China: Protection Of Intellectual Property In China

Last Updated: 3 March 2006

Article by John Orange & Sean Zhang, ©2006 Blake, Cassels & Graydon LLP

John Orange and Sean Zhang visited China recently to assess the IP landscape. In this article, they provide a brief update of what is happening in China and how our clients may take advantage of the recent changes in China in formulating their global IP strategies.

The protection of intellectual property (IP) rights is crucial to the success of many foreign investors and enterprises who wish to profit from China’s fast growing market. Effective protection of IP in China has always been a concern to foreign investors. As many foreign investors have discovered, counterfeiting, passing off and other forms of IP infringement are common in China. At the same time, Chinese companies are investing heavily in sophisticated technology and require an effective IP system to protect their own investment.

The level of IP activity in China is high. For example, there were more than one million new trade-mark and patent applications in 2005. The total number of patent applications filed in 2005 was 476,264, of which over 170,000 were applications for inventions (other applications were for design and utility model patents). This is the same level of filings as in the European Patent Office and comparable to the United States Patent and Trademark Office. Notably, about 50% of those filings are by Chinese entities. According to the data compiled by China’s Patent Office, the total number of new filings in 2005 increased by more than 30% over the previous year. Similarly, Chinese entities have also increased their filings abroad, especially new filings of international applications through PCT (Patent Cooperation Treaty) filings. By contrast, the annual filing rate in Canada is generally flat and was about 40,000 patent applications in 2004, with about 15% of those from Canadian firms.

These data may point to a different attitude toward IP in the corporate world in China than what one might glean from street scenes. There is a general awareness of IP among executives of Chinese companies. Many Chinese companies have made IP protection part of their business strategies. There is significant litigation involving Chinese firms as both plaintiffs and defendants, including cases in which foreign firms were made defendants.

This general awareness in the corporate world may be partially attributed to the gradual transition to a market economy in China. Further, in preparation for China’s entry into WTO, China has made significant changes to its laws governing IP. Some of the recent interpretations and opinions issued by the Supreme People’s Court, the highest court in China, have also clarified a number of crucial issues relating to the interpretation of China’s IP laws, and lowered the thresholds for bringing criminal charges against infringers. These have all helped to create a climate that is becoming more friendly to IP owners.

Aggressive IP strategies of Chinese firms have practical implications for western companies doing business in China. Improvements are likely to be protected through patent applications filed in China, creating a barrier to accessing new developments. The increased foreign filing interest by Chinese entities may mean that those improvements are also protected in western companies’ home markets, again inhibiting further development. A well thought out technology transfer agreement and a domestic IP strategy is needed to address these issues.

Different types of patent protection are available in China, making it easier to protect improvements. Aside from patents, “utility model” protection is available for inventions. Utility models are intended to cover simpler mechanical types of improvements. They have a shorter life but are not examined and therefore are cheaper to obtain. Although not available in Canada, they can be filed in China on behalf of western companies and form a valuable option in the overall IP strategy.

Enforcement

Enforcement remains a concern. Generally speaking, it has become easier to obtain court orders in China to stop infringements. In China, IP cases are heard by special divisions within the court system. Judges of these divisions are becoming more and more sophisticated in adjudicating IP disputes. Typically, evidence of infringing products or acts can be more readily obtained in China. Once infringement is proven by evidence, court orders inhibiting further infringement can be obtained. On the other hand, it is still difficult to get damage awards. This is mostly due to the lack of court procedures equivalent to western countries’ document production processes. Absent such processes, it can be difficult to obtain relevant financial evidence.

These new developments are significant, especially to owners of patentable technologies. Companies infringing patentable technologies are unlikely to disappear overnight, as they typically have considerable manufacturing assets (in contrast to copyright infringers who may have limited assets and no fixed place of business). Obtaining orders against these manufacturers can therefore be of real value. In some cases, patent owners choose to negotiate licenses with the infringers.

Whether to prevent competitors or imitators from using China as a manufacturing base or to enter Chinese markets with its own products, a company may want to consider including China in its global IP strategy. China has a first-to-file system. It is therefore important to file for IP protection in China as early as possible. This is especially so for utility model applications, which are subject to only a formality review, and trade-mark applications, which may proceed to registration without regard to true owner’s use or registration outside China. Without its own IP in China, a company may find itself as a defendant or without any bargaining power when it later enters the Chinese market.

IP rights, once granted, last a decade or longer. Despite the still-existing concerns over IP protection in China, it is advisable to take a long-term view towards IP protection and factor in the trend of IP protection in China. Those who take advantage of the recent positive changes in China, and take steps to invest in IP assets there, may be best positioned to profit from the growing Chinese market and protect their own markets in Canada.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
16 Oct 2018, Seminar, Toronto, Canada

Join Blakes lawyers for our 10th annual overview of recent legal and regulatory developments and practical strategies to navigate the changing regulation of Canada’s payments industry.

26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions