Archives: IP rights

As China lawyers, we are all too frequently contacted by our clients who need help dealing with IP infringement in China.  As a first step, we analyze the situation and propose a course of action.  The following is an amalgamation of memoranda, done so as to convey both what goes on out there and how to deal with it.  Most importantly, however, it is intended to provide a path towards preventing IP infringement through proactive trademark and copyright registrations.

In reading the memo, please note that Company A is our client and the company to whom the memo is written.

Introduction.

This memo outlines next steps for dealing with the ongoing infringement of Company A’s intellectual property in China.

As you are already aware, Website1 and Website2 currently have multiple listings for unauthorized “Brand Name A” products: Website1 has listings for “The Brand Name A” ______ and “The Brand Name A” ______; Website2 has listings for “The Brand Name A” ______ and “The Brand Name A” _______. I am certain that we could find numerous other instances of infringement on other websites if we looked, but these are two of China’s biggest online marketplaces. For instance, we just ran a search on another leading e-commerce site, ______, and found a listing for “The Brand Name A _______.” This _______ is identified as having been published by “________ Publishing,” which we do not recall being one of your OEM suppliers.

To generalize, you are facing — and will continue to face — two main kinds of infringement: (1) the unauthorized manufacture and sale of products that you already produce (e.g., The Brand Name A _______) and (2) the unauthorized manufacture and sale of products that you do not already produce (e.g., The Brand Name A _________ and The Brand Name A _________).

Generally speaking, the most efficient way to enforce IP rights in China is with a registered trademark. China has no common-law trademark rights, which means that unlike in the United States, Company A does not have rights to the “Brand Name A” trademark with respect to every conceivable product in China. Indeed, the only way for Company A to obtain trademark rights in China on a particular product is for Company A to register a trademark covering such product. Right now, your trademarks in China only cover certain products in Class ____ (specifically, _________) and in Class ____ (specifically, __________________, sold as a unit). Nearly every other product — whether one you actually make (like ________ or _________) or one you do not make (like _________ or ____________) — is not covered by your existing trademarks.

Our recommendations follow:

I.  File IP Complaints with Website1 and Website2.

The fastest and easiest way to have infringing links removed from a Chinese e-commerce site is to submit a request to that site. Website1 is part of the ________ group of companies, and so you should be able to use your existing _______ account to file an IPR complaint. With respect to Website2, considering the past difficulties in communication that we have had with the company that runs that site, we recommend that we contact the supervisor at Website2 (with whom we have dealt in the past) who handles IP complaints, and submit a complaint directly to him, rather than having you submit such a complaint through their online form.

The above method should work fine with The Brand Name A ________ product, assuming the postings are not for the resale of legitimately purchased goods. However, it is possible that the above method will not work (and in fact it should not work) with the ___________product on Website1 or the ___________product on Website2, because your China trademarks do not extend to such products. We should nonetheless proceed as if the trademarks do extend to such products. We note that this method worked with Website2 before, largely because Website2 has shown itself to be relatively unsophisticated in terms of its understanding of trademark law.

II. Register Additional Trademarks with the Chinese Trademark Office

Even if Websites 1 and 2 both agree to take down all of the objectionable links, relying on Company A’s two existing China trademarks is not a viable long-term solution. We strongly suggest that you file additional trademarks to cover (1) all of the goods that you already sell, (2) any goods that you might sell in the future, and (3) any goods that you want to prevent anyone else from selling as a “Brand Name A” product.

This last category is the trickiest, for two reasons. First, how do you decide which goods to protect? You probably do not need to worry about “Brand Name A” carburetors or pianos. On the other hand, you probably should worry about “Brand Name A” candles and picture frames. (Some large companies with nearly unlimited budgets, like _________, simply file trademarks to cover virtually all possible goods.) Second, China has a use requirement for all registered trademarks: if you do not use a registered trademark in commerce at least once every three years, it will be at risk of cancellation. That said, China does not have an affirmative requirement to prove use; a trademark is presumptively valid unless a third party challenges it for non-use. This means that if you file a trademark solely to prevent a third party from using that trademark, it will be valid until a third party challenges it, but will be valid for at least three years.

