China technology licensing lawyersChinese companies want Western technology and in the last few years they have become willing to pay for it. One of the things our China lawyers are seeing more and more lately are deals where the Chinese company wants to be able to use in China both the name and the technology of the Western company. This means our China attorneys must draft trademark licensing and technology licensing agreements.
Very basically, this involves the following:
1.) The Western company  should register its trademark (typically its brand name and/or its company name and perhaps a logo as well) in China in both English and Chinese.
2.) The license agreement usually should be drafted in English and in Chinese, with Chinese as the official language. This license agreement typically should be subject to Chinese law with enforcement in China.This agreement must then be registered with China’sTrademark Office. Absent this trademark office registration, no royalty can be paid because The Bank of China will not let the money leave China as a royalty payment without it.
3.) The primary focus of the licensing agreement is typically the following:
  • Approved products
  • Territory
  • Royalty payments. The amount of the royalty and the method for calculating it are usually the main issues. If the royalty is based on per unit sales, it is often difficult to determine the number of units sold.
  • Payment terms. This is usually on an annual or semi-annual basis. The payment process from China is cumbersome and because of this monthly payment systems are almost never used. To cover risk, some licensors require an annual payment in advance.
  • Term and termination. The usual China trademark license is for a 20 year term, but it can and does vary. Normally, the sole basis for terminating the licensing agreement is for the Chinese company failing to pay the license fee. It is possible to provide for a minimum annual royalty payment and falling short allows for early termination, but this is fairly unusual.
If the Chinese side wants technology assistance on the product or service side, the licensing agreement becomes more complicated as it typically needs to include the following as well:
  • The technology to be covered.
  • If training in how to use the technology will be required, it will nearly always make sense to use a separate training agreement for this.
  • If the trademark license will require the licensed product incorporate components manufactured and sold by you as the licensor, it will likely make sense to have a separate purchase and sale agreement for those components.

There you have it….

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.