Archives: protecting your China IP

What with we lawyers needing to complete our Continuing Legal Education (CLE) credits before the end of the year, my November and December are jam-packed with speaking engagements.  In the hope that some of our readers will be able to attend one or more of these events, I will briefly set them out here now and then discuss them in greater detail in the coming days/weeks. We are always getting emails from readers looking for “good China conferences” and this post is in answer to those, with an international trade conference thrown in for good measure.

1.  November 8, 2012, Chicago, Illinois.  I will be on a panel at the 2012 PLUS International Conference discussing “The Evolution of D&O Insurance in Asia.”  I will mostly discuss the risks that foreign companies have been facing of late in China, arising, at least in part from the downturn in China’s economy.  My short speech will deal with some of the same issues raised in my recent Wall Street Journal article, “China’s Slowdown and American Business,” but focus more on insurable risks. My co-panelists will be the following:

2.  November 12, 2012, Seattle, Washington.  I will be moderating a panel at the Annual Washington Trade Conference, put on by the Washington Council on International Trade.   The entire day is devoted to international trade policy.  Governor Christine Gregoire, Senators Maria Cantwell and Patty Murray, Commissioner Meredith Broadbent of the U.S. International Trade Commission, and U.S. Representative Adam Smith, are all on the program.  My panel is on “Challenges and Opportunities for Washington Services Exports” and it consists of the following:

3.  November 15, 2012, San Juan, Puerto Rico.  I will be speaking on  “What You Need to Think About When Doing Business in China – A Legal Perspective” at the 19th World Offshore Convention.

This is an excellent conference, at which I spoke in Shanghai last year. Last year’s conference lived up to this year’s promise to “reveal real life, tried and tested solutions together with bold alternative strategies for those forward thinking international financial professionals and wealth managers committed to being at the forefront of this ever changing industry.”

4. December 7, 2012, New York City.  I will be speaking on China IP at a conference on Protecting Intellectual Property in a Global Economy – Was it Made in China and Stolen from America? This conference is being put on jointly by HB Litigation Conferences and Bloomberg BNA.  I have spoken previously at HB Litigation conferences and they have been uniformly excellent.  The upcoming conference is to have the following “eight central topics”:

  1. The Threat to U.S. Companies Posed by Foreign Entities
  2. Economic Espionage Act Prosecutions
  3. Understanding the Eastern Business and Cultural Perspective
  4. Litigating an Infringement Case with a Chinese Company
  5. Evaluating the Threat of Computer Hacking
  6. The Dangers of Counterfeiting
  7. Protecting Intellectual Property in China
  8. Negotiating Supply Chain Agreements

The conference is being chaired by August J. Matteis, Jr. and Peter J. Toren of Wesibrod Matteis & Copley and Beau Oliver, and Sean Page of Toffler Associates. Matteis and Toren were the winning lawyers in a recent USD$26 million copyright/design misappropriation case against a Chinese tire manufacturer.  The following people are also on the faculty:

  • Helene Kim, Executive Director of International & Executive Legal Programs at UC-Berkeley Law School
  • Julie Myers Wood, President of Compliance, Federal Practice and Software Solutions for Guidepost Solutions
  • Paul Maric with the Federal Bureau of Investigation’s Economic Espionage Unit.
  • Spring Chang, Attorney at the China law firm Chang Tsi & Partner
  • John Falk, President and CEO of Vigilent Inc
  • Donald McPhail, Attorney at Cozen O’Connor
  • John Gibbons, Senior Managing Director of Investigations at Guidepost Solutions
  • Shaun Kennedy, Director of the National Center for Food Protection & Defense
  • Angelo Mazza, Attorney at Gibney, Anthony & Flaherty
  • Stephen Weisbrod, Attorney at Weisbrod Matteis & Copley
  • Jordan Fishman, Inventor of the tires at issue in the USD$26M case mentioned above.

I will be writing more on this conference shortly, but right now I urge you to attend by writing to HB’s Managing Director Tom Hagy at tom.hagy@litigationconferences.com or by calling him at (610) 312-4754.  Tom has promised me that if you mention “China Law Blog” he will give you a “special price.”