We propose that we work together to come up with a list of classes and goods that will achieve the broadest trademark protection for Company A’s intellectual property. We suggest that you file any such additional trademarks for (1) the phrase “_____________” (2) “The Brand Name A” logo, and (3) any other logos or phrases that you would like protected.

It generally takes around 16 months to register a trademark in China, and you have no rights in a trademark until registration, so we advise moving quickly.

III. Register Copyrights with the China Copyright Protection Center

China’s copyright law is formally quite similar to that of the United States: a valid Chinese copyright exists at the moment a creative work is put into tangible form in any other country that is a signatory to the Berne Convention. However, as a practical matter Chinese agencies and courts do not take action on an unregistered copyright.

Registering your copyrights will allow you to take action against counterfeit Brand Name A products, whether or not the postings (or products) are identified as such. Armed with such copyright registrations, you could take action against (for instance) a bootleg _______ with another title on the cover, a _______ that is simply called a “_________” _______, and a ______ that contains the exact same content but with a different title.

We strongly suggest that you register copyrights for all copyrighted material created or controlled by Company A: your _______s, ________s, and _________s, and also any _________ that have a tangible form, whether as ________s, ________s, or otherwise.

It generally takes around three months to register a copyright in China. You have no enforceable rights in a copyright until registration, so we would advise moving quickly on this as well.

IV. Register Trademarks and Copyrights with China Customs

Registering your trademarks and copyrights in China establishes your rights in such intellectual property. Enforcing your rights requires additional steps. As noted above, to remove infringing postings it is virtually always necessary to contact the e-commerce site. And to stop infringing products from being exported from China requires, at minimum, that you separately register your trademarks and copyrights with China Customs.

Note, however, that China Customs only inspects large shipments. They will not inspect small shipments for infringement, primarily because they cannot determine whether such shipments represent counterfeit goods or legitimately resold goods.

Registration with China Customs is only possible after issuance of formal trademark and copyright certificates.  For this reason as well, we advise moving quickly with trademark and copyright applications.

V. Attempt to Identify Infringing Parties

Though fighting IP infringement in China can be like playing a game of whack-a-mole, sometimes it is possible to discover the identity of infringing parties. In many cases the infringing manufacturer has a connection to a manufacturer you are using to produce your goods. Sometimes they are one and the same. Needless to say, knowing the identity of the infringing party informs the potential actions that we can or will want to take.

We would be happy to discuss the possibilities for investigating the identity of infringing parties. At the very least, we should collate and analyze the information available online. To the extent such infringement becomes systematic and/or endemic, we should discuss further steps such as hiring third-party investigators in China.

VI. File a Complaint with AIC and/or File a Lawsuit

Once we have solidified Company A’s IP portfolio by registering the appropriate trademarks and copyrights and identifying serial infringing parties, we can consider taking formal action beyond requesting e-commerce sites to remove infringing postings. There are two main options for formal action:

(1) File a complaint with the Administration of Industry and Commerce (AIC), the national-level agency that handles IP disputes and enforces IP rights.

(2) File a lawsuit with a Chinese court that has jurisdiction over the defendant.

These approaches both have good and bad points. Filing a complaint with the AIC is usually cheaper and more likely to result in a quick injunction and/or a seizure of the infringing goods. However, the AIC does not have the power to award monetary damages for infringement or to require indemnification; for that, you would need to file a lawsuit.

Note that for both of the above approaches for dealing with China IP infringement, the identity and location of the infringing party makes a big difference. If the infringing party is a large state-owned enterprise, or is the major employer in a smaller city, the chances of either the AIC or the local courts taking meaningful action go down

We are not at this stage yet, so it would be premature to outline a formal strategy for pursuing infringers. But generally speaking, we would work with our partner law firms in China to formulate the best strategy for you.

