In this post, I will provide some practical suggestions for protecting your intellectual property rights in China.
Before we start, I want to express my point of view, that IPR protection is a serious affair around the globe, not only in China. It seems these sort of problems happens mostly in China previously, due to policy vacancy and lack of infringing enforcement, while these have been improving in recent years.
Dealing with most Chinese suppliers can be pleasant, while at the same time, you can never be too cautious to protect your business benefit. By following some basic instructions, you could avoid losing control of your intellectual property rights.
What Intellectual Property-IP can be Protected in China?
Trademarks, patents, copyrights, trade secrets, geographical indications, and plant breeders’ rights are all recognized forms of IP that can be protected under Chinese law.
Generally speaking, your product IP may be leaked in 3 situations in China
- The manufacturer leaks your information.
- Other Chinese manufacturers imitate your products and sell them on the market.
- Your competitor steals your design and makes it in a Chinese factory.
How to Protect Your Intellectual Property Rights in China
For those companies that are already doing business in the Chinese market, it is never too late to review your intellectual property strategy to ensure that it keeps pace with your innovation and market expansion and provides the best protection for your core intellectual property.
Register your intellectual property rights in China
Bear in mind the most important principle: China should be the first country to register. This means that if you have a cool logo or design, and you want it to be exclusive, make sure to register for it in China before manufacturing or even publishing.
If someone saw your well-designed product at your online store, and register for it in China, it is most likely you would have to pay to get it back. However, if you register in China ahead of anyone else, the Chinese courts will treat it fairly even if it is from a foreign person or company. In the past few years, the legal system in China has made progress in the IPR area, and foreign entities now enjoy a fairer playing field in court.
Another good news is, more and more law offices now accept affairs in English. Thus hiring an English-speaking lawyer in China is more convenient and money-saving. Plus, you don’t need to spend much on registering your intellectual property in China. These together could reduce your cost on IPR protection to the lowest.
Reduce information leaking during contact with suppliers
When you request a quote, you may interact with many suppliers in China to find the best quote, while eventually, you may choose only one or several of them to get your business, and cut off the others, even if they had signed an agreement and manufactured for you for a period of time.
For the time being, those guarantee agreements with suppliers you have not chosen will not prevent them from using your intellectual property rights, as these suppliers may continue to use the formal model for manufacturing, and the rest of the manufactured products may be listed onto 1688 or other sites for selling, thus harming your exclusiveness.
To prevent this, you should be careful ever since the RFQ period, and let out as little information of your formula as possible. What’s more, for the suppliers that are cut off after a period of time, you may notice the terminated partners’ names to your local registration lawyer, and have them observe the factories to prevent them from infringement.
Sign an Enforceable Chinese contract
Use understandable and straightforward clauses in bilingual contracts. I found that many conflicts come from the explanation of ambiguity in different languages. It is not that the supplier deliberately violated the terms of the agreement, while it turns out that they did not totally understand the contract from the very beginning.
So keep it simple, bilingual, and confirm with a translator or lawyer that the supplier has read and understood it. Most of the suppliers in China are honest, and generally won’t have any problems if they totally understand the terms of intellectual property before starting production.
Is China’s Intellectual Property Protection System Really Working?
Effective protection and enforcement of intellectual property rights are critical to China’s successful transformation into an innovation-driven economy, which provides a strong impetus for continued progress in this field.
Since joining the World Trade Organization in 2001, China’s intellectual property protection system has developed rapidly and is now basically in line with international standards. Significant progress has also been made in law enforcement through measures such as establishing specialized courts and tribunals for intellectual property rights in first- and second-tier cities.
Therefore, as long as intellectual property rights are properly registered or granted in China, it is possible for foreign merchants to implement intellectual property rights.
When Do I Need to Start Registering an IP in China?
As previously stated, China implements the first-to-file principle for trademark registration. This means that the first entity to register a trademark in China will be granted ownership, regardless of whether it has been used before. This is a key difference between China’s IP systems and most of the developed countries, which must be considered in the IP strategy in China.
