Taorui Guan on Cooperative Federalism and Patent Legislation: A Study Comparing China and the United States (CJIL)

"Cooperative Federalism and Patent Legislation: A Study Comparing China and the United States"
Taorui Guan
Chicago Journal of International Law (vol. 24, no. 2 (2024), pp. 259-304)
Published online: February 2024

Abstract: How should patent legislative power be allocated between central and local governments in order to construct a patent system conducive to promoting innovation? A comparative analysis of the models of the U.S. and China sheds light on this question. The early American states established their patent systems before the formation of the federal system, but the U.S. Constitution arrogated patent legislative power to the federal government, ending the era of decentralized patent systems. This centralized structure ensures uniformity in rules but might hinder the system’s adaptability and ability to experiment. In contrast, as China’s patent system evolved, its patent legislative power spread from the central to the local governments. This shift led to the coexistence of dual-level patent legislative structure. Currently, twenty-nine out of thirty-one province-level authorities (93.5%) and twenty-one out of 323 city-level authorities with local legislative power (6.5%) have established local patent laws. China’s patent system is not entirely decentralized but rather, semi-decentralized, as the locales not only implement their local patent laws but also must enforce the central government’s national patent laws. China’s semi-decentralized patent legislation model embodies significant features of cooperative federalism, where the central and local governments share the national power to handle affairs and collaborate to address issues. Yet, the central government maintains a dominant position in this cooperative relationship, as a consequence of China’s unitary state structure. Compared to the current centralized patent legislation model in the U.S., China’s semi-decentralized patent legislation model has the advantage of making statutory law more adaptable to local specificities and promoting local competition and institutional innovation. However, it also faces challenges, such as increased costs due to inconsistency; efficiency decline stemming from rent-seeking behaviors; and the risk that local protectionism will create anti-competitive effects.