5.  December 13, 2012, Seattle, Washington.  I will be co-chairing a seminar on “The China Market: Selling Products and Services in the New China.”  As you can tell by the seminar’s name, its focus will be on China as a place to make money, not so much to save money.  I will be writing more on this conference as it approaches.

If anyone has any questions regarding any of the above, please let me know.  Otherwise, I will see you there.

Okay, so the title is a bit of an exaggeration, but it is true, at least to a certain extent.  I just read two articles that got me to thinking about this.

The first article, “The footwear firm that gave counterfeiters the boot,” is by BBC reporter Kim Gittleson. Ms Gittleson extensively interviewed me for the article, but I ended up getting two small quote lines.  One had me repeating my usual mantra on how if you do not register your IP in China, you are not entitled to complain when it gets taken from you in China:

Dan Harris, an international lawyer with Harris & Moore and author of the popular China Law Blog, says that while American companies have got smarter about protecting their products, there is still one golden rule.

“The key is if you don’t register you’re intellectual property – your trademark, your copyright, your patent – you have pretty much no chance,” says Harris.

For more on the need to register your IP in China meme, check out “China IP Protection. Deja Vu All Over Again” and “An ABC To Losing Your China IP.”

My other quote is more interesting:

But, he [me] adds, focusing on how to protect your business can drive you crazy – and at the end of the day: “Sometimes you have to ignore it and focus on making money.”

I like that one and here’s why.  Far too often foreign companies come to our firm almost debilitated with fear about doing business in China, to the point that they have left big money on the table seeking to protect what simply does not need protecting. Of course you should be concerned about protecting your IP in China, but at the same time, you should weigh that concern against the money-making or money-saving opportunities China can give your company.

The second article, “Retirement Living World China 2012 – Day 1,” [link no longer exists] has Ben Shobert writing on the Retirement Living Conference that just started in Shanghai.  Ben writes about an “interesting insight” on China IP revealed by Kevin Ryan of Waterbrook Xian:

He [Kevin Ryan] also offered up what I found an interesting insight into one concern he had that has been alleviated over the last year; specifically, his concerns over intellectual property theft in the service realm related to senior care have not proven out. Kevin shared “my thinking on IP has changed 100% … I now think that the ongoing management expertise is what will create long term value, that is something that can’t be thrown away.”  Western operators have this IP and while some Chinese developers and prospective operators may believe they can easily copy this, Kevin is confident his long term capabilities and know-how are components of his business model that he can continue to leverage and protect.

For those who think that Kevin’s comments on IP make too little of this potential issue, it is worth pointing out that while China does have a well-earned reputation for IP theft, the country’s ability to take IP in what are commonly known as service or highly intangible industries has not been as much of a problem for foreign operators.  The best example of this, and one that is quite relevant to the senior care sector, is of course the hospitality industry in general.  As I was reminded during a meeting Monday, the hospitality industry in China is still dominated by foreign operators whose primary point of distinction is a brand that offers foundationally better customer experiences than what their Chinese competitors can offer.

Ben’s and Kevin’s comments surprised me a bit in that it would not have occurred to me that a senior living facility would be so concerned about IP protection.  I too do not want to make light of this industry’s IP protection needs (especially since I am certainly no expert in this industry), but it seems to me that about all they would typically need would be strong protections against others stealing their trademarks (their name, their brands, their logos, etc.) and good employee contracts setting forth the trade secrets their employees cannot take with them.

Not saying that you should stop worrying entirely about your IP in China because protecting your China IP is obviously important. Just saying that you should not allow yourself to put too high a priority on this one aspect of your business.

What do you think?

Client just sent me a link to a United States Government internet “brochure” on “Protecting Your Intellectual Property Rights in China” [link no longer exists] along with a note saying “this is what you are always saying.” It is what I am always saying, and though this information appears to be about ten years old, near as I can tell, all or virtually all of it is still current and still on point.  It provides a very clear, blissfully short overview of China’s intellectual property laws and then provides an excellent list of what it calls “major players” in China intellectual property. For anyone starting out in China and confronting the issue of how to protect your intellectual property (IP) there, I highly recommend this site.

