Intellectual Property Rights (IPRs):
Counterfeits & Patent Protection

Protecting your ideas requires applying for relevant trademarks, copyrights, patents or industrial design rights. There have been several cases in China in the past where companies have paid a Chinese manufacturer to produce their product only to have the designs leaked, leading to imitation copies. While severe, such wild scenarios are the exception rather than the norm. The common Chinese perception of laws as mere reference points is important in this context.

The term “intellectual property rights” encompasses all of the primary rights covered by copyrights, trademarks, patents and industrial design rights. It is defined by the World Trade Organisation (WTO) as being “the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.”

Copyright refers to automatic legal right to a person over the creation of original material, which can be film, literary, artistic or musical in nature. Trademarks refer to the legally registered material used to represent a company, for example, a logo or brand design. Patents are applied against an invention or unique design, it grants the creator the sole right of producing the invention. Finally industrial design rights relates to the protection of the visual design of a product, for example a specific pattern or color.

 

China intellectual property right infringement of fake handbags. Fake purses and similar products are commonly associated with Chinese IPR enforceability problems.

 

Current Outlook China Intellectual Property

Since China joined the WTO in 2001, the country has sought to increase the legal framework and address its own IPR laws and regulations to bring it up to the standard WTO sets down. This is seen in the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, as is imposed among members of the WTO. An overview about this and all other crucial WTO trade agreements can be found here. While China is still rife with counterfeit products, the country is seeking to increase the protection for international companies. China intellectual property rights are seen as important to attract foreign investment.

If you desire a China patent for your intellectual property, you must go beyond simply registering IPR in your own country. To enforce your China intellectual property rights, you have to register your patents and trademarks with appropriate Chinese agencies.

To receive patent protection, you have to register it with an authorized patent agent in China to have the patent filed with China’s State Intellectual Property Office (SIPO). Otherwise the foreign statues will fail to reach China and any foreign registrations will be unenforceable

If you are seeking to protect a trademark, a foreign company is advised to register it with the China Trademark Office. They are also advised to do the same with internet domain names and the Chinese language version of all trademarks. Similar to patents, it must be submitted through the services provided by an approved Chinese agent, however the application can be prepared by foreign lawyers.

Copyright, however, are different in that no duplicate registration requirement. As long as your native country belongs to a bilateral agreement or copyright international conventions that China is also a member of you will receive protection. You can go further than this and register the copyright with China’s National Copyright Administration (NCA) allowing you easier proof of owners, but it is only a voluntarily process.

 

China intellectual property rights provide patent protection. There are countermeasures that can and should be used to protect the IPR status of your products in China.

 

Competition in Your Home Market by Chinese Companies

Those who decide against entering China because of IPR concerns often rue the decision. Market demand in China may still lead to factories reverse engineering your product. Once Chinese companies are able to copy or even further develop your product themselves, they take a market share in China and try to advertise to clients in your market.

Registering with the relevant Chinese offices protects your IPR more so than in the past as China moves from “made in China” to “designed in China”. Not registering both fails to protect you and sufficiently save you money.

The probability of the laws being enforced can vary depending on the interpretation between the local governments regarding China intellectual property. While the counterfeit market in China is huge, the amount of enforcement action currently taking place is usually larger than expected.

 

Counterfeits and Knockoffs

The distinction between counterfeits and knock offs is crucial. A knockoff, on the other hand, purposely imitates a brand to trick the buyer into thinking the knockoff is the real brand. A knockoff will have a similar design and image without infringing on any logo, trademark or brand name. Taking legal actions against the producer of knockoffs is commonly more difficult since the degree of similarity is decisive, which is a subjective issue.

The knockoff culture in China is embedded in the term “Shanzhai” which is used in China to mean a product imitating and infringing on a trademarked good. It represents a strong culture where traditionally small families would produce knockoffs by tinkering with the original design; however with time, the quality has improved and many professional factories have taken root. The sense of guilt from doing this is quite low, because Chinese society views ideas more as public goods than private ones. China intellectual property rights are hence against traditional culture.

A counterfeit is a product with the purpose of being passed off as real by expressly claiming to be manufactured by the brand owner. Many western consumers knowingly purchase counterfeit goods.

About the author

Jan has an intimate knowledge of strategic planning and operations management he acquired in the German military and in academia. Having graduated from Peking University, he possesses an acute knowledge of the Chinese economy. Jan routinely consults on short and medium term company strategy and is currently working on the company’s 3 year plan.

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