I have given four China law speeches in the last month (two live and two via webinars, here and here). Three out of the four talks generated questions as to whether what I had said applied to Hong Kong or to Taiwan. My answer in all instances was a resounding “no.”
Mainland China has its own legal system, separate and apart from Taiwan, Hong Kong and Macao. In thinking about the laws of those places, you should think of them as different countries. Now there are definitely some instances where the laws in Mainland China are different for companies and/or legal matters coming from Taiwan, Hong Kong or Macao, but those instances are not terribly common and they become even less common when the matter involves a Western company. Your default position should always be to assume that the laws are different and to always assume that whatever you do in the PRC will not carry over to Taiwan, Hong Kong or Macao.
For example, when we do NNN Agreements for our clients, we make clear that the Agreement we will be drafting “will apply only to PRC China manufacturers. It does not cover Taiwan or Hong Kong or Macau companies that may handle manufacturing for you as intermediaries. If you will be dealing with companies from Taiwan or Hong Kong or Macau (or from any country other than the PRC), please let us know so we can make allowances for that.” We do the same thing for our OEM Agreements as well. In my future talks, I am going to early on make clear that my speech is confined to the PRC.
I thought of all this today after reading a post on the China IP Insider Blog, entitled, IPR: A territorial animal, emphasizing how intellectual property rights are “territorial” and what you register outside of China does not constitute registration in China:
Since working on the China IPR SME Helpdesk I have organised and attended scores of events on various intellectual property (IP) topics. Following presentations from legal experts we always allow some time for a question and answer session. The most common question asked by European businesses is a variation of the following question:
“If I have a (insert trade mark or patent) registered in (insert EU country). Is it valid in China?”
The answer is easy; it’s a resounding no. Intellectual property rights are territorial due to the fact they are offered and governed by each country’s legislation. Although some international treaties exist, they generally only facilitate the application process in different countries.
The post goes on to note that the fact that China currently exists in a “one country, two systems” situation only exacerbates the confusion, but that “the IP systems in Mainland China differ from those in Hong Kong, Macau and Taiwan and different registration is required in each territory.” It then does a really nice job postulating as to why so many people get it wrong regarding the universality of IP registrations:
Through dialogue with many European Helpdesk users I have identified that one reason why many people presume IP rights skip borders is that intellectual property is sometimes considered a moral right. Additionally, with such easy access to information internationally through the internet it is very possible that a trade mark registered in Italy for example can easily be seen by a Chinese competitor if the Italian company uses the internet to sell or market their product.
And as to why this mistaken belief in the universality of IP can be so deadly:
Unfortunately this can lead to problems for your European business. China is a first to file system which means that the first person to register the trade mark is the legal owner in China even if the trade mark has been used by a different company in another country. Whether obtained morally or not, possession is not just nine tenths of the law, it is the law!
It concludes by advising that the “best way to protect your intellectual property therefore is to protect it in every market you operate in (manufacture, sell, may move into in the future etc.),” or as we say here, File Your Trademark In China. Now.