How to protect Intellectual Property Rights in China
China is a huge unpredictable market with many companies competing for business. The temptation to infringe patents and intellectual property rights is intense and new products have to be legally protected to ensure successful sales.
Intellectual property rights (IPR) refers to the legal establishment of rights to new products and inventions. This also includes artistic creations, logos and images which are part of your products unique commercial identity. The attempt to copy and use another company’s images and products for commercial purposes can be legally prevented. IPR laws are meant to enforce all unique and intellectual images and concepts which have employed to create a company’s products.
The World Trade Organization (WTO) agreement on IPR has been ratified by many countries. The legal system and courts under WTO jurisdiction work to protect these rights against copying or appropriation by another party and help to establish a just international trading environment. The WTO regulations on IPR protect the rights of designers, trademarks and patents as well as copyright issues and matters relating to trading secrecy.
Companies seeking to trade and invest internationally and adhere to a legal system which enables their products to be protected in the event of commercial disputes. In a major fast expanding market such as China it is essential to stay abreast or new market developments, particularly matters relating to IPR.
When entering the Chinese market it is important to take expert legal advice on the law relating to IPR. This needs to be done before the company is registered with the relevant Chinese agencies and government authorities. Registration must include trademarks and patents so that your company can commence trading in China. It is important to remember that under Chinese law the registration of patents and trademarks is based on the first company to register the documents rather than the date when the invention was registered. This can result in Chinese companies appropriating intellectual property rights if they are the first to register them. It can take years for the Chinese legal system to resolve IPR disputes.
It is also important for a company or agency entering the Chinese market to register trademarks and images in the official Chinese dialect which is normally Mandarin. This helps to ensure increased protection. You also have to make sure that you have established that you are adequately protected in your contractual relationships with associates, licensees and distributors as well as those who leave your employment. You will also need to ensure that you have your own legal consultant so that you do not rely entirely on your Chinese legal adviser.
Patent applications by agencies in China must begin within 30 months before the completion date. The time required for patents and utilities is a year whilst first time applications for industrial designs are allotted 6 months.
International companies already present in China can apply directly for registration. Those new to the Chinese market have to register with the Trademark Office of the Administration of Industry and Commerce (SAIC). Failure to use a registered trademark within 3 years in China will result in its cancellation.
When these initial procedures are completed the company representatives should inspect the production area regularly to ensure its proper functioning. There may be a need to protect details of product design so that they are not disclosed to Chinese suppliers. Items including branding, bar codes, shipping and the buyer’s details and pricing should not be revealed to suppliers. Lastly checks should be conducted on the reliability of Chinese partners even after a business agreement has been concluded. Long term strategic thinking is necessary because IPR infringements may still occur and it is still necessary to be economical with trade information.