China IP Protection: It’s Getting Better. . . .

Vietnam manufacturing lawyer

I have a young relative who has for quite some time been “a challenge” for his parents. For years, whenever we would get together for family events, we would all start out, charitably enough, by spending around thirty seconds talking about how “he’s getting better.” For the next ten to fifteen minutes we would then enumerate all the things he had done that made us all feel good he was not our child.

China’s intellectual property protection tends to get the same treatment. There seems to be near universal agreement that things are getting better in China, and yet the focus is always on how bad things are. The International Trademark Association (INTA) is putting on its 131st annual meeting in Seattle this week and since I am nearly fully booked for breakfast, lunch, and dinner with one or more of the international IP lawyers attending, I figure I am going to be getting a steady stream of questions about China’s progress on IP.

My answer will be as follows:

Trademarks
.

Much better than widely believed. Much (though certainly not all) of what you hear about foreign companies having trademark enforcement problems in Chinese courts is due either to their own mistakes in not registering their brand names in China or in not vigorously enforcing their China trademarks. Proof of the value of China’s trademarks is that the Sanlu name just sold for more than a million dollars.

Copyrights.

Yes, it’s bad out there. But it is getting better. So much so that our China IP lawyers now — nearly without exception — recommend our software clients register their copyrights in China. The Wall Street Journal’s China Blog just did a post,
Global Software Piracy Gets Worse, But China Improves. the gist of the which is that in 2004, 90% of software in China was pirated but that declined to “only ” 80% in 2008.

Patents
.

Patents are doing about like copyrights. Things are pretty bad, but things are getting better…..

What are you seeing?

7 responses to “China IP Protection: It’s Getting Better. . . .”

  1. Hi Dan,
    Thank you for this. I’ve been trying to get to the very bottom of the latest moves and shakes on these very issues, ever since I read Carson Black & Rob Collins’ DOING BUSINESS IN CHINA FOR DUMMIES (despite the title, the gleanings were copious). I even commented about this over at Jack Perkowski’s blog, Managing the Dragon.
    Will you be livetweeting from the event? Would enjoy reading your reflections from there…for sure.
    From Prague,
    Adam Daniel Mezei

  2. Dan – I’m skeptical on the copyright issue, at least insofar as it’s applicable to consumer-level spending, ie Chinese street corners. I’d say, at the moment, DVD/CD and consumer software piracy is practiced MORE openly and widely in Shanghai (at least) than at any other point in the last six years. It’s growing rather than shrinking. For example, there’s a downtown street well-known to expats (there’s that fine Mediterranean restaurant on it) where – just last year, there were only two DVD shops operating openly. Now there’s six in a one-block area, with two of them reaching the scale where – if they were in the US – they’d be labeled ’emporiums.’ I guess it’s open to discussion as to whether or not Shanghai’s pirate DVD markets are greater or lesser indicators of the overall Chinese copyright situation. But if they are, it’s definitely getting worse.

  3. “Much (though certainly not all) of what you hear a about foreign companies having trademark enforcement problems is due either to their own mistakes in not registering their trademark or in not vigorously enforcing them.”
    Disagreed. While in civil TM cases, there have been some real landmark cases in 2008/2009, counterfeiting–arguably the biggest IP challenge out there for so many brand owners–has not abated in the past year. In fact, the reverse is true.
    The recession has made enforcement much more difficult due to authorities’ reluctance to go after counterfeiters out of fear of increasing unemployment. Additionally, counterfeiting has absolutely been on the rise during the recession as SMEs work harder to make ends meet, often by substituting counterfeit production for genuine, just to keep the factory doors open. Finally, as certain brand owners cut IP budgets, they will be in for a rude awakening come 2010/2011.

  4. Adam,
    My sense (and the numbers) is that it is getting a bit better on the software side but I do not have that same sense on the movie and music side.

  5. Richard,
    I agree with you. I should have been clearer (and I have since changed it). I meant to refer to “trademark enforcement problems” in the courts.

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