By Dan Harris
In yesterday’s post, Mathew Alderson wrote about how Beijing IP Court statistics released during the UK-China IP Symposium he attended in Beijing on November 1st. Mathew concluded his post by noting the following:
These statistics and the underlying cases on which these statistics are based tell us that foreign companies can prevail in intellectual property disputes against Chinese companies, but to do so they invariably must have either proper China IP registrations that they can allege were infringed and/or a good contract that they can allege was breached.”
In other words you should be taking steps to protect your IP in China so as to protect your IP in China so as to minimize your chances of having to sue in China while also increasing your chances of prevailing in China if you do need to sue. In a subsequent post we will take you through those steps.
In this post we set out the four most important steps you should take to both minimize the likelihood of having a China IP problem and to maximize your chances of prevailing should such a problem actually arise.
1. Protect Your IP in China by Registering your IP in China. Register your trademarks, copyrights, and patents in China. Registering your IP in the United States or the EU or Australia or any other country does not provide you with IP protection in China.
— China Trademarks: Trademarks are nearly always fast, easy and inexpensive to register in China. If you ever plan to sell your products or services or even just have your products made in China, trademark registration in China is a must. China has a first-to-file trademark system, not a first-to-use system. This means what it sounds like; whoever files and secures a trademark registration first for a brand name or a logo gets it, whether or not you have been using that same brand name or logo in your home country for the last 100 years. Chinese squatters are constantly on the look out for up and coming startups whose trademarks they can register in China and use for “ransom.” Chinese squatters also love securing the trademarks for brand names of products made in China for export. Oftentimes these squatters are friends and family of your own manufacturer who register “your” trademark in China and then use that registration to raise your manufacturing costs and then hold you hostage when you try to switch to another manufacturer. See Why Changing China Suppliers Can Be So Risky, where we described this typical scenario:
Western company tells its China manufacturer it will be ceasing to use China manufacturer for its production. A few weeks later, Western company has its products seized at the China border for violating someone’s trademark. The Western company is (rightly) convinced that its China manufacturer is the one behind the product seizure, believing the Chinese manufacturer registered the Western company’s brand names as trademarks in China long ago and is just now using that trademark to seize product as revenge. China has laws forbidding its manufacturers from registering the trademarks of those for whom it manufactures, but because it is usually not possible to prove that your manufacturer in Shenzhen had a cousin in Xi’an do the registering, this sort of thing goes on unchecked. This sort of thing is increasingly happening with design patents as well. For how to prevent this from happening to you, check out the following:
— China Copyrights. Copyrights are automatically protected in China under the Berne Convention, but to be able to sue quickly for a copyright violation and to have full copyright protection in China, it almost always makes sense to file your copyrights there. Just as in the United States and the EU, you need only submit a small portion of your software code to secure copyright protection on the entire program.
— China Patents: China patents typically must be filed in China before any public disclosure, though there are situations where the application can work so long as it is filed in China within 12 (sometimes more) months of your first foreign patent filing. China also has design patents which are shockingly fast and easy to secure. See The ABCs of China Design Patents.
In most instances it will also make sense for you to secure the appropriate trademarks, copyrights and patents in whatever country you will be selling your product.
2. Protect Your IP in China With China-Centric Contracts. Having a good contract with anyone in China to whom you will be revealing your IP is the second key to avoiding IP disputes in China and to prevailing in such disputes. The right contract or contracts will depend on your specific situation. The most common contract for IP protection is an NNN Agreement (this is a more thorough, more complicated and, most importantly, more China-centric version of an NDA). But this might also include a trade secret agreement, a non-compete agreement, a confidentiality agreement, a non-use agreement, a licensing agreement, or many other sorts of contracts tailored for your specific situation. For making sure whatever contract you use to protect your IP actually works for China, check out The Five Keys to A China Contract That Works.
In addition to registering your IP in China and having China-centric contracts to protect your IP in China, performing takedowns of products on Chinese websites that infringe your IP and registering your IP with China customs will also usually make sense because these two things are usually both effective and relatively inexpensive.
3. Perform Takedowns on Chinese Websites. Once you have registered your IP in China, you will be well prepared to perform takedowns of infringing products you find on Chinese websites. This is especially true of products that violate your China trademark or images of products that violate your China copyrights. The major Chinese online marketplaces all have their own takedown procedures which typically require you prove your identity and your company’s bona fides and also that you prove you possess the rights to the IP that is being infringed. Our China IP lawyers/paralegals usually can accomplish a takedown of infringing IP from a Chinese online marketplace within a week or two. I previously wrote a six part series on Copyright takedowns in China that proceeded as follows:
Copyright Takedowns in China was a general summary of the regulations that establish China’s copyright takedown procedures. Copyright Takedowns in China Part II: Searching, Linking or Storing? looked at how providers of storage space face more liabilities than those merely providing searching or linking services. Copyright Takedowns in China Part III — Audiovisual and Sound Recordings in the Cloud discussed how China’s takedown regulations apply to cloud service providers. Copyright Takedowns in China, Part IV: Whatever you do, Register your Copyrights First, made clear that “if you ever expect to have infringing content taken down the single most important thing you should do is register your copyright in China in advance.” Copyright Takedowns in China, Part V: The End of Online Anonymity? was on the things you should do after you succeed in taking down copyright material. See also Getting Counterfeits off Alibaba: Anger is NOT a Strategy.
4. Register your IP with China Customs. China Customs will block products that infringe on China IP from entering OR leaving China. The “leaving China” part is why it is 100% essential that you register your IP in China even if all you are doing in China is having your products made there. The leaving China part is also why it usually makes sense for foreign companies that have registered their IP in China to also register that IP with China customs. Even though manufacturing in China is on the decline, China still manufactures way more than any other country in the world and it is still by far the world center for counterfeiting. If you register your IP in China and then also register that IP with China customs you will have positioned yourself to be able to block counterfeit versions of your products from leaving China for anywhere in the world.