There are cost-effective methods to protect your company’s IP in China—if you take them early.
1. Register your IP
Except for copyright (which is automatically protected in China via the Berne Convention), U.S. IP registration does not provide you with any protection in China. Without registration in China, just as without registration in the United States, there is little that can be done to protect your IP.
Trademarks: A trademark (TM) is usually easy, fast and inexpensive to register in China. If you ever plan to operate in China, e.g., sell products/services or manufacture there, TM registration is a must. In contrast to the United States, China uses a first-to-file, not a first-to-use, system. Accordingly, Chinese squatters will look for up and coming startups and register their TMs. Once the startups enter the Chinese market, they then find out that someone already registered their marks, as has happened to both Tesla and Groupon. Furthermore, unscrupulous Original Equipment Manufacturers (OEMs) may register your TM and hold you hostage when you try to switch to a new OEM by threatening to sue your new OEM or block export (see #3 below).
Patents: To file a patent in China, you must have your application translated into Chinese and file it in China before any public disclosure. However, you may be able to backdate your application to before a public disclosure if you file in China within 12 to 32 months of your first U.S. filing. Please see our earlier post about utility models for quick and inexpensive patent filings in China.
2. Perform Takedowns on Chinese Websites
Now that you have registered your IP, you can perform takedowns of infringing products from Chinese websites. All of the major Chinese websites have takedown procedures including Alibaba, Taobao (similar to eBay) and Baidu (the most popular search engine in China since Google was blocked in China). Takedown procedures generally involve first submitting identification and proof of IP rights (e.g., a copy of the patent or TM) and then information on the infringing products (e.g., URLs for infringing product listings). Some websites will allow the defendant to challenge the takedown while others (e.g., Taobao) will perform the takedown first but allow the seller to appeal the decision afterwards. Oftentimes, takedowns can be completed within a week or so.
3. Register with Customs
Chinese Customs will not just block the import into China of infringing products but will also block the export of infringing products. As China is known as “the World’s Factory,” it can be useful to block the export at the source instead of (or in addition to) registering in each individual country that imports your products. While all types of IP can be registered with Chinese Customs, you may have the most success with trademarks and design patents because it is easier for Customs to determine infringement. Patents may be too technical. Any further information you can provide to Customs, such as manufacturers and ports, will improve your likelihood of success.
4. Engage a Brand Monitoring Service
Brand monitoring services, such as BrandProtect, will monitor the web for infringing products. In some cases, a brand monitoring service can assist in takedowns.
5. Monitor Chinese TM Filings
The China Trademark Office regularly publishes trademark applications for opposition, for more information click here. If a squatter tries to register your mark or a potential competitor tries to register a similar mark, you can oppose that mark before it is registered. After registration, it is harder and more time consuming to cancel a mark. At best, you may be able to cancel the registered mark for non-use, but this requires three consecutive years of non-use. If you were planning on operating in China before then, you may need to license your own mark.
While these five methods are law-related, one should not forget physical protection mechanisms. For example, splitting up manufacturing at different OEMs with final assembly in the United States will ensure that no single OEM will know the full manufacturing process. Further, visitors who access your facilities should not be allowed to bring in mobile phones, USB sticks, computers, etc. Similarly, any access to source code, customer lists, etc. that may be granted to employees in China should be limited to a need-to-know basis only.
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