China Law Blog

This is the second of my posts on the United State's Patent and Trademark Office's two-day conference on "Protecting Your Intellectual Property In China and The Global Marketplace"  I attended last week.  The first post was entitled "Nike On China IP Protection:  Just Do It With Green Tea," based on an excellent speech given by Kevin R. Brown, Nike's Director of Global Brand Protection.  This one is about Timothy Trainer's very informative speech on preventing piracy.

Timothy Trainer is the President of Global Intellectual Property Strategy Center in Washington, D.C.  Before that, he was the president of International AntiCounterfeiting Coalition (IACC) and before that he was the INTERPOL's IP Crime Action Group.  He is also the author of the book, Border Enforcement of Intellectual Property.  Both Mr. Trainer's experience and his speech indicate he knows whereof he speaks when it comes to global intellectual property protection.

Mr. Trainer began his speech by discussing China's present situation with respect to intellectual property protection.  He talked about the many steps the Chinese government has taken in an effort to reduce counterfeiting and he cited to statistics indicating these efforts were having an impact.  But he was also able to cite statistics indicating the problem is worsening.

He then set out the various options companies in China have to go after those who conterfeit their products; 1) Criminal Action; 2) Administrative Enforcement; 3) Civil Action;  and, 4) Enlisting the aid of local, provincial, and/or national authorities.

It was in the area of planning global IP strategy that Mr. Trainer really shone.  He talked about how companies must take a global view of their IP and how they must ask themselves questions such as, "Where are our stragetic pressure points?  Where are we selling our products and where do we intend to sell our products?"  In other words, if a counterfeit version of your product is being sold in Rwanda and you have no intention of ever selling in Rwanda, you may not want to put money into stopping it.  If, however, your product is being counterfeited in China and being sent to the United States, even if you have no intention of selling your product in China, you may want to examine your Chinese options as a way to protect your U.S. market.

Mr. Trainer then put up a PowerPoint slide headed, "SMEs, SOL??"  His next PowerPoint slide set forth some of the peculiar difficulties small and medium sized businesses face in trying to protect their intellectual property globally:

"SMEs lack resources to man and fund lots of civil actions."

SMEs "do not 'own' IP in dozens of countries like large multinational companies.

Lack of IP ownership in a country = NO enforcement of IP

His next PowerPoint highlighted the Catch 22 IP situation for SMEs and suggested how to try to resolve it:

--Too small to obtain trademarks and patents abroad, but successful enough for counterfeiters to steal and market goods using your IP where you don't have rights

Suggestions:

--Countries where you own rights, be aggressive

--Countries where you don't own rights, engage the US government (embassies abroad and agencies in the US); explore other legal grounds to justify trading partners taking criminal enforcement actions against organizations that import, smuggle goods into a country

During the Q&A section following Mr. Trainer's lecture, I asked what he saw as the biggest mistake being made by SMEs in protecting their IP from Chinese counterfeiting.  I expected Mr. Trainer to answer "failing to register their IP in China," because that is the most common mistake I see as a lawyer.  Mr. Trainer's answer was completely different, but hugely insightful.  According to him, the biggest mistake is to provide too much information on the internet, which makes it easy for someone in China to start duplicating.  This makes great sense because though registering one's IP in China does reduce the likelihood of your product being duplicated, it cannot be as effective as preventing counterfeiters from even knowing what to copy.

I agree with Mr. Trainer that SMEs have it much rougher in the global IP arena than huge companies like Starbucks or Nike, which have the resources to register hundreds of trademarks, patents, or copyrights in hundreds of countries around the world, including those in which they may not yet be doing any business at all.  SMEs simply cannot do this.  Nonetheless, my advice for SMEs with respect to China, specifically, differs somewhat from Mr. Trainer's global advice. 

In dealing with China, I suggest SMEs do the following:

1.  Before your company goes to China, you must register your IP there to protect it.

2.  Monitor what is happening to your IP in China and move aggressively to protect it.

3.  Even if your company is not going to China, if Chinese copying of your product is a real possibility, you should conduct a cost benefit analysis on registering your IP in China.

4.  If you have not registered your IP in China it is very unlikely it will be worth either your time or money to do anything about copying of your product or using of your trademarks in China.  However, you can and should do everything you can to prevent copied goods from entering into those countries where you do have IP registrations to protect you.

Oh, yeah, and do be careful about what you put up on your web site.