When foreign companies begin doing business in China, one of the most common concerns they have is protecting their Intellectual Property (IP). Despite China creating a comprehensive legal framework designed to protect both domestic and international IP and reports that enforcing IP rights is improving, they’re still known for having issues protecting a company’s IP.
In this article, we provide an overview of what intellectual property is, the different types of IP and 4 simple ways to protect your IP in China.
What is IP?
The World Intellectual Property Organisation (WIPO) explains that, ‘Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.’
There are three main parts of IP law that companies and entrepreneurs use to protect their ideas; Trademarks, Patents and Copyrights. Having strong intellectual property rights (IPR) ensures companies, entrepreneurs, creators and designers that their ideas will be protected and allows them to share their knowledge and ideas to others.
Australian businesses should have formal legal protection of IPR before entering the market in China. The process of registering IPR in China takes much longer than it does in Australia, with trademarks taking 18 months to be granted, copyright procedures three months and design patents up to eight months.
Why should you protect your IP?
Registering your IP allows you to protect other people and companies using or creating something identical or similar to your product or brand. It also allows you to profit from your work without competitors stealing your idea and registering it as their own IP.
Do you need to protect your IP in both Australia and China?
Yes, IP rights are territorial. Meaning that if you register any form of IP for your company in Australia, it only protects you in Australia. In order to protect your IP in China, you need to register them there.
Different types of IP
Depending on your idea or product you may need to register one or more of the different types of IPR in order to enter the Chinese market.
According to WIPO, ‘a patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem’.
China has three types of patents; design patents, invention patents and utility model patents.
Design patents protect the appearance of a product and give you the right to exclude certain people from manufacturing, selling or using your product or idea. They are granted after passing a preliminary examination, which can take up to six months. The design is published and then the patent is enforceable straight away.
Invention patents are the same as a standard Australian patent, meaning that they must be new, be different from existing technology, be able to be used in an industry and lasts up to 20 years from the filing date. They are usually filed through the Patent Cooperation Treaty (PCT) but can also be directly filed with the China National Intellectual Property Administration (CNIPA).
A utility model can be used to protect physical products, but not chemical compounds or processes. They are fast to obtain and reasonably cheap and are enforced as soon as they’re granted. It’s filed the same way as the invention patents, a preliminary examination will be performed and once the application is accepted, the patent will be granted.
A trademark distinguishes your goods or services from others, protecting your brand and is normally a brand name or logo but can also be shapes or colours. Trademarks in China are under a first-to-file system, meaning that whoever applies for the trademark first will own it, despite who created it, or used it first. There are two ways to register a trademark in China, by filing an application with the Chinese Trademarks Office (CTMO) or extending your trademark in Australia to China via the Madrid Protocol. The easiest way to do this is using a trademark attorney that has experience registering trademarks in China.
According to WIPO, ‘copyright (or author’s right) is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture, and films, to computer programs, databases, advertisements, maps and technical drawings’. There is no need to formally register your copyright because it is automatically protected upon creation. However, you can still register your copyright in China, so you can record the details of the work and the owner. You can register copyright through the Copyright Protection Centre of China and it takes a few months to process the application.
Domain names aren’t technically IP but it’s really important that you register them in China as well. They can be misused or stolen by domain name counterfeiters or squatters trying to get money or con people. The China Internet Network Information Center (CNNIC) is officially responsible for domain name registration; there you can see a list of registered domain names in China and register your own. Similar to trademarks, domain names in China are under a first-to-file system, so you should register it as soon as possible.
4 Ways to protect your IP in China
- Register your IP rights in China
The easiest way to protect your IP in China is by registering it as soon as you think about doing business in China. If you don’t, you have no protection there and are subject to people or companies stealing your IP.
- Create and use contracts specific to China
Having a contract with the manufacturer or company you’re working with in China is incredibly important and will help protect your IP. A common contract used in China for IP protection is an NNN (Non-disclosure, Non-use and Non-circumvention) Agreement, which is a more thorough, China-specific version of an NDA (Non-disclosure agreement). It’s recommended that you use a trademark attorney who is familiar with Chinese IP rights and has created similar contracts before.
A China-specific contract should include how and where the dispute will be resolved. Since China doesn’t enforce judgements in foreign courts, the contract should state that the dispute will be resolved in China. This makes the contract enforceable in China and reduces the risk of anyone breaching it. The contract should also be bilingual allowing all of the parties to understand the agreement and ensuring no one breaches it.
- Constantly check for infringement
After you have registered your IP, you’re responsible for monitoring and checking it. It’s recommended that you work with a lawyer that’s familiar with IP law in China to help you protect your IP and perform takedowns if needed. Using search engines to search for IP infringement is a great starting point and cost-efficient. You’re able to use Google to search for your trademark or similar words as well as images that are related to your product or service. The Chinese Trademark Office has an online database where you can search trademark registrations and applications. The SISTM search tells you the name and the contact details of a company that has a identical or similar trademark to your own. Popular online Chinese marketplaces, like Alibaba, have their own procedures if other people are infringing on your IP and will help you take them down.
- Register your IP with Chinese customs
Unlike other countries, Chinese customs authorities and the General Administration of Customs in China (GACC) can examine and seize infringing goods leaving China, so it’s highly recommended that you register your IP rights with them. According to IP Australia, “to record your IP right with Customs, you must submit the following details:
- The name, place of registration or nationally of the IP owner
- The name, details and the relevant information of the IP right
- The details of the exercise of any IP license
- The name, place of origin, customs at the point of entry/exit, importer and exporter, major characteristics and prices of the goods for which you have authorised use of the IP right
- The manufacturer, importer, exporter, customs at the point of entry/exit, major characteristics and prices of goods that are known to have infringed upon your IP right.”
It’s a great way to make sure if people are infringing your IP that they can’t sell the products to people outside of China.
If you’re thinking about selling your product or services in China, make sure to read our guide Everything you wanted to know about China manufacturing.
Protecting your IP in China can be a huge hurdle to overcome. If you find yourself needing more help with implementing IP protection, reach out to us. Having processed millions of dollars worth of transactions for our customers, we have the no how to help you get your products made and protected.