This article will give you an understanding of China’s IP legal landscape and tell you how to design and implement an intellectual property protection strategy in China.
It is less expensive for you to act proactively to protect your IP in China rather than be forced to react to instances of infringement, but if infringement does occur, you must act. Take these seven steps to stay ahead of IP infringement in China, from the IP attorneys at YK Law.If you have questions about protecting your IP in China or are facing infringement of your IP in China, we can help. Contact us to talk about your IP concerns while doing business in China.
Step #1: Balance Your IP Needs in China with Market Opportunities in China
Considerations when Transferring IP to China
Assess the risks vs. the benefits of transferring IP to China. You should consider transferring only the IP you must have to conduct business operations. Retain the latest generation designs and technologies in the U.S. to minimize risk, unless you have identified licensing opportunities in China for these.
Considerations when Licensing Intellectual Property
If you choose to license your IP, be sure to negotiate favorable royalty rates and retain ownership of any improvements. If that’s not possible, then at least ask for a “grant back” or “license back” provision.Certain IP licenses need to be registered with the China National Intellectual Property Administration.
Before executing such licenses, have a qualified IP lawyer review the terms & conditions to be sure they are compliant with Chinese law, and where the original licenses are executed in English (or another non-Chinese language), have an IP lawyer confirm that the Chinese translations of the licenses are fully accurate before they are registered along with the non-Chinese originals.
Step #2: Register Your Intellectual Property in China
Copyright is automatically protected in China under the Berne Convention. However, register your copyrights in China can still be helpful to evidence your ownership.
Patents are territorial, so your U.S. patent will not be effective in China. To register your patent in China, you must have your patent application properly prepared in Chinese language and then file it in China before any public disclosure. You should note that the publication of your patent application in the U.S. will be treated as a “public disclosure.” If you decide to file your patent application in both China and U.S., under the Patent Law of China, you will enjoy a priority right to your patent only if you file the patent in China within 12 months after your initial filing in the U.S., if it is an invention; or, within 6 months after your initial filing in the U.S., if it is a design patent.
Timing is important, and there is an expedited patent registration process available in China and a select few other countries called the utility model. It is a faster process, much higher granting possibility, and much less expensive because the application is not examined for patentability, However, the level of protection offered by an utility model patent is not as high as a conventional patent (a.k.a. “invention patent” in China).
You should discuss with your attorney to determine which type of patent suits your needs.
Registering a trademark in China is relatively fast and inexpensive. If you sell products or services in China, or you manufacture goods in China, you must register your trademark quickly because unlike the United States, which uses a first-to-use system, China implements a first-to-file system, which means that, except for some limited situations stipulated by law (for example, a malicious registration), whoever files a trademark registration first obtains the exclusive right to use that trademark.
China’s first-to-file system has spawned a thriving industry in spotting up-and-coming startups and registering those startups’ trademarks in China, forcing startups to license or purchase their own trademark. And, if you work with an Original Equipment Manufacturers (OEM) in China, that OEM may register your trademark so that if you try to switch OEM, they can threaten to sue you or block export.
Prevent these problems by registering your trademark early, and include provisions in your contracts with your Chinese partners/suppliers/OEMs that they shall not register your trademark without your consent.
If you find your trademark is already registered by someone else in China, speak to one of our attorneys and we may help you to find legal solutions to get your trademark back.
Step #3: Register Your IP with Chinese Customs
Customs will block both the import into China of infringing products and the export of such products. Considering how much China exports, enlisting the help of Customs will be a time and cost-saving move for your business.
Trademark and design patents are likely easier for customs officials to identify and protect than technical patents. Providing as much information to customs as you can, such as suspected infringing manufacturers and ports used, will help them help you.
Step #4: Craft Internal Processes to Protect Your IP
Identify your IP assets and categorize each according to the level of sensitivity and protection needed. Audit your internal controls, such as storage and access restriction, to provide sufficient protection and document those protection protocols for reference. TTask your management team with responsibility for protecting the company’s IP, and regularly communicate the importance of ongoing vigilance.
