A new client the other day asked me what it should be doing to protect its IP in China and I asked whether they wanted the ten minute version or the ten day version. Fortunately for the both of us (and not surprisingly), they chose the ten minute version and the below is basically that.
I regularly speak on how to protect IP in China and the above is nearly always my first PowerPoint slide and the below is my standard accompanying explanation.
1. The first key is having a good partner
Having a good partner matters because a good, financially healthy Chinese company is less likely to steal your IP because it has something to lose, both with you and generally. China’s economy is in a substantial downturn, due in large part to the US tariffs and to US and EU duties on Chinese products. See Has Sourcing Product From China Become TOO Risky? This means more than even the usual number of . Chinese companies are not good partners and so finding a good Chinese partner just got tougher. See e.g. China Trademark Theft. It’s Baaaaaack in a Big Way.
2. The second key is having a good contract with anyone in China to whom you reveal your IP.
The right contract or contracts will depend on your specific situation. The most common contract for IP protection is an NNN Agreement (this is a more thorough, more complicated and, most importantly, more China-centric version of an NDA). But this might also include a trade secret agreement, a non-compete agreement, a confidentiality agreement, a non-use agreement, a licensing agreement, or many other sorts of contracts tailored for your specific situation. For making sure whatever contract you use to protect your IP actually works for China, check out The Five Keys to A China Contract That Works.
3. The third key is good IP registrations.
This might include any combination of trademarks, copyrights and patents. It also usually makes sense for you to register your IP with China Customs and with the Customs Office in the country to which your products will be shipped.
And then just constantly monitor and protect both online and offline. See Getting Counterfeits off Alibaba.
UPDATE: Not more than ten minutes after this post went up, one of our international manufacturing advisors called to say I should have tailored the above advice for those doing business not just with China, but with Thailand, Malaysia, Vietnam, the Philippines, and Taiwan (the countries where most of our manufacturing clients are going) as well.
Good point, so here goes. The above advice applies with equal force to Thailand, Malaysia, Vietnam, The Philipines, and Taiwan. Heck, it applies with pretty much equal force to India, Mexico, and the Ukraine as well, and to pretty much every other country in the world too.