I love when a reader sends me a link to an old blog post and asks if “it is still true.” I got one of those today about a post we wrote way back in 2006, entitled, Protecting Your China Intellectual Property: China IP Registrations are the “Bare Minimum.
That really short post said that if you want to have any hope of protecting your IP from China you must register that IP in China:
Just came across this excellent McKinsey Quarterly article, Protecting Intellectual property in China: Litigation is no substitute for strategy. [link no longer exists] The article is on China Intellectual Property (IP) protection strategies.
I like how this article stresses that legal tactics (such as registering and enforcing your IP and using China-specific contracts to secure your trade secrets) are the “bare minimum of what companies involved with China must do to protect their Intellectual Property Rights (IPR).” The article states that companies should also factor IP protection into their strategic and operational decisions and it gives good examples on how to do this. Perhaps most importantly, it stresses that relying on international litigation to vindicate your IP rights should be a last resort. It even has a nice pyramidal graph, grouping by importance what companies should do to protect their IP in China. Our China IP lawyers love the graph and they’ve been sharing it lately with clients.
I often find myself saying essentially the same thing to companies doing business in or with China. My shortest spiel on protecting your IP from China usually goes something like this:
China is not a terribly good country when it comes to intellectual property protections, but most who lose their IP to China do so not because China is so terrible at protecting IP but because they were so terrible at protecting their own IP.
If you choose a good Chinese partner, if you have the right (China-centric) contracts, and if you register your IP in China, the odds are overwhelming you will be fine. Choosing the right partner is key because if you are going to do business with a thief, the other two things will not protect you much. So this is the bare minimum. Beyond that, it’s critical you register your company name/brand name/product name in China (even if you are just manufacturing there) because it is bad when a Chinese company rips off your product and starts selling it for half of what you charge (especially if the Chinese company that does that is your China partner) but it is way worse if it can legally sell your product with “your” name on it for half. When that happens, it’s usually lights out for the business. And yet China trademarks are really quite cheap.
And now that so many of our clients are having their products made in Asia outside China (Vietnam, India, Thailand, Korea, Cambodia, Taiwan, etc.), I should note that all of the above holds true with equal force pretty much throughout Asia.