Protecting Your IP from China
Two China IP Horror Stories
Just this past week, I heard two typical China IP horror stories.
The first involves an Australian manufacturer of pub equipment that went to China to investigate manufacturing one of its products there—only to discover that the product was already being produced “in the thousands,” with the IP rights already applied for by the rogue manufacturer.
The second story is of an American manufacturer who discovered its ex-manager had set up a rival operation in China selling the same product—right down to the trademark.
In the first story, the Australian company could have prevented this problem simply by filing its trademark in China. In the second, the American company should have had its manager sign an employment contract containing non-compete and trade secret provisions.
Five Keys to Protecting Your IP from China
The following are what I saw then—and still see now—as the top five things to do to protect your IP when doing business with China:
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China is not a do-it-yourself country. Get professional IP help.
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Contracts must be translated into Chinese, and they must be China-centric. They should cover everything, because anything omitted is fair game. See Drafting China Contracts That Work.
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China is a “first to file” trademark country, with no recognition given to prior use or ownership. It is essential that you file for your IP rights—trademarks, patents, and designs—before you enter China. Failing to do so is practically an invitation for your manufacturer or distributor to register them for themselves.
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Consider whether your current trademark is useful for the Chinese market. Conduct searches and consider protecting several versions of your trademark, including (in some cases) the English version, the Chinese translation, and even a phonetic version.
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Design your products to make them difficult to copy, and commit to continuous innovation to stay ahead of counterfeiters.
China-Centric Contracts Are a Must-Have
NNN Agreements (a “premium” NDA that includes non-circumvention and non-compete provisions in addition to just standard non-disclosure language) can be critical for protecting your IP from the Chinese companies with which you are doing business. Note that Western-style NDA agreements do not work in China and — for various reasons — are usually worse than having no agreement at all.
The Key Takeaway for China IP Protection
China’s IP laws are different and difficult, but there are still practical and relatively inexpensive things you can do to greatly increase your IP protections.
