"Protecting your IP and Patents in China" ACSME Roundtable - October 2018

 
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Scott Bouvier is the Head of the IP practice at King & Wood Mallesons (KWM) - a law firm which combines the largest and oldest Chinese law firm (25 years old) with Australia’s oldest firm (208 years old). He is a commercial lawyer who specialises in IP and works to support commercial deals between Chinese and Australian companies.

KWM currently has 250 IP lawyers in China, mainly in Beijing and Shanghai. They protect foreign investors in China and work with the world’s leading brands: Microsoft, Monsanto, Apple….

The American Chamber of Commerce in China conducts an annual survey to identify the major challenges faced by US companies in their China operations. For the past 5 years, the issue of IP has not been in their Top 5. As an example, they see inconsistent regulations or current labour conditions as more important challenges to their business than IP protection.

The growth of trademark protection has been exponential in China. What Scott loves about enforcing your IP in China is that you don’t need to go to court. You have administrative courts and arbitration processes available to help you get your IP enforced quickly and efficiently.

Similarities between China and Australia...

  • The copyright system

  • Registration of patents

  • Registrations of trademarks

Big difference...

  • In Australia, whoever uses a trademark first gets the chance to register and own it.

  • In China, it's important to note that it’s the first to file it that owns it.

In other words, someone could register your name and trademark in China even if they have no association with you or your company. And then they can either (a) sue you for infringing their trademark if you subsequently do business in China under your own name, or (b) attempt to sell your trademark back to you for a high price.

It isn’t expensive to register your trademark in China. You should do this now, even if you haven’t started trading there yet and, if your products appear on an e-commerce platform, you should have done this already.

Simple advice Scott gives…

  • The Chinese version of your name should always be protected.

  • Before even thinking about taking your business to China, you need to register or even just apply to register. For startup brands, it should only cost a few thousand dollars to do it.

  • You have to make sure you write down the names of all the people involved in an invention. Otherwise, it will be invalidated. You can jointly own the invention but you need to make sure everyone understands how to share the money.

NDAs…

  • Executing a simple NDA in both languages is important if you’re planning to share confidential or sensitive information to a potential partner, supplier or agent in China.

  • There are cultural sensitivities around this while you’re establishing trust with your Chinese partners, and the decision to request an NDA is not straightforward.

  • It’s hard to know what information you can share at the beginning, and what should be subject to an NDA. Keep it simple if you can.

  • The NDA should be subject to enforcement in China, not Australia. Your local partners will take more notice of it if they know that you can make trouble for them in China

It should be remembered that, even in Australia, there are only a few IP cases where people actually get paid money for proving that their IP has been infringed. IP cases are mostly there to prevent and stop infringements, rather than to get paid damages.

What makes it even harder in China is that you don’t have discovery. For example, if someone is infringing your software, you’re unlikely to get paid any damages. The best you can hope for is that the infringement will stop. In some cases, they understand that the consequences of IP infringement are too low, so they increase the punishment by including damages, but you shouldn’t rely on this.

Coming Up

The next ACSME Roundtable topic will be “Deconstructing the Myth of Chinese "Face"" on Tuesday, 27th November 2018. Register now via the link below.

You can also sign up for ACSME Membership to receive priority tickets for future monthly Roundtables.

 
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