Protecting your intellectual property assets and China
While the potential for company growth in China is very high – making bringing your operations there very attractive – such a move requires (among other things) a considered strategy to protect your intellectual property rights in that jurisdiction.
The improving spending power of China’s 1.4 billion population makes it a prime target for companies around the world who are looking at expansion. While the potential for company growth in China is very high – making bringing your operations there very attractive – such a move requires (among other things) a considered strategy to protect your intellectual property rights in that jurisdiction.
China has a reputation, whether rightly or wrongly for being a haven for counterfeit product. That’s not to say that the government isn’t taking steps to review its intellectual property enforcement laws. But when compared to many other countries, China’s IP laws are relatively new and have only had a much shorter period of time to develop. While good progress has been made in progressing China’s ability to deal with infringers, it may naturally take some time before China catches up in terms of having a robust IP protection regime. This does not mean that applying for IP protection in China is a toothless tiger. China currently has registration-based protective regimes for trade marks, patentable technologies and copyright (something that is missing from Australia’s IP protection landscape). Intellectual property rights can also be protected through the thoughtful application of China’s trade secret and unfair competition laws. Indeed, China does provide significant benefits for those who seek to use its various registration systems to protect their IP assets in China.
Unlike Australia, China’s trade mark registration system works on what we call the “first to file” rule system. Australia (like many other countries) is based on a “first to use” system – this means superior brand rights are afforded to businesses that can show they commercially used the brand first in the marketplace for their particular good or service offering. Just because another business might file a trade mark application first, does not mean the “first user” cannot obtain its own registration or be prevented from continuing to use its brand.
China’s “first to file” system is essentially a first in best dressed approach. First filed trade marks generally have superior recognition under Chinese trade mark, notwithstanding that another business may have used the trade mark first. Such a system requires quick action, lest a rival company registers your brand name first as their own before you do. Even though you may have been operating in China for some time beforehand, you may have to be prepared for a lengthy legal battle to retain your rights to use that brand in that country.
Some handy things to remember about trade mark registration in China (and other IP rights registration) is set out below:
- Unless you have a residential address or business address in China, filings must be conducted through registered and qualified agents or attorneys (Actuate IP has a network of such associates in China which it co-ordinates with to file applications for its clients)
- Filings will need to be translated into Chinese – these translation costs should be taken into account when considering registered protection in China
- If you are looking to register a trade mark in China, remember to also have searches conducted on the translation and transliteration of your trade mark. Sometimes the direct translation may be protected, but the phoenetic transliteration may unintentionally miss out on protection
- Also, be aware when choosing a trade mark to file in China, that there are several dialects of Chinese which are spoken in that country (most commonly, Mandarin and Cantonese). The sounds of words in one dialect can differ significantly from another and may lead to unintended consequences for your brand
- Always seek to register your IP rights before entering the market in China to maximise your potential for avoiding legal issues
- While copyright registration is not compulsory, foreign investors are still encouraged to register with China’s National Copyright Administration in order to establish evidence of ownership. This also grants the owner of the copyright the ascendancy should legal actions be necessary.
IP Protection in China is still a progressing concept but one which China is rapidly developing in line with other countries with more established intellectual property legal frameworks. Nevertheless, China remains one of the most sought-after markets in the world, and if a company is to be globally competitive, it makes good business sense to carefully inspect Chinese intellectual property laws when preparing to enter and operate within that market.