It is important to restrict access to IP and other sensitive Information among your employees in China. Access to trade secrets such as source code, customer lists, and any other sensitive information should be limited to a need-to-know basis among employees in China to reduce the opportunity for leaks. Have employees with access to sensitive information sign noncompete and nondisclosure agreements that are enforceable in China.
Access to sensitive information should be strictly controlled and monitored with the use of passwords and non-network computer terminals kept in low-traffic areas. Employ security cameras.
Step #5: Carefully Engage with Business Partners in China
You should consider all suppliers, vendors, distributors, licensees, and OEMs in China as potential competitors and take precautions accordingly.
For example, you can design your manufacturing process to protect your IP in China. Consider manufacturing separate components at different OEMs in China with final assembly of your product in the United States, to prevent any single OEM from learning your entire manufacturing process.
Visitors to your facility in China should not be allowed to bring in mobile phones, USB sticks, computers, cameras, or anything that might somehow record any aspect of your operations.
Step #6: Monitor for Infringement
You are busy running your business. Hire one of the many reputable brand monitoring services to do this for you. You can also:
- Send representatives to trade shows to look for counterfeiters;
- Read the latest IP publications to monitor for new patent and trademark applications that may infringe on your IP;
- Enlist your trading partners and members of your distribution network in China to look out for and report possible instances of infringement.
The China Trademark Office publishes trademark applications at WWW.CNIPA.GOV.CN to provide the opportunity for opposition. If someone tries to register your mark or a similar mark, you should oppose it before it is registered because it is much more difficult to cancel a mark after it is registered.
It is possible to cancel a registered trademark for non-use in China, but three consecutive years of non-use are required. During that period, you may find yourself in a position of having to license your own mark. It is also possible to cancel a registered trademark if such registration is found “malicious.”
Step #7: Confront IP Infringement When Discovered
Despite your best efforts, counterfeiters and infringers in China may succeed in infringing your IP. They use sophisticated methods such as exploiting procedural loopholes in the IP registration process, seeking to invalidate legitimate patents and trademarks, and reverse-engineering IP.
This being said, you must act once you discover IP infringement in China.
Contact IP Infringers in China
Engage an attorney to send cease-and-desist letters. While it is a cost-effective way to stop infringement potentially, it also alerts infringers that you are aware of their actions.
Perform Takedowns on Chinese Websites
All major Chinese websites such as Alibaba have takedown procedures that involve submitting identification and proof of IP rights and information on the infringing products.
Build Cases Against IP Infringers in China
Review and collect the internal physical and electronic evidence that proves infringement. Employ a firm that investigates IP infringement.
Use Official Enforcement Channels in China to Pursue Infringers
There are administrative, civil, and criminal repercussions for IP infringement in China. Each enforcement channel has pros and cons, and it will depend upon your goal in enforcing your IP rights which of these you employ. Please consult with your attorney to determine the best route to stop IP infringements.
Frequently Asked Questions About Protecting IP in China
Does China Have Copyright Laws?
Yes , China has a Copyright Law (passed in 1990, and amended in 2001,2010 and 2020) All copyright registrations are handled by the Copyright Protection Center of China (CPCC).
Copyright registration is voluntary in China, however, registering a copyright in China makes it easier for a copyright holder to enforce their rights in China.
How is Intellectual Property Protected in China?
The laws in China regarding copyright, trademark, and patent differ from those in the U.S. so if you are unfamiliar with IP law in China, seek the help of experienced IP attorneys.
What Cannot Be Protected as IP in China?
While IP is categorized slightly differently in China than the U.S., most IP that is protected in the U.S. can be registered and protected in China.
How Long do Copyrights, Trademarks & Patents Last in China?
Copyrights – the author’s lifetime plus 50 years
Trademarks – 10 years, renewable within six months prior to expiration
Patents – Utility model patents, 10 years; invention patents, 20 years
Is Piracy Legal in China?
Piracy and counterfeiting are illegal in China. IP infringement can be enforced administratively, civilly, or criminally.
YK Law Can Help You Protect Your IP in China
The experienced IP attorneys at YK Law can help you with all aspects of IP protection and enforcement in China, from establishing internal procedures and protocols, to venue shopping for enforcement and license negotiation. Let us and our partners in China help you protect and enforce your IP rights in China.