulties for scientific and technology achievement to be recognized and accepted in China and a low utilization of such achievements as a result. In order to change this situation, efforts have been made in the amendment to promote the transformation, which can be seen from its Article 10 that: “Where fiscal funds are used to set up application science and technology projects and other related science and technology projects, relevant administrative departments and administration authorities shal l improve and perfect the approaches for managing scientific research organizations, and l i sten to the opinions of relevant industries and enterprises when formulating relevant science and technology planning and plans, and when preparing project guidelines. In organizing the implementation of application science and technology projects, relevant administrative departments and administration authorities shall specify the obligations for transforming scientific and technological achievements that shall be borne by the parties under t aki ng such p r o j e c t s , strengthen IPR management, and take the transformation of scientific and technological achievements as well as the creation and utilization of IPRs as important aspects and bases for project establishment and final acceptance.” Of course, enterprises or relevant enterprise associations should also enhance their abilities to participate in the formulation of science and technology plan, program or project guidelines made by the State so that true voices of the market can be heard.
IV. Achievement Sharing and Science& Technology Reports
It is urgent for China to establish a comprehensive and authoritative state-level science and technology information system on basis of science & technology report and IPR document information in order to reinforce the foundation of China’s science & technology R&D, enhance its dissemination ability of science and technology information, promote science and technology progress and increase the transformation and utilization of achievements therein.

As an important measure, the 2015 amendment provides concrete science & technology report system with achievement therein involved.

Its Article 11 stipulates that: “The State shall establish and improve the science and technology reporting system and the information system for scientific and technological achievements, announce to the public the implementation of science and technology projects, scientific and technological achievements and related IPR information, and provide information inquiry, screening and other public interest services concerning scientific and technological achievements. State secrets and commercial secrets may not be divulged in the announcement of relevant information. Where certain pieces of information are not announced, the departments concerned shall promptly inform the parties undertaking relevant science and technology projects of the same.” “The party undertaking a science and technology project established with fiscal funds …(and)…the parties undertaking science and technology projects that are established with non-fiscal funds shall submit relevant science and technology reports, and exchange scientific and technological achievements and related IPR information to the information system for scientific and technological achievements.

The departments of people’s governments at and above the county level that are in charge of relevant work shall facilitate such parties to perform the foregoing operations.” There is a serious segmentation and fragmentation of science and technology information in current China that several departments are in charge of such information.

For example, Institute of Scientific and Technical Information of China is affiliated to China’s Ministry of Science and Technology, which has at least two reporting platforms o f s c i e n c e and t e c h n o l o g y , namely, National Science and Technology Report Service and National Science and Technology Achievements Database; SIPO holds the technical information of and rights information related to patent application, and right information related to layout-design of integrated circuits; Ministry of Agriculture and the State Forestry Administration have the respective information of new varieties of agricultural plant and forestry plant; Copyright Protection Center of China is in charge of registration information of computer software and ordinary works; and other departments have also established large number of information collection systems of scientific and technological achievements. China should make a comprehensive integration of scientific and technological information for an overall plan of information and establish a unified state-level information database of scientific and technological achievements.
V. Compensation for Risk and Improvement in Financing
According to the resource of capital, there are three financing methods for the transformation of scientific and technological achievements: venture capital, IPR pledge financing and IPO. The amendment takes into account the perspective of risk compensation, etc. in order to decrease the financing difficulties in the transformation. There are five articles for such purpose that the author thinks should be cited as the follows: “The State encourages venture capital institutions to invest in projects for the transformation of scientific and technological achievements. Venture capital guiding funds set up by the State shall guide and support venture capital institutions to invest in early-stage SMEs of science and technology.” (Article 38) “ The State encourages establishment of funds or risk funds for transformation of scientific and technological achievements, such funds shall be raised by the State, local authorities, enterprises, institutions and other organizations and individuals and shall be used to aid transformation of such scientific and technological achievements as need substantial investment, involve considerable risks and promise high yields and to accelerate the application of major scientific and technological achievements in industrial production.” (Article 39) “The State encourages banking financial institutions to strive for innovation in terms of the organization structure, management mechanisms, financial products and services, etc., and encourages the development o f lending business such as lending against IPR pledges or equity pledges, so as to provide financial support for the transformation of scientific and technological achievements.”

“The State encourages policy oriented financial institutions to take measures to extend more financial support to the transformation of scientific and technological achievements.” (Article 35) “The State encourages insurance institutions to develop insurance products that are in line with the characteristics of the transformation of scientific and technological achievements, and provide insurance services for the transformation of scientific and technological achievements.” (Article 36) “The State shall improve the multi-level capital market, and support enterprises to raise funds for projects for the transformation of scientific and technological achievements by direct financing means such as equity trading, lawful issuance of stocks and bonds, etc.”

(Article 37)

VI. Market Development for Further Transactions
The transformation of scientific and technological achievements needs a scientific and technological market with high efficiency and authority. After years of development, there have existed basic operation frameworks with scientific and technological market policies and regulations system, supervision and management system and technology trading service system in China, in which remarkable achievements have been made in every respect. The Law makes clear stipulation on the question of scientific and technology market development for the first time in order to further promote the development of science and technology market, and help the transformation of scientific and technological achievements. Article 30 provides that: “The State shall nurture and develop technology markets, and encourage the establishment of science and technology service inter me diaries to provide technology trading with market places, information platforms, and services such as information search, processing and analysis, assessment, brokerage, etc. When providing services , science and technology service intermediaries shall follow the principles of being impartial and objective, refrain from providing false information and proofs, and keep confidential the State secrets and the commercial secrets of the parties concerned that come to their knowledge during the course of services.”

Furthermore, the Law a l s o stipulates that: “The State shall support the c o n s t ruction o f public R&D platforms according to the needs of industrial and regional development to provide the transformation of scientific and technological achievements with technology integration, common technology R&D, pilot tests and industrial tests, systematic and engineering style development of scientific and technological achievements, technology popularization and demonstration and other services.”

(Article 31) and “The State shall support the development of science and technology business incubators, university science and technology parks and other science and technology enterprise incubators, so as to provide early-stage small and medium-sized enterprises (“SME”) of science and technology with premises for incubation, startup guidance, R&D and management consulting, and other services.”

(Article 32) Law does not mean everything. Although the Law is very specific in some places that can be directly cited for application, some articles are relatively general which cannot be directly applied and needs to have more detailed rules made by relevant departments. In either case, it needs the obligee, inventor, transformer, administrative personnel from government related to the scientific and technology achievement to have real understandings of the contents and meanings of the Law If so, the Law can be a real systematic bonus for promoting the transformation of scientific and technological achievements and realizing the rapid and stable development of China’s national economy.
(Translated by Yuan Renhui)