Intellectual property protection in China, always a concern for foreign businesses, now is more understandable thanks to a new tool from an agency of the US government. Non-US companies will find most of the guide useful to them. https://www.stopfakes.gov/servlet/servlet.FileDownload?file=015t00000005ppG
Guides for additional countries are available on the same website. https://www.stopfakes.gov/IPR-Toolkits
China has certainly progressed well beyond the bad old days when IPR protection was something of an oxymoron. Whether from outside or inside pressure, explosive economic growth, domestic innovation or some combo the system of laws, bureaucrats, lawyers and courts to deal with demand is truly impressive.
By one indicator, the number of cases filed in a year, China has added another eye-catching statistic to a growing collection. Nationwide more than 350,000 cases were filed in 2018. The Chinese have a lot of IP to protect, and prodigious pirates have turned on their own. Thanks to beefed up laws, they will no longer be subject to a slap on the hand. Depending on the type of violation, they’re facing serious jail time and eye watering monetary penalties if convicted.
One hopes it never comes to that, and an ounce of prevention goes a very long way. The first step is to register your patents and marks before starting business there. If you’ve ignored this advice and are there anyway, it’s not too late unless locals have already beaten you to the registrar’s office.
Under Chinese patent law, unlike the US, it’s first to file rather than to use. A party in China can obtain ownership of a trademark merely by filing an application to register it and is not required to show evidence of use. That’s why it’s important to file in China even if you’re not in the market yet or you are but not selling all of your products at the moment. You’ll probably need assistance filing for patents in China, and today you’ll find high-quality legal help offered through the China offices of many major international law firms.
Copyright law in China protects original works of authorship including literary, dramatic, musical and artistic works, as well as designs and computer software.
Registration in China is not a prerequisite to obtaining protection but it does convey important advantages, especially when seeking relief from the courts. A common source of delay is when authorities must establish copyright ownership. With a certificate in hand the courts can make a determination and punish the infringer.
Protection of trade secrets continues to be a major concern of foreign companies in China and is becoming more of a concern for Chinese companies as they develop products and technologies requiring protection. According to one study, 50 percent of US companies have not transferred some of their technologies to China because of theft concerns. This is bad for the companies (lost sales) and for Chinese partners and customers (can’t access the benefits of technology). Chinese authorities have created a series of laws to address the problem but enforcement has been an issue.
Also a problem has been the “forced” sharing of secrets as a condition for entering the market, or government regulators appropriating the secrets in the process of examining applications for licenses. The regulators in some high-profile cases have then given or sold the secrets to domestic competitors of the foreign company. The new Foreign Investment Law addresses these problems by making unlawful coercive transfers, forbidding government officials from misappropriating secrets, and prescribing jail time for offenders.
The laws are welcomed, but the real test will be enforcement, an area of continuing concern for foreign companies and a reason the US has balked at removing punitive tariffs until there is evidence the Chinese are doing what they promise.
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