Intellectual Property Protection In China

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Intellectual Property Protection In China - Part 1 by David Carnes If imitation is indeed the sincerest form of flattery, then the Chinese can be very sincere flatterers indeed. But if you prefer prosperity over flattery it would be wise to take precautions against losing your shirt (or at least the rights to it) in one of the world’s most dangerous IP jungles. It isn’t that the legal regime is deficient – it’s enforcement that’s lacking. For the present at least, China is a net importer of intellectual property. A relatively lawless IP environment is advantageous to China’s short-term interests, just as a strictly enforced IP environment suits the interests of net IP exporters such as the United States. This issue has been constant irritant in relations between China and Western nations, as well as Japan. Nevertheless, China’s enforcement of intellectual property has steadily improved in recent years. Protecting intellectual property (IP) in China requires a multi-pronged strategy including registration, workplace security, employee contracts, commercial contracts and enforcement.
Registrations China’s IP registration regimes are more or less consistent with international standards. Trademarks - are protected on a first-to-file basis, with an exception for well-known trademarks. Do not rely on the “well-known” exception, however (unless you are Coca-Cola), because whether a particular trademark is “well-known” or not is a time-consuming argument that keeps IP lawyers in business all over the world. If a trademark uses words, the Chinese language equivalent should also be registered.	©Dragan Trifunovic - FOTOLIA
China has adopted the international Classification of Goods and Services under the Nice Agreement, and has also adopted the international registration regime under the Madrid system. FIE Business Names – must be in Chinese and registered with the local Administration of Industry and Commerce before an application to set up a Foreign Invested Enterprise can be submitted (see this site’s Company Startup Guide for details on company name registration). Since China does not have a national register of business names, registrations are valid only within a particular locality (and an FIE business name cannot be registered in any location except its location of establishment). Trademark registrations offer better protection in this respect.
Patents & Designs - are protected on a first-to-file basis. China is a member of the Paris Convention, so filings in a member country within applicable time limits can also gain priority in China. More ominously, compulsory licenses may be granted (i) to qualified enterprises if the owner of the patent fails to license the patent on reasonable terms, and (ii) in the event of a national emergency. Because of this, many foreign companies do not register patents for sensitive technology in China. See Technology Transfers and Licensing for related information. Copyrights - Copyrighted material may be registered with the China National Copyright Administration. As in the United States, copyrights are not granted on a first-to-file basis. Registration does serves as useful evidence of ownership of a copyrighted work, but it is not a legal precondition to enforcement. Software – is considered copyrighted material and may be registered with the China National Copyright Administration. Registration requires the filing of source code (with some code blacked out). As a consequence, many foreign companies refuse to register their software in China. Domain Names - are protected on a “first-to-file” basis. A foreign company must have an FIE or Representative Office in order to register a “.cn” domain name in China. Workplace Security It is strongly advised to create a “plumbing” system to control IP leakage in the workplace. IT systems and any hard copies of IP should be kept in an access-restricted, secure location. Confidential information should be distributed on a strict “need to know” basis. Confidential material should be marked “Confidential Information” in Chinese in anticipation of possible litigation in Chinese courts. Employees Independently investigate the reputation and trustworthiness of applicants for sensitive positions during the recruitment process. Labor contracts should be prepared carefully. You should consider including the following in all labor contracts: Confidentiality obligations Non-compete clauses - Post-termination non-competition clauses should be limited to a reasonable geographic area and time limit. Compensation is also required to be paid during the period of non-competition. Assignment – Although China recognizes the work-for-hire principle, the labor contract should clearly assign ownership of intellectual property created in the course of employment; otherwise IP rights may prove practically impossible to enforce against an employee who creates an IP-related work for hire. Intellectual Property Protection In China - Part 2 - by David Carnes »
About The Author David Carnes is licensed to practice law in California. He speaks and reads Mandarin Chinese and has several years experience working with Chinese law firms and Sino-American joint ventures. His website, China Legal Bulletin, is at http://www.lunaticwisdom.com/blog1 Source: Free Articles from Article City Reproduced with permission

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