Conclusion

“The Brand Name A” has become a famous brand in America and beyond, and because of that you will inevitably be facing increasing intellectual property infringement in China. To fight against this we recommend that we move forward with (1) filing IP complaints with Websites 1 and 2; (2) registering additional trademarks in China; (3) registering copyrights in China; and (4) registering your existing trademarks with China Customs.

We spoke with a software company the other day that has nearly fifteen “independent contractors” in China, who it views as “part of the corporate family.”  This company was contacting us to see about forming a WFOE in China.  They told me that they were not in any rush.

The first thing I did was to ask whether they knew that what they were doing in China is completely illegal. They did not.  I explained to them how there is almost no such thing in China as an independent contractor and that they essentially had nearly fifteen employees and because there was no company actually employing those fifteen people, what they are doing is illegal. I then told them of how China in the last year has stepped up even more its efforts to rid the country of foreigners there illegally and companies there illegally.  I also told them of how their existing structure puts all of their China assets at huge risk. Their China IP assets are at risk for the simple reason that they do not really own them.  A company operating illegally in China is just not positioned to be able to assert IP rights against anyone in China.  Their other China assets are at risk because the Chinese government will likely seize them if and when it cracks down on what they are doing.

They seemed very interested in going legal until I started laying out how doing so would greatly increase their China operating costs.  I told them how their forming a WFOE would necessitate their incurring the following additional costs/expenses:

  • WFOE formation fees and costs.  They expected this.
  • They would need to lease office space from an approved landlord.  This is a requirement for WFOE approval.  This would likely increase their office rent.
  • For every $1,000 in employee salaries, they would probably need to pay about $400 (40%) in employer taxes and benefits.  They were not expecting this at all.
  • In addition to the employer taxes, their employees will need to start paying income taxes. They seemed to think that their “independent contractors” are already paying all required taxes. I told them that I am virtually certain that they are not, and that their going legal will almost certainly lead to their “independent contractors” demanding higher salaries to make up for their take home pay being reduced by having to go onto the tax rolls.

I then talked of the advantages of having a WFOE, including the following:

  • You are operating legally.  Your risk of the government shutting you down tomorrow has essentially disappeared.
  • You are much better positioned to do real business in China, because you are legal.
  • You are much better positioned to protect your IP in China, because you are legal.
  • You are much better positioned to terminate employees because you do not need to keep them on forever for fear of their reporting you to the authorities.

After this phone call, I spoke with China-based co-blogger, Steve Dickinson, for the latest on how China’s government is treating foreign operations with multiple people working for them in China. Steve pointed out how the Chinese government is aggressively pursuing tax evasion claims against both the “independent contractors” and those connected to the illegal business. The government pursues the “independent contractors” for failing to pay their own taxes and it pursues the foreign business for Chinese income tax and related national and local business fees and taxes. Most importantly, the government also seeks to take action for back taxes against any representative (i.e., individuals) of the foreign company who happen to come to China. When the number of illegal employees is large, the claim for back taxes can be quite large. Often, the tax authorities time their raid on the illegal business to ensure that a representative of the foreign company is on site and, in many cities, they will not let the foreign representative leave China until after resolution/payment is achieved.

In other words, doing the “independent contractor thing” without having a registered business in China is asking for trouble.  Big trouble.

What are you seeing out there?

New Zealand Trade and Enterprise, an NZ governmental agency tasked with helping NZ companies grow internationally is out with an excellent 80 page primer for small and medium businesses looking to make it in China (h/t Dragon Business Network Blog). It really covers the field of what SMEs need to know about China, and though it is nominally aimed at NZ businesses, virtually all of what it says apply to businesses from just about any country.

