IP in China: Navigating the opportunity and enforcement issues
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IP in China: Navigating the opportunity and enforcement issues

In 2012, China was the top-filing destination for inovia’s clients and it’s no surprise — the market opportunity is just too large to ignore. But with opportunity comes risk and for years, enforceability issues in China have been among the hottest topics in IP.

Earlier this week I attended Managing IP magazine’s “IP in China: Growth & Opportunities for US Companies” event. A diverse group of law firm and corporate speakers were there to provide updates on China IP law and share best practices for accessing China’s huge market while protecting intellectual property rights.

“You have to do business there”

Many speakers were not shy in acknowledging the challenges that China presents. In his keynote address, Christopher Chalsen, a Partner at Milbank, discussed the struggles his client Disney has faced. The company fights an ongoing battle against piracy and counterfeiting in China, but knows that it must do business there. Despite all of its struggles in the country, Disney is moving forward with plans to build a massive theme park in Shanghai.

Governmental vs. Cultural Differences

Chalsen, along with several other speakers, pointed out that it is not the governmental differences between China and the rest of the world that makes IP difficult to enforce, but the cultural differences. Citizens in China don’t necessarily feel that stealing IP is wrong. Qinghong Xu, a partner at Chinese firm Lung Tin, echoed that the gap in substantive IP law between China and the US is relatively small, but the cultural differences are severe.

Prevention is still the best protection

Despite the challenges, if you’re planning on doing business in China then prevention is still the best protection. US applicants have several options for protecting their brand and technology:

Trademark registration – File early; China has a first-to-file system

Copyright protection – Works first published outside of China are protected under international copyright conventions or bilateral agreements to which China is a party.

Utility model patents – A Chinese utility model patent relates to the shape or structure of a product. It is equally enforceable compared to an invention patent, but is cheaper and offers a 10-year term. Note: certain jurisdictions such as the US refer to their regular patents as utility patents; China’s utility model patent is different to this.

Invention patents (Equivalent to a “utility patent” in the US) – China is a member of both the Paris Convention and Patent Cooperation Treaty (PCT).

Design patents – This protects the ornamental appearance of an invention and offers a 10-year term.

Resources for US companies

While enforcement may still be difficult to navigate, the speakers shared a number of resources that U.S. businesses can consult:

Stopfakes.gov – Steven Duke, Economic Officer, U.S. Consulate General in Shanghai, shared information on U.S. Government initiatives to assist companies doing business in China. On their stopfakes.gov website, inventors and companies can learn about IPR, access free resources and report retailers selling fakes.

Quality Brands Protection Committee (QBPC) – Ron Davis, Sr. Director of Brand Protection at Qualcomm and chair of the QBPC Membership Services Committee, discussed how the QBPC is leveraging networking, a Chinese mindset, and positive reinforcement to impact IPR protection in China. Brand owners of well-known consumer or industrial products can join the organization, which now has over 210+ multinational members.

Success stories

Amid the warnings and best practices, it was also nice to hear a success story at the event. When Carmit Turjeman, inventor and owner of Travalo, first took her business into China, she learned quickly that the Chinese government “is not nice to strangers.” Her product has over 1,000 copycats, but she’s had a very high success rate with lawsuits brought against infringers in China.

What’s behind Travalo’s success? A Chinese partner. Travalo has formed a legal partnership with their manufacturers in China and have registered many utility models under the Chinese company. When a case is brought to court, the Chinese courts appreciate the fact that it is a Chinese company innovating within the country’s borders. Travalo has also built litigation departments in China and Europe so that they have protection on the ground.

Looking to the future

Difficulties still exist, but progress is being made. A key finding of our fourth annual U.S. IP Trends Survey is that feelings in China have improved; fewer respondents mentioned enforceability issues as a key IP trend for the coming year. China has also become a regular filing destination for respondents.

If China is part of your international patent filing strategy and you’re interested in exploring our services for direct filing or PCT national stage entry, please don’t hesitate to contact us.

 

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