For any company doing business in China, concern about enforcement of intellectual property (IP) is a significant factor guiding corporate strategy and operations there.
While China’s IP laws and regulations have increasingly reflected international standards, where IP rights are better enforced and protected – challenges do remain. These challenges including China’s IP legal framework related to trade secrets, uneven IP enforcement, and procedural barriers to protecting IP.
Amidst these challenges, the sophistication level of counterfeiters and infringers has increased. These bad actors exploit procedural loopholes, seeking to invalidate patents and trademarks which are legitimate. They employ tactics including reverse engineering, and find novel methods to infiltrate legitimate distribution networks, while building their own nefarious networks in parallel.
In response, China’s government has improved IP law and enforcement. These improvements include the alignment of domestic legislation to basic WTO requirement of the Trade-Related Aspects of Intellectual Property (TRIPs) protocol, and the creation of regulatory and legal incentives for the domestic corporate sector to file for patent protections. While China’s IP protection regime meets standards set by the international community, domestic implementation and enforcement of IP related laws does remain a concern for the international business community.
Important IP protection provisions in China include concepts that trademarks protect colors, symbols or other mechanisms which identify business products or services. Trademarks remain valid for ten years, and they may be renewed indefinitely in ten-year increments. Invention patents can last twenty years, and protections exist for utility models (“mini-patents” requiring less inventiveness) for up to ten years. Design patents (focused on the look of products) may receive protection for up to fifteen years.
Payment of annual fees exists for all patent rights, and the country operates on a “first to file” system. Where two people file for a patent for an identical invention, for example, the first to file will be granted the patent. Both invention and utility model patents can be granted for the same invention, meaning it may be advisable to file for both at the same time.
Utility model patents are cheaper and more quickly granted, with protection for designs lasting a maximum of fifteen years. Where someone wishes to enforce IP rights in China, this may include administrative action, or customs seizure and civil litigation. China’s government can prosecute serious criminal offenses related to several types of infringement.
For companies to be successful in China, they should take a comprehensive approach to protecting their IP there, however keep in mind the unique on-the-ground realities posed, including costs, while balancing their ability to effectively act to protect their IP in that challenging context.