The whole thing is worth a read, but I particularly liked its short and clear recitation of how companies should deal with protecting their intellectual property in China. On that topic, the primer had this to say:

It is advised that you seek professional legal advice before seeking enforcement of your IP rights. In order to protect your IP rights you should:

  • Consider which products need to be trademarked, not only now, but in the future.
  • Protect your Chinese-Language marks in addition to your New Zealand marks.
  • Defensive registrations may be needed for similar sounding marks as well as in other product categories and classes.
  • Be aware that a mark registered under the food class will not be able to stop someone from using that mark on a clothing product.
  • Do not be too trusting with pictures and drawings of your product and do not put detailed descriptions on your website.
  • Keep all IP documents safe to ensure a complete audit trail if litigation is required.
  • When entering into collaborations with Chinese partners or agents, ensure you have signed contracts that protect your rights and ensure there is a written agreement as to who owns what.
  • Ensure confidentiality agreements are in place as well as non-competition clauses in employment contracts.
  • Register all of the rights that you can – patents, trademarks, and copyrights.
  • Remember – the cost of registering is far cheaper than the cost of litigation.

You also need to be aware that China’s IP laws are different to New Zealand’s IP laws in that China’s system is based on a ‘first to file’ principle rather than the ‘first to use’ or ‘first to invent’ principle. Your rights are not recognised if they are not registered. New Zealand businesses need to be cautious and aware of this difference as people may have already set up your trademark and then try and sell it to you. It is also important to note that you cannot submit trademark applications directly. You must use a designated agent to file for you.

Do not let the potential threat of IP rights violations deter you from entering the Chinese market. China is continually improving the law and application of the law in this area. To manage these risks, we recommend seeking professional advice on specific circumstances before entering the Chinese market.

Do check it out and let us know what you think.

Come one come all, guaranteed millions to be made/saved in China.  You already knew about the 1.3 billion middle class consumers salivating at the opportunity to buy our cell phones and iPods, but did you know your intellectual property (IP) fears are completely groundless, you can achieve full-on guanxi by spending ten minutes a day on it for less than a month, and great scientists are cheap and plentiful.  Yes folks, China is on sale right now at 80% off, and anyone who does not bring their biomedical company there will be missing out.  This sale runs through Friday, and does not include previously discounted merchandise.

Okay, so I am exaggerating a little bit, but after reading this short article entitled, “China Generates New Opportunities for Biomedical Companies,” written by, Greg B. Scott, I do feel ready to have my biomedical company up and running smoothly and cheaply in China within the month.

Did you know:

  • China is a huge market with low costs.
  • Despite its challenges (never really mentioned), life science companies see “the immediate benefits and potential promise and are launching R&D, clinical, manufacturing and distribution operations in China.”
  • China is developing, new, “cutting-edge compounds and medical devices,” “unfettered by the U.S.’s conservative political climate”;
  • Drug development costs in China are 80% less than in the U.S., and outsourced manufacturing of drugs and devices can be less than 1/10 the cost;
  • China’s “potential market for healthcare products of 1.3 billion people is aging more rapidly than any other country, and its middle class of over 250 million is projected to double to 500 million by 2020.”
  • “There are over 2,000 Chinese-foreign joint ventures in the biomedical sector, including major players like Roche, Novartis, GSK, Pfizer, Medtronics, Becton Dickinson and Inverness Medical, just to name a few.  Most are significantly expanding their operations and are investing heavily in research and development to move beyond just manufacturing and distribution.
  • “China is encouraging foreign investment in the life sciences by subsidizing foreign investment organizations and deregulating venture capital.”
  • “Drug development costs are not only 80% lower than those in the U.S., they are at least 50% less than most other OUS [outside United States?] markets. The low cost of medical supplies services and animal and primate studies contribute to this.”
  • “There is a large population of highly-educated scientists trained at the more 170 medical schools and 120 biomedical research institutes in China available at 1/10 the equivalent U.S. salaries.”
  • “IP protection is definitely improving, with patent laws now compliant with WTO/TRIPS requirements, increased legal enforcement supported directly by the SFDA, and an IP rights team from the USPTO now located in China.

