Intellectual property (IP) protection is a longstanding and critical concern for companies operating in China, which has also been a key point of contention in the US-China trade war. China has already made strides in recent years to improve IP protection as the government seeks to spur domestic Chinese innovation and improve the business environment for investment, such as revising its IP laws and establishing a new national IP appeals court. However, challenges remain, as counterfeiters and infringers are getting increasingly sophisticated. For example, infringers may take advantage of procedural loopholes and proactively seek to invalidate legitimate IP rights. Companies are thus suggested to develop a comprehensive strategy to identify and protect their IP in China. This includes enhancing internal controls and making the best use of external resources.
IP registration in China
In China, IP is defined as a proprietary right enjoyed by a holder with respect to their works, inventions, trademarks, geographical indications, trade secrets, layout design of integrated circuits, new varieties of plants, etc. Among others, copyrights on works, patent rights on inventions, utility models, and designs, and trademark rights, are the most common IP rights.
China follows the principle of territoriality in IP protection, meaning IP rights acquired under the laws of a country can only be valid and protected within the territory of that country unless an international convention or bilateral or multilateral agreement is in place. What that means is that enjoying IP rights in your home country will not secure your IP rights in China. A domestic IP registration/filing in China is necessary to effectively protect your IP in the country. Besides, China mainly applies a “first-to-file” rule for IP registration, which means that the first entity or individual who registers IP rights will hold those rights exclusively, irrelevant of the original user, with limited exceptions. Thus, the first and foremost strategy we can provide is to register/file your IP rights in China as early as possible. We summarize the registration matters for patent, copyright, and trademark in the tables below.
Patent registration in China
Copyright registration in China
Trademark registration in China
Set up a thorough internal IP protection system
IP protection is a long-term project that the China market participants must always pay attention to.
Besides registration, businesses are also suggested to establish a thorough internal IP protection system, to adopt preventive measures to protect IP, and to confront IP infringements in business operations. This system can be set up with the help of external third-party professional services, especially for businesses that are new to China and have limited knowledge of China’s trademark protection situation. Among others, the below strategies serve as good starting points:
Provide training for all employees (especially those who have access to key IP information) to ensure their actions do not compromise the organization’s IP protection.
Control and monitor employee’s access to key equipment and areas and limit the likelihood that any one employee has access to all the information needed to copy IP.
Incorporate IP protection to facility design and business’s daily operational processes.
Utilize technologies to track and protect IP.
Be careful with business partners and include proper IP protection clauses in all contracts and agreements.
Assign a specific team or personnel to focus on IP management, including integrating the IP related data and tracking the status of the IP protection.
Actively monitor for infringement at industry trade shows and trade fairs, through IP publications, and on Internet.
Monitor competitor’s IP status to see if there is any chance to take proactive defending actions.
Assess the registration necessity in any country/region and get the registration started as early as possible.
Take actions to fight against any infringement by competitors and/or any other participants of the target market.
Make good use of the current IP protection measures implemented by China
China has been making substantial efforts to improve the IP protection offered in the country. Besides launching a lawsuit, a more time and cost efficient way might be to report to the competent authority directly, which can help IP rights holders achieve the following:
Force the infringer to stop infringing immediately
Confiscate illegal gains of infringer.
Impose penalty on infringer.
Require the infringer to compensate the right owner as per asked by the owner.
Filing your IP rights with China customs
For businesses engaging in import-export, they are suggested to file their patent, copyright, or trademark, with the customs authorities. This is necessary because:
It is a prerequisite for the customs to take active IP protection measures.
It helps customs to find infringing goods.
It can have a deterrent effect on the infringer.
To file with customs, applicants shall either be the IP owner (for trademark and patent, its IP registration shall be done with the competent authority of China and for copyright, its country of origin should be a member of the Berne Convention for the Protection of Literary and Artistic Works) or a qualified agent in China. The IP customs filing takes around 1.5 months and the general procedure is as follows:
Review of application
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax, HR, technology and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, DSA’s mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. With more than 25 years of on-the-ground experience and a large team of lawyers, tax experts and auditors, in addition to researchers and business analysts, DSA is your partner for growth in Asia.