CNN China correspondent Lara Farrar, just wrote an excellent story on China’s efforts to boost its intellectual property protection so as to better enable it to become an innovation-based economy. The article is entitled, “Keeping things safe: China aims to boost its intellectual property rights,” and it nicely highlights Beijing’s increasing emphasis on IP and it extensively quotes CLB’s own Steve Dickinson

It begins by noting how Beijing is seeking to move China from a manufacturing economy to an innovation economy and how this plan includes increasing annual patent filings to two million by 2015. Last year China’s intellectual property office granted 815,000 patents, itself a 40% increase from the year before. 

The article then gives Steve THE call out quote: “If you don’t think you are going to get sued in China, you are crazy.” Steve was referring to how Chinese companies are getting increasingly aggressive at protecting their own IP and they will not hesitate to sue foreign companies they see as infringing on their intellectual property (IP). The article notes how 30,626 intellectual property rights cases were filed in China in 2009, a 25% increase from the previous year. Amazingly, all but 117 of these cases have already been resolved.

The article rightly stresses the importance of registering your IP in China because if you do not register your IP there, you have no protection there:

“If you do not register your IP (intellectual property) in China, that is the equivalent of giving your competitor a royalty free license. If you don’t get a Chinese patent that means you have no right to sue.

“[The Chinese] say that if you don’t come to China to file, you cannot accuse us of not respecting your own intellectual property because you don’t even care to go to the Chinese patent office.

“If China is your largest market, it makes sense for you to budget the most to protect your intellectual property in that market. There is no magic to that.”

In 2010, international patent filings from China totaled 13,000 applications, a 61% increase from 2009, the China Daily reported. Dickinson believes that it is only a matter of time before China’s domestic courtroom battles are replicated on the international stage.

“Intellectual property is one of the main areas of litigation [in China]. They are really after each other on these issues. They for sure will start to take it overseas. There is no question. The only question is the where and how,” he said.

Stan Abrams of China Hearsay concurs: “They are going to be acting like foreign companies in other markets and what do foreign companies do in those markets? They do things like enforce their patents or participate in litigation. The Chinese are going to start doing these in greater numbers.”

I recommend you read the full article here.

Danny Friedmann of IP Dragon wrote a great post entitled, “How to prevent and act upon intellectual property rights infringements in China” that very nicely (and succinctly) sets out exactly how to accomplish that. 

Friedmann states that intellectual property infringement is prevalent in China “and a challenge for every company in every industry” but those companies that “take adequate precautionary measures,” “anticipate infringements,” and “aggressively enforce their rights … can substantially minimise their risks and damages.” Danny is absolutely right.

Friedmann advocates companies do the following to protect their intellectual property in China:

  1. Be prepared.
  2. Do your homework. Know the people with whom you are doing business. Get them to sign a “confidentiality agreement [non disclosure agreement, or NDA] beforeyou hand over any sensitive business information.” Make sure your contract is clear on who owns what IP rights. “If a potential business partner refuses to sign the contract, find another business partner.”
  3. No registration equals no right. With the exception of copyrights, if you do not register your IP in China, you almost certainly have no IP protection. In other words, you must register your trademarks and your patents in China to have your trademarks and patents protected in China.
  4. To trust is nice, to control better. Know what is going on with your IP in China at all times and use “several anti-counterfeit technologies.” In other words, do not rely solely on the law to protect your IP in China. 
  5. Be ready to enforce.  The post then describes the various enforcement options, including administrative, civil and criminal, and where to go for additional information.

A very good post and a must read for anyone interested in protecting their IP in or from China.

Stan Abrams over at China Hearsay is (or will be?) speaking on China intellectual property at an IP conference for SMEs in the Netherlands and he has mapped out on his blog what he is going to say. And here it is:

1. Register your IP as early as possible.
2. Don’t sacrifice IP protection for speed (i.e. don’t jump into the market before you take care of your IP).
3. Have a well-crafted, reasonable, and feasible China IP plan in place before anything goes wrong.
4. Do your homework (keep your eyes open for infringement and listen to your distributors and agents).
5. Check up frequently on licensees, distributors, agents, and manufacturers.
6. Avail yourself of all reasonable enforcement measures (after doing a cost benefit analysis of course), but understand the obstacles involved.

Couldn’t have said it better myself.

