A Realistic Assessment of Transferring IP to China

The protection of IP in China is the biggest challenge for foreign businesses. As China works to continue to evolve its economy and become more innovative, Beijing has reshaped its IP laws. Under the 13th Five Year Plan for the Protection and Enforcement of Intellectual Property, the Chinese government has been actively enforcing patent law. Main objectives of the plan include: to promote IP creation and utilization; to strengthen IP protection and management; and to expand international IP cooperation.

The government said it would accelerate the passage of a new foreign-investment law that includes administrative measures to protect the IP of foreign companies and ease pressure on them to transfer technology. China has consciously sought to fulfill its international obligations in intellectual property rights protection, endeavoring to bring its intellectual property protection level near the new international standards, and has taken many major measures to further raise its current level of intellectual property rights protection.

Foreign companies in China should be extra careful to employ well-established practices of IP protection. These include:

  • Standard practices to protect inflows and outflows of sensitive classes of material
  • Monitoring access to key labs, and control of computers, laptops and mobile phones
  • Use of secrecy agreements with employees and suppliers as well as restricted-access rights to internal databases

What IP can be Protected in China?

Trademarks, patents, copyrights, trade secrets (know-how), geographical indications, and plant breeders’ rights are all recognized forms of IP that can be protected under Chinese law.

If a foreign firm doesn’t file its patents, copyrights, and trademarks in China, its IP has no formal protection there. Businesses should register eligible IP in China as early as possible. Companies should also understand the full range of IP for which they might file, including multiple types of patents (utility model, design, and invention), as well as trademarks and copyrights. In the view of the China IP lawyers, it is good to conduct a realistic assessment of the business risks and benefits of transferring IP to China.

By registering your IP in China, you can perform takedowns of infringing products from all the major Chinese websites. Alibaba, Taobao and Baidu have takedown procedures. Effective protection and enforcement of intellectual property rights are critical for China’s successful transition to an innovation-driven economy and this has created a strong impetus for sustained progress in this area.

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Protect your IP Rights in China as Soon as Practically Possible

IP, or Intellectual Property, refers to the inventions and creations of a business. It encompasses patents, copyrights and trademarks. In the early stages of your business operations in China, you need to be proactive with the safety and security of your intellectual property. Although China is the finest place for product manufacturing and sourcing, this country is infamous for its copycat culture.

Chinese have taken the art of IP infringement to a new level and given the recent US-China trade escalation, foreign companies need to take a more cautious approach in reducing their IP threat in China. The failure to seek IP protection may put your business at a competitive disadvantage and could reduce your company’s valuation. The owner of a copyright has the exclusive right to reproduce copyrighted work. These works include original literary works, computer programs, musical works and audiovisual works.

The sector of product innovation is changing at an astonishing pace. No wonder, a business organization’s capability to derive maximum value from IP rests on the following factors-

  • IP awareness throughout the entire company
  • Cross-functional collaboration
  • Involvement of the top management
  • A comprehensive and value-driven IP strategy
  • Collaboration with the expert China trademark and IP attorneys


According to an article in Forbes, “ In the case of China, where the intellectual property protection system is still evolving, MNCs have limited opportunity to influence the government to strengthen the appropriability regime through changes to the law or more stringent enforcement. One example of a successful approach was Microsoft’s persuading the Chinese government to install authentic Windows software on government-purchased computers.”

In the opinion of the expert China IP lawyers, US and European companies need to make IP protection an important responsibility not only to merely the legal protection team but also a prime concern to every employee and top-level management. Overseas companies with a business operations in China need to adjust internal information flows and reporting structures to reflect those responsibilities.

Where is IP registered in China?

Trademarks & Patents

The China National Intellectual Property Administration, PRC (CNIPA) administers the registration of trademarks as well as the grant of patents.

Copyright

Copyright registration is overseen by the Copyright Protection Center of China (CPCC), which falls under the National Copyright Administration of China (NCAC).

Globalization has made it critically important for small businesses to pursue and protect their IP rights, both domestically and abroad. Securing proper protection of IP is essential to businesses of all sizes. Do keep in mind that big companies such as Samsung, Apple and Nike have had their ideas infringed upon and have made multi-million dollar lawsuits in China. An unregistered design in China is at risk of having no protection. Whether you are trying to enter into Chinese market or already having business operations over here, it is advised that you should give top-priority to secure your IP rights in China as early as possible.

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