China Law Blog

The American Chamber of Commerce in China just released its yearly survey of U.S. companies in China and the bottom line on China intellectual property (IP) protection is flat out bad (h/t to China Challenges Blog.)  According to the survey, 41% of U.S. companies in China believe counterfeiting of their products increased in 2005 and 55% were hurt by violations of intellectual property rights.

The hardest hit companies are those involved in movies, software, automotive parts and pharmaceuticals.  No surprise there. 

According to Matt Roberts, a co-chairman on AmCham's public policy development committee,  "IPR [intellectual property rights] is still a huge and growing problem. While the legal environment is improving, and we believe the Chinese government is more aware of its poor performance in IPR issues, there is nowhere near the required enforcement."

According to AmCham-China president Charlie Martin, "the problem [of IP theft] is growing faster than the enforcement efforts... and this problem of growing exports is really one to watch because that is going to reverberate against China on the international stage."

Just today, in counseling a client on whether to file for patent protection in China, we (my firm, one of the Chinese firms with which we work on such matters and the client) all decided that the risks/costs of filing for patent protection outweighed the possible gains.  Our decision was based in large part on the inability and/or unwillingness of Chinese courts to enforce patent rights.  On the other hand, we virtually always recommend (and did in this case as well) that our clients file for trademark protection in China. 

What is so frustrating about this survey is that it appears to say the Chinese government in Beijing is trying, but is being outgunned by the counterfeiters. The full survey, which is quite comprehensive, can be found here.