Protecting Your IP from China
Two China IP Horror Stories
Just this past week I heard of two typical China IP horror stories. The first is of an Australian manufacturer of pub equipment that went to China to investigate manufacturing one of its products there, only to discover that its product was already being produced “in the thousands, with the IP rights applied for by the rogue manufacturer.” The second is of an American manufacturer who discovered its ex-manager had set up his own rival operation that sold the same product “right down to the trademark.”
In the first story, the Australian company could have prevented its problem simply by filing its trademark in China. In the second story, the American company should have had its manager sign an employment contract that contained both non-compete and trade secret provisions.
Five Keys to Protecting Your IP from China
The following are what I see today as the top five things to do to protect your IP from China:
1. China is not a Do-It-Yourself country. Get professional IP help.
2. 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
3. China is a “first to file” trademark registration country with no recognition given to prior use or ownership. It is therefore essential that you file for your IP rights — trademarks, patents, and designs — before you enter China, and failing to do so is an invitation to your manufacturer or distributor to do it themselves for themselves.
4. Consider whether your current trademark is useful for the Chinese market, conduct searches, and then consider protect several versions of your trademark, including, in some instances, the English version, the Chinese translation, and even a phonetic version of the English.
5. Design your products to make them difficult to imitate, and commit to continuous innovation to keep one step ahead of the 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 non-disclosure provisions) are usually critically important 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.