Malicious third parties can easily register foreign companies’ trademarks before they themselves register in China. This may be an overlord who intends to sell the brand back to a foreign company at a high price, or it may be a company that wants to use the foreign company’s brand awareness in China to produce and sell products. In the end, the company could prevent the foreign company from selling its products in the Chinese market and even file a lawsuit on the grounds of trademark infringement. Although there are ways to deal with this situation, the fastest, safest and cheapest course of action is to register as early as possible in China.
The patent is granted based on the prior application. Therefore, if other conditions are the same, whoever applies first will receive patent protection. After you file your first patent application for an invention, whether in your country or elsewhere, you have 12 months to apply for protection of the same invention in other countries (including China). After that, the invention will no longer be considered new. Therefore, it is important to keep China in mind when filing the initial patent application.
If My Intellectual Property is Successfully Registered in China, Will I be Fully Protected in China?
Completing registering intellectual property rights in China can not be self-motivated to prevent infringements. As an IP owner, you must keep monitoring the Chinese market and other existing export markets to ensure that your products are not copied by your competitors.
Ensure good communication with suppliers and supervise the activities of distributors. Ensure that there are clear contractual, intellectual property protection clauses between you and your partners, distributors, licensees, or employees, including ownership and usage restrictions.
How Should I Enforce when My Product is Infringed in China?
Since intellectual property rights are personal rights, it requires action by the right holder. When foreign companies encounter infringements in China, they should seriously consider protecting their intellectual property rights based on a detailed case analysis.
In China, there are several ways to strengthen your rights and prevent unauthorized use of your IP.
- Intellectual property rights can be registered with the General Administration of Customs to prevent infringing products from being exported from China.
- There is also an insider’s way to prevent infringing products from being exported from China, which is to use the inner-system of China Customs IPR registration and protection, and if you can not use it by translated pages, it is always a good idea to turn to your registration lawyer or other professionals.
- In simple cases, city administrative law enforcement can be a relatively quick and cheap way of action to stop infringing activities.
- Civil litigation can be used, especially when seeking damages from the infringer.
- China also provides intellectual property remedies for large-scale commercial piracy and counterfeiting through criminal enforcement.
- Some e-commerce websites in China are allowed to request that the list of goods be deleted infringe the intellectual property rights owner.
Before mastering any method above, one must first understand the knowledge and expertise of the Chinese legal system. Try to communicate with a professional lawyer to get more accurate information.
Official Suggestions for IPR in China
Here are some suggestions from governmental bureau and authorities to help foreign companies protect their IPR in China market.
Canadian Innovation, Science and Economic Department
European Commission China IPR Help Desk
Chinese Supplier View-Intellectual Property Protecting
And Chinese suppliers do have some other opinions about protecting intellectual property in China.
I’m in manufacturing, and I can safely say we have very little interest in stealing your IP. Selling it on our own requires a completely different skillset and is basically equivalent to starting a new company from scratch. Selling the idea to competitors may make some money, but it is trivial compared to the value of lost manufacturing contracts.
It’s actually really easy to reverse engineer things. I don’t know how many times customers have sent us incomplete or just plain wrong drawings and I’ve personally had the reverse engineer their product to make it for them. Your competitors can reverse engineer just as easily.
If you want to protect your IP, lawyer up. If you are manufacturing domestically, then your designs can be made proprietary. If you manufacture overseas, you can’t really enforce patents overseas, but you can still enforce them once they hit the market.
According to our experience, it is challenging to prevent manufacturers from secretly manufacturing your products. If your product sells well, there will be many competing manufacturers try to imitate it. The important thing is that you hold a patent or market license for your product. In this way, other sellers cannot sell your products on the market.
Finally, if you want to protect your intellectual property rights in China, please consult with a lawyer. If you produce domestically, then your design can become a patent. If you produce overseas, it will be harder to enforce the patent, but once the product enters the Chinese market, you can still enforce it.