Just came across a great article on protecting your IP in China. It is by Godfrey Firth, who is with the Business Advisory Services at the US-China Business Council in Shanghai and it is entitled, “The best offense is a good defense—and vice versa.” [link no longer exists The article outlines virtually all of the basic strategies applicable to protecting various types of intellectual property in China, while at the same time, it provides a broad overview for the layperson.

Firth’s thesis is that a “successful China IP protection strategy needs to encompass both offensive and defensive elements.”

Firth sets forth “some practical measures” foreign companies doing business in China need to take to protect their IP in China, rightfully noting that the “specific measures a company adopts will vary depending on the company’s industry and level of involvement in the China market.”

Firth calls on companies to make protecting their IP in China a responsibility of everyone in the company, not just the lawyers. He suggests companies communicate and enforce a clear IP protection strategy throughout the company by “communicating the value of protecting IP to all employees, business partners, and customers” and by “instilling a sense of ‘ownership’ of company IP in staff.”

He then lists measures companies can use to protect their IP. He notes that since China is a “first to file,” not a “first to use” country, companies must register their IP in China as soon as possible. For trademarks, he suggests companies register their brands in both English and Chinese and carefully select the categories and subcategories in which they file. For patents, he notes china offers design, invention, and utility model patents and he suggests companies should generally file “both utility and invention patents for the same item, since utility patents receive little substantive review and are usually easier to acquire. Once an invention patent is granted, the utility patent can generally be dropped, as utility patents last only for 10 years from the date of application, compared to 20 years for invention patents.” Though registration of copyrights is not required to secure protection, companies should nonetheless “consider registering their works with the National Copyright Administration (NCA), since registration provides a public record and serves as useful evidence in court.” He correctly notes that registering software copyrights “may be quite sensitive, since it may require providing some source code to NCA.” Lastly, he states that companies should consider trade secret agreements as an additional means of protecting their IP

Firth then lists the following non-legal means for protecting IP:

  • Design your product so it is difficult to copy and “compartmentalize the production process so that no single unit can produce a complete product.” Outsource different parts “to different companies to minimize the risk of inadvertently creating a new competitor.” If possible, keep your “key technologies and procedures” and “vital designs or latest-generation technologies” in your home country.
  • Know who you are hiring and make your employees sign non-compete and non-disclosure agreements (NDA).
  • Conduct due diligence on your potential and current suppliers and distributors. Research their networks and identify weak points through which counterfeit products can enter distribution. Select partners with reputations of their own to protect. Include IP protection clauses in your contracts with them.
  • Keep a close eye on competitors by, among other things, monitoring the patents and trademarks they seek. This can help “prevent the registration of copycat trademarks and patents.” Firms should be especially alert to design and utility patents filed for infringing products.

The article concludes with the admonition that even after doing all of the above, “companies must devote time and resources to detecting violations and taking legal action; a company’s legal rights mean little in China unless the company chooses to protect them.” Firth details some of the various administrative, civil, criminal and even political actions, companies can take if they discover their IP has been compromised in China.

What I find so interesting about this article is that so much of what Mr. Firth prescribes for protecting IP applies to doing business in China beyond IP. I am in the process of preparing a speech on how companies can protect themselves from bad Chinese products and much of Firth’s advice regarding IP applies to bad product protection as well. With both IP and product issues, it is important to cover yourself with good contracts, but it is of at least equal importance to engage in due diligence regarding those with whom you are dealing and to monitor constantly your Chinese partners once a relationship is established.

Bottom Line:  Getting your legal and operational house in order will obviously not prevent all China problems, but it is a necessary start.

A reader from Seattle alerted us to an upcoming two-day, free program on China IP, to be put on by the United States Patent and Trademark Office.  Entitled, “Protecting Your Intellectual Property in China and the Global Marketplace,” this program will be on Wednesday and Thursday, July 12-13, 2006, at the Grand Hyatt in Seattle, Washington.

This program will focus on ” China’s laws and regulations that may affect how a business protects and enforces its intellectual property, how best to protect business assets to avoid intellectual property problems in the first place, how to recognize when an intellectual property asset has been infringed, what to do if infringement occurs, and what the U.S. government is doing to improve the intellectual property protection and enforcement environment in China.”

No agenda or speakers have been listed, but registration here [link no longer exists] is already open.