Doing Business in China IP Issues Before You Go


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Doing Business in China IP Issues Before You Go by James Longwell

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Doing Business in China IP Issues Before You Go

  1. 1. Doing Business in China IP Issues Before You Go
  2. 2. Gowlings: IP & China 700+ professionals in 7 Canadian cities 120+ year history of excellence in practicing law 20+ year history of protecting IP in China 1St Canadian patent application filed in China in 1985 Gowlings has trained numerous Chinese IP James Longwell Partner, Toronto professionals through its visiting scholars programIntellectual Property Network of Chinese IP and business law professionals 1
  3. 3. Understanding the Differences• Fear - Uncertainty – Doubt (F U D) • China is an Unknown • Many Doing first or early Intl deals in China • Nation of large contrasts • China in Western Media • Bad news sells newspapers / TV • US Trade Reports • China is a perennial target 2
  4. 4. Understanding the Differences• Legal basis: negotiating contracts, court precedents • China is a civil law jurisdiction • Canada’s legal system primarily based on common law: • “legal” details are left to the lawyers 3
  5. 5. “As a matter of general principle, a patentee anda licensee are free to contract as they see fit anda consideration of problems in licensinginvolves a consideration of as many facets andlegal situations as the ingenuity of thenegotiating parties may devise.”Gordon F. Henderson, Q.C., “Patent Licensing, Problems from theImprecision of the English Language”, 63 CPR 99, at 100. 4
  6. 6. Chinese IP Protection• Many Canadians are surprised by harmonization of IP laws• China has made enormous gains in ~20 yrs• Continues to grow/strengthen its IP laws• Our lack of knowledge contributes to F U D 5
  7. 7. Chinese IP Protection• Comprehensive Protection in China • Patent - Invention, Utility Model, Design • Trademark • Copyright • Trade Secret 6
  8. 8. P/UM/D Application Filing Statistics 7
  9. 9. Chinese IP Enforcement• Major differences between Canada and China• Different government institutions and court systems 8
  10. 10. Chinese IP Enforcement• Canada – IP owner generally left to do its own investigation and to bring civil law suit• Choice of court • Federal Court – IP infringement • Court of Province for any matter: IP infringement, contract dispute, trade secret breach, ownership dispute• Canada – police or customs agents at borders rarely involved with IP infringement matters 9
  11. 11. Chinese IP Enforcement• China – many more options: • Administrative Enforcement • AIC and AQSