Five Things to Do to Protect IP with China

Author: Joy Huang

During a medical deviceconference, I had an interesting discussion with a Chinese medical device maker on the topic of IP. "We used to hide our inventions", the manager says, "Now we show case them publicly at trade shows.  We know others will copy us.  And we decided that we needed to compete on quality and price."  He acknowledged the hardships in using such a strategy to compete, but noted that they had few choices.

 Despite the many progresses China had made in IP protection, there is still much to be done.  Enforcing IP violation punishment can be challenging at local levels. While years ago, it sufficed to compete in China with older technologies, the market has changed. If your business involves selling or manufacturing cutting-edge technology and knowhow, it is important to have a plan in place on IP protection.

 1. Include IP in contract

 Make sure to stipulate IP in the general contract with the Chinese supplier or partner.  Some busineses hesitate to do this because of the stories they hear about lack of enforcement of contracts in China.  Despite this, an official contract still gives you more protection than none at all, especially if things go sour and a judge is involved.  

 2. Hire local IP lawyer

 Hiring a reputable law firm to represent your IP interest has, above all, an deterring effect.  It sends a clear message to your Chinese suppliers or partners that you are serious about IP issue, and that you are willing to fight for it.  Retaining a local law firm is important because such firms have intimate understanding of the local culture and legal system.  Chinese IP laws are constantly changing, and having local representation has the advantage of having fast access to interpretations of the law.

 3. Petition to administrative authorities

 The world is changing.  The Chinese government has made IP protection one of its priorities, despite the perception that it is slow to respond to the issue.  It has come to realize that not only does IP issue impact foreign investment to China, it also can reversely affect Chinese companies' competitiveness in the global market.  Petitioning to the administrative authorities has emerged as one of the most effective means of stopping IP infringement.  

 4. Source from multiple suppliers

 If you are using a Chinese manufacturer for more complex products and are concerned about IP theft, use more than one supplier.  Businesses with complex products are advised to use multiple suppliers for different parts of the product, and possibly yet a different supplier for final assembly.  If your product involves hardware and software, you can manufacture the hardware in China and integrate the software with another supplier outside of China.

 5. Build relationship to prevent risk

 The saying, "everything for friends, nothing for strangers" is perhaps a bit extreme in summing up this unique Chinese cultural trait, but there is some truth to it.  Compared to the west, almost everything in China centers around relationships.  If your business with the Chinese is built soly on transactions, there are few reasons they will try to protect your interest.  If you invest in building a strong personal relationship with your Chinese partners, on the other hand, you will be in a much better position when it comes to sticky issues like IP.  

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