The article goes on to highlight a few examples of American biomedical firms doing business in China, including HUYA Bioscience International, Inc., described as “the first company to in-license a compound from a Chinese biopharma for clinical development in the U.S.”  Bridge Pharmaceuticals, which “just opened its 100,000 square foot facility in Beijing, which is said to meet U.S. standards for preclinical drug development.” AVIVA Biosciences Corp. a diagnostics products development company with a clinical research facility in Beijing.  TargeGen, a private company using small molecule medicinal chemistry to focus on vascular biology, which “has continued to expand its relationship with Wu Xi PharmaTech Co. Ltd. of Shanghai, a leading drug R&D service company with 1,400 scientists and over one million square feet of research and GMP manufacturing space.”  On top of this, “several VCs have established programs to review investment opportunities in China, including WI Harper, Burrill & Co., IDG-Accel, Kleiner Perkins, Granite Global, Enterprise Partners, Paramount BioSciences and Panorama Research.

But, according to the article before you just fly over to start doing business in China, you should know the following:

  • “The Chinese are strategic thinkers. They have grown up with The Art of War and The 36 Strategies, both from the Warring States era (476-221 BC), as the basis for their approach to negotiation. This often involves manipulation and deception and drawing out as much information from your opponent as possible, while being “as unfathomable as the clouds” yourself. This is somewhat counter-intuitive to Americans, who (generally) believe that openness and clearly defined objectives are key to long term relationships. “
  • The state is involved in almost everything in China. If you are looking to in-license a compound, it will likely be from a State University or a State-Owned Enterprise (SOE). If you want to register your VC firm or establish a business entity or joint venture there, you must deal with a variety of local, provincial and state officials.”

But now that you know that, the next thing you must do is “select someone who understands China’s rapidly changing biomedical industry and business environment and who can build trusted relationships (guanxi) with your potential partners. This will save you time and expense by quickly identifying viable business partners and establishing the initial contact on your behalf. It will also save you many 20 to 30 hour round-trip flights, as you establish your company’s guanxi in China.”

So now you have all you need to go forth and prosper.  Better yet, just get going now and read the article on the plane. Time is a wasting…

In response to yesterday’s post containing outsourcing tips from a business perspective a reader sent me an e-mail asking what to look out for on the legal side.  Fortunately, I was able to find a short article fellow blogger Steve Dickinson had published a few years ago on just this topic.  Here it is:

Many small and medium sized companies that engage in OEM manufacturing/outsourcing in China fail to take the steps necessary to protect themselves. When problems arise, they can do little or nothing to protect themselves because they have no legal basis for protection. The fact is that outsourcing disputes must be resolved in China, under the Chinese legal system. The Chinese legal system has improved greatly over the past ten years and taking a few basic legal steps can greatly reduce your risk. The cost of such protection is modest compared to the protection it will provide.

The following five basic steps will greatly reduce your problems with Chinese manufacturers, while improving your chances of recovering should any problems arise.

  • Create and properly register your intellectual property rights in the United States. If you do not have a firm basis for your IP rights under US law, you will have nothing to protect in China. Before you go to China, be sure your intellectual property is protected under US law. Protect your brand identity by creating and registering your trademark, slogan and logo with the US Patent and Trademark Office. Register your important copyrights with the US Copyright Office. Carefully identify and protect your trade secrets, proprietary information and know how.  All of this will help prevent Chinese copies from entering the United States.
  • Register your trademarks in China. Registration can protect your future access to the Chinese market, prevent the export of counterfeit goods from China, and prevent a competitor from registering your mark in China, which would prohibit you from exporting your own product from China.
  • Use a written agreement to protect your know how and trade secrets in China. Small and medium companies usually do not have an extensive portfolio of patents. Their most valuable intangible assets typically are their know how and trade secrets, which cannot be protected by formal registration. Chinese law, however, permits companies to contractually protect their know how and trade secrets by contract. Such agreements may also address issues such as non-competition and confidentiality. Without such a written agreement, virtually no such protection is available.
  • Product Quality and Payment Terms. The rule here is simple. Do not make final payment to your Chinese manufacturer until you are confident you will be getting an on time shipment of the correct items and quantities at the quality standards you require. This usually means you must incur inspection costs in China and provide for a clear procedure for dealing with these problems as they arise. You must take the lead on this. You cannot depend on the OEM manufacturer to do this for you.
  • Use comprehensive OEM Agreements with each manufacturer. Small and medium sized businesses often enter into OEM manufacturing transactions with a simple purchase order. This is a mistake. The purchase order will protect the Chinese manufacturer, not you. Your protection depends on your securing a written OEM manufacturing agreement with each Chinese manufacturer with which you deal. The ideal OEM agreement will address all of the issues discussed above while also addressing other basic legal issues such as jurisdiction and dispute resolution. This agreement should be in both Chinese and English, since the Chinese language version will control in China.

