I gave four China law speeches last month and three out of four generated questions as to whether what I had said applied to Hong Kong or Taiwan. My answer in all instances was a resounding “no.”
Mainland China has its own legal system, separate and apart from Taiwan, Hong Kong and Macao. In thinking about the laws of those places, you should think of them as different countries and your default position should be to assume the laws reflect this.
For example, even something as relatively simple as an NNN Agreement substantially differs as between the PRC, Hong Kong, Taiwan and Macau. The same is true for Manufacturing Agreements. The employment laws in these places can be wildly different as well. Perhaps most importantly, if you have a trademark in one of these places, it will not provide you with protection in any of the others and if you have a legal entity in one, that will not make it legal for you to operate in another. In my future talks,
I thought of all this today after reading a post on the China IP Insider Blog, entitled, [link no longer exists], emphasizing how intellectual property rights are “territorial” and what you register outside China does not constitute registration in China:
I have organized and attended scores of events on various intellectual property (IP) topics. The most common question asked by European businesses is a variation of the following question: “If I have a (insert trade mark or patent) registered in (insert EU country). Is it valid in China?”
The answer is easy; it’s a resounding no. Intellectual property rights are territorial because they are offered and governed by each country’s legislation. Though some international treaties exist, they generally only facilitate the application process in different countries.
The post goes on to note that the “one country, two systems” situation only exacerbates the confusion, but “the IP systems in Mainland China differ from those in Hong Kong, Macau and Taiwan and different registration is required in each territory.” It then postulates why so many get it wrong regarding the universality of IP registrations:
One reason why many people presume IP rights skip borders is that intellectual property is sometimes considered a moral right. Additionally, with such easy access to information internationally through the internet it is very possible that a trade mark registered in Italy can easily be seen by a Chinese competitor if the Italian company uses the internet to sell or market their product.
And as to why this mistaken belief in the universality of IP can be so deadly:
Unfortunately this can lead to problems for your business. China is a first to file system which means that the first person to register the trade mark is the legal owner in China even if the trade mark has been used by a different company in another country. Whether obtained morally or not, possession is not just nine tenths of the law, it is the law!
It concludes by advising that the “best way to protect your intellectual property is to protect it in every market you operate in (manufacture, sell, may move into in the future etc.)”.
All true.
