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How to protect your IP in China

by Tom Pattinson
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For any UK company seeking to enter, or expand operations within, the China market, the words ‘Intellectual Property’ (IP) hold an immense amount of clout. Protecting IP is relevant across every industry and sector – from engineering to automobiles to medicine, and actors in all of these industries are sensitive to the value of their IP and the great costs that are associated with its compromise. One analogy of IP sees it as a sturdy crash helmet protecting the ‘brain’ of a brand: i.e. what the brand produces, its memories, past learnings, mistakes and footprint, as well as its future potential for research and development.

“Counterfeit products not only infringe on the brands and markets we strive to operate in, but also directly affect our own brand and performance; leading to a decline in our reputation in the minds of customers,” says Jasmine Chen, Legal Counsel to Weir Group China. “At the same time, the absence of a good IP protection system may affect companies’ investment in R&D when entering new markets due to fears of infringement.”

With high-profile IP infringement cases popping up frequently within business and trade news, and complications resulting from IP disputes often proving costly and cumbersome, the case for protecting your IP and donning this figurative crash helmet has never been stronger – especially on China’s busy roads.

In April, CBBC organised the China IP Outlook as part of the National Intellectual Property Week. This day of workshops and discussions was the latest in a series of CBBC-led events that have seen 16 roundtables with Alibaba, 10 roundtables with Tencent and WeChat, seven roundtables with JD.com, and dozens more with other online sales platforms. Through these events, British companies and platforms are given the opportunity to have face-to-face discussions about IP issues and possible collaboration. The benefits of the roundtables go beyond the companies attending them, as the dialogue helps improve operations and create a multiplier impact benefiting all companies selling products on these platforms.

“Intellectual Property Rights are now increasingly valued by China, and the protection of IP can promote innovation and the long-term development of the country,” says CBBC’s IP specialist Lucy Song. “President Xi stressed the need to strengthen IP protection at last year’s Boao Forum for Asia, while Premier Li also mentioned the need to significantly increase the cost of IPR infringements and establish a punitive compensation system”.

CBBC is also working closely with stakeholders to increase supervision of the logistics industry, identify technical breakthroughs that improve the efficiency of solving IP crime, introduce a system of IP crime blacklisting, and increase communication and cooperation between key players.

A new e-commerce law took effect in January 2019 and is a prime example of China taking the lead in protecting IP online

How to protect IP in China

Undertake voluntary copyright registration in China

Protect your ideas with copyright registration. Although China signed up to the Berne Convention for the Protection of Literary and Artistic Works, it is also advisable to undertake voluntary registration of your copyright in China. Registration is quick and straightforward and greatly reduces the evidence required should there be any dispute.

File design patents

Patents filed outside of China do not automatically enjoy protection and therefore it is essential to register any specific designs or design processes.  It takes approximately nine months to one year to obtain a design patent in China, with successful registration granting you exclusive rights for ten years. It’s worth noting that if you disclose your design anywhere in the world before you apply for a design patent in China, you will be ineligible for protection.

Protect your trade secrets

Prevention is key when it comes to protecting trade secrets in China. Should these be released to the public any legal protection is lost, with official recourse often not feasible. UK companies have a number of means at their disposal in the protection of confidential information of commercial value – including the use of Non-Disclosure Agreements for third parties, clients, and contractors; confidentiality agreements and retention plans for staff; and internal data security and IT protection measures.

Secure your domain name

With over 800 million internet users and a highly sophisticated e-commerce marketplace, China presents an abundance of opportunities for UK companies, however navigating the online world is not without its IP pitfalls and threats. In particular, as domain names in China operate under a first-to-file system, companies should take care to register their domain names before establishing a presence in the China market. Doing some research on domain name arbitration before entering China is also a smart move.

Seek out opportunities for collaboration

With an issue as complex as IP protection, collaboration is essential. UK brands seeking to undertake best practice in their IP strategy in China should be open to – and indeed are advised to actively seek out – collaboration with a wide range of players, including government bodies, the police, IP platforms, e-commerce retailers, legal advisors, and industry experts. This collaboration will benefit not only your brand but will also benefit the wider IP environment – a win-win for everyone.

“We have assisted law enforcement agencies to successfully destroy a large number of dens which manufacture and sell infringing counterfeit products,” says Ji Ying, IP Senior Legal Counsel, GlaxoSmithKline (GSK). “China’s law enforcement agencies have always attached great importance to the protection of food and drug safety, and GSK has unremittingly assisted law enforcement agencies to promote drug safety, and strengthen both the crackdown on counterfeit products and China’s protection of IPRs,” she says.

Keep up to date on new rules and regulations

Knowledge is power, and changes in China’s legal system can have a knock-on effect to your company’s IP security in China. A new e-commerce law took effect in January 2019 and is a prime example of China taking the lead in protecting IP online. It enables Chinese and international companies to better protect their IP with the government’s declaration that e-commerce platforms will take joint accountability for the distribution of counterfeit goods and risk facing financial penalties if they enable counterfeiters.

To learn more about CBBC’s work on intellectual property and any aspect of intellectual property rights in China, please contact avi.nagel@cbbc.org


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