Above all else, remember that if you are outsourcing to China you are in effect doing business in China and you need to adjust accordingly.  All of this was true a couple years ago and all of this is true today.

According to The Shanghai Daily, [link no longer exists] Danish clothing company, Aktieselskabet Af 21 November 2001, owner of the Only, Vero Moda and Jack & Jones clothing brands, has sued “eBay’s China arm,” eBay Eachnet, in a Shanghai court, for allegedly allowing counterfeit sales on its website.  Aktieselskabet is seeking $25,000 in damages, a public apology, and an end to the sales.

My one minute Internet search revealed Aktieselskabet has brought legal action in the United States, Canada, and Australia to protect its trade-names.  Aktieselskabet Af 21 November 2001 uninspiredly means “The November 21, 2001, Limited Liability Company,” which might help to explain why the company is so protective of its clothing brand names.

According to this Xinhua story, eBay claims it simply provides “a platform on which registered users publish dealing information by themselves.”   EBay also makes the rather interesting claim that even though it charges for this service, it “never profit[s] from the deals carried out on it.”

EBay also says EachNet has its own “IPR [intellectual property right] protection system” and “trademark owners will get good protection after registering on the system.”  Aktieselskabet apparently never registered.

IP enforcement in China is obviously not as good as in places like the United States, Japan, or the EU, but it is much better than widely believed. And it is certainly much better than the Western media presents it.  On top of that, we are seeing constant improvement and we have noted some of that here, here, and here.  We also contend that much of what the Western press describes as China’s IP problems (particularly in the area of trademarks) frequently stem from IP mistakes made by foreign companies, rather than from unfair or lax enforcement by Chinese courts.

A reader from New York City alerted us to an interesting press release [link no longer exists] from NERA Economic Consulting.  NERA has twenty offices worldwide and is a leading international economist firm.  It is a part of Marsh & McLennon, a financial conglomerate which, at one time, had its Seattle office in my building.

Nera’s press release touts a recently published article by NERA economists on intellectual property rights in China that concurs with our view that Chinese IP enforcement is rapidly improving:

Dr. Alan Cox and Kristina Sepetys cite the growing Chinese economy, more sophisticated laws, and greater attention to enforcement as reasons for the increase in Chinese intellectual property rights infringement cases. Their article, “Intellectual Property Rights Protection in China: Litigation, Economic Damages, and Case Strategies,” appears in the new book, Economic Approaches to Intellectual Property: Policy, Litigation, and Management, edited by NERA economists Gregory K. Leonard and Lauren J. Stiroh.

The number of IP rights infringement cases being brought before Chinese authorities is still relatively small, and the fines and damages awarded are low compared to those in the US and other industrialized countries. But Cox and Sepetys write that these conditions are steadily changing. “In addition to the international concerns, there is more intellectual property being generated in China and with it a greater domestic interest in the protection of intellectual property rights and enforcement of IP laws. The combined effect is to increase the number of people being arrested and fined for IP violations,” Alan Cox said.

