by Mike Bellamy
China does not have a reputation for respecting IP. But things are changing fast- for the better. Chinese industry understands that design innovation and brand reputation are ways to increase margins. Now that the Chinese finally have intellectual property worth protecting, it is natural that their government place more emphasis on rule of law and IP enforcement.
Perhaps the best news for international buyers is that it appears that IP law is being enforced on a level playing field for domestic and international businesses in China. More and more international buyers are realizing that registering their IP in China is the first step toward protecting themselves.
This article is designed to answer the most common questions asked of me relating to IP registration. The suggested steps and pricing are based on my experience working with lawyers to register and enforce IP in China. The rates are accurate at the time of writing (July 2013). If you need help, contact me at the CSIC as I would be happy to introduce the China based, English speaking law firms that have done a good job for me. Here are the highlights:
Q1: What is better to use, a clause for IP in the purchase agreement, or a Non-Disclosure Agreement (NDA)?
A: Use both. Usually, you will sign the purchase agreement with your supplier (with IP protection clause), however, before you decide who will be your supplier, sometimes you have to talk and reveal some of your IP to your potential supplier, so, you can see, a NDA can be used before you finally sign the purchase agreement.
Q2. Can an American register IP in China without setting up a company there?
A: Yes, you do not need to have a business in China to register you IP. Individuals can not directly register IP in China, but a China based, authorized IP lawyer can do it for you. You own the IP, they just handle the registration.
Tip: China operates a “first to file” system in IP registration, that means, the one who first applies for the IP will get it. I strongly suggest you to register your patent and trade mark, even you just manufacture your products in China.
Q3: As far as legal issues, once I have my IP registered in China, and assuming I have my IP protected by agreement with the manufacturer, is there anything else I should lookout for？
A: Do not forget to inform the China customs office about your IP. This will help them stop knockoffs from leaving China.
Q4. What is the fee structure for the lawyers you have used in the past to write a bilingual Purchase Order (PO), which includes a clause for IP?
I recently paid 8400 RMB for a comprehensive, multipage, bilingual contract which was tailor made to my project. The best part about having a good template is that you can use it over and over.
Q5. What is the fee structure for a NDA?
4600 RMB will get you a good one that is customized and bilingual. And like the PO template, a good NDA can be used for many years on many projects.
Q6. What are typical lead times to get NDA and PO templates created?
Five working days should suffice unless there is a rush.
Q7: What are the costs of registering IP in China?
For trademark registration, the all-in price starts at 5450 RMB, inclusive of government fees. About 1000 RMB more for a design patent. Utility patents are a bit more complex and start at 7400RMB, including government fees.
There may be additional fees to search the IP records to ensure no one else has taken the idea already. But regardless, the fees are 1000’s not tens of 1000’s of USD.
Wishing you successful China sourcing!