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How To Protect Your IP From China. Part 4.

Posted in Legal News

This is part four of a series arising from a speech I gave last month at a biotechnology conference in Washington DC.

In How To Protect Your IP From China. Part 1, I mostly looked at the risks China poses to intellectual property and very generally on how companies can determine how those risks should influence their actions.

In How To Protect Your IP From China. Part 2, I mostly focused on what I, as a lawyer, look at in trying to protect my clients’ IP from China and what you, the company, should be looking at and doing to protect your own IP.

In How To Protect Your IP From China. Part 3, I looked at the negotiating tactics Chinese companies so often employ in an effort to take advantage of your intellectual property.

In this, part 4, of this How to Protect Your IP from China series, I set out the basics regarding contracts with China.  At this point, it become particularly important that I emphasize that this post is coming from a speech. It is of particular importance here because for much of the following I used PowerPoint slides and then orally expounded on them.

Here are the keys to just about all contracts with Chinese companies.
  •     In writing  – oral doesn’t cut it.
  •     One language  — Two languages just doubles the arguments and thereby increases your attorneys fees.  Usually Chinese if Chinese court.
  •     Use excruciating detail
  •     Liquidated damages are a good thing
  •     Attorneys’ fees.  Sometimes makes sense, sometimes doesn’t.
  •     Dispute resolution.  Absolutely critical, particularly in cases involving IP.  US court is oftentimes the worst choice.
  •     Sealed.  If you don’t get the Chinese company’s seal on the contract, you can be sure they will argue that whoever signed it was not authorized to do so.  They probably won’t win on the argument, but it will slow down your case and increase your legal fees.
For more on what should go into a Chinese contract, check out How To Write A Chinese Contract That Works and How To Write A Chinese Contract That Works. Part II.  
Your contract should specify how disputes will be resolved:
  • Where?  US as typical no-go. Vancouver, Toronto, Singapore, Hong Kong.  Beijing, Shanghai.
  • What law?
  • Institutional or ad hoc?
  • Fees?
  • Language?
  • Arbitrators’nationality?

Arbitration in China is not as bad as you think, particularly if you tailor the arbitration clause to your situation:

  • Specify English language
  • Specify non-Chinese arbitrator(s)
  • Discovery?
  • Injunctive relief?
  • Third parties?
  • Notice?