As part of this trend, Chinese and foreign companies are increasingly using the Chinese IP laws to their advantage. For example, in July 2004, the State Intellectual Property Office of the People’s Republic of China (SIPO) invalidated Pfizer’s Chinese patent for Viagra — the first time Chinese companies pursued legal remedies challenging a Chinese patent owned by a foreign company. A Chinese peripheral maker, Netac Technology Co., also recently sued Sony Electronics for USB flash memory disk patent infringement.

There is a very real basis for believing Chinese courts will protect your IP rights, but to secure even that protection, you must properly register your IP with the appropriate Chinese authorities. If you are doing business with China, registering your IP there is absolutely essential.

Asia Business Intelligence Blog ran an interesting post yesterday on Chinese counterfeiting.  According to the post, approximately 8% of China’s GDP may come from counterfeiting.  Asia Biz starts out by analogizing China’s counterfeiting with past counterfeiting by Taiwan and Japan, but then veers off into philosophizing that the Chinese view of law is at the heart of the widespread counterfeiting there:

My strong impression from readings and discussions on this subject is that mainland Chinese view the law as but a tool — a means to an end — whereby individual gain can be gotten at the expense of a rival. They do not respect it as a particularized expression of an encompassing framework established to protect the welfare of the populace at large, despite sloganeering to the contrary. The law is for “me,” but not, more importantly, for “us.”

Until that conceptual foundation has been built — who knows when and if, despite the work by many brilliant intellectuals — the rights you hold in your intellectual property will be the object of stubborn disrespect and counterfeiting will continue to be a staple of the Chinese economy.

I agree and I disagree.

I agree with the analogy to Taiwan and to Japan, but I disagree that there is something “Chinese” about counterfeiting.  I have said it before and I will say it again: as China’s economy continues to grow, and as Chinese companies themselves continue to innovate, enforcement of IP rights will increase in China.  Just as it did in Taiwan and in Japan (and I would add Korea to this list), increased wealth will lead to increased IP protection.

Only time will tell who is right on this.  In the meantime, don’t just throw up your hands and say “that’s just China.”  At minimum, you must explore options to protect your IP and your brand.

Good post on IP Dragon, entitled, “When will rampant piracy in China stop? Mark Cohen: ‘Don’t know.’ Bill Gates: ‘2016,'” asking when China’s rampant piracy will end.  The post extensively quotes Mark Cohen, a U.S. intellectual property (IP) lawyer sent to China by the United States government to work on improving China’s IP protection.  Great quote from Mr. Cohen: “The question is not, is there law?  It’s what law is being enforced and where?”

Our view is that the more the Chinese courts and officials come to realize IP enforcement is in China’s long term business interests, the greater the enforcement.  We are already seeing greater IP enforcement in China’s biggest cities where the benefits of foreign investment are readily apparent, and we see this spreading.  It is also true that many lower court decisions refusing to enforce IP rights are getting overturned by the higher courts.  As we mentioned in a previous post, “Another Foreign IP Victory In China — Ferrero Rocher,”even the Voice of America [link no longer exists] recently noted that “[s]everal Western multinationals have won copyright piracy cases against Chinese companies in recent weeks.”  We are also seeing Chinese lawyers increasingly recognize the need to protect their client’s IP rights.

The key for businesses involved in China is to register their IP so that if someone seeks to copy it, they will have a basis for court protection.

The Tianjin High Court ruled last week in favor of Italian Chocolatier, Ferrero Rocher, in a case against a Zhangjiagang Food company involving copycat chocolates.  The court ordered the local company to immediately stop producing the copycat chocolates and to pay $87,000 in damages.

This actually prompted the Voice of America to remark that “[s]everal Western multinationals have won copyright piracy cases against Chinese companies in recent weeks.”

We see this decision as additional proof the Chinese courts (at least the higher level ones) will enforce properly registered IP rights, even on behalf of Western companies against Chinese companies.  Though some may question the low amount of damages, Ferrero Rocher has to be quite happy with the court’s cessation of production order. The fact this decision came out of Tianjin (as opposed to Shanghai or Beijing) is further proof Chinese courts are beginning to take seriously their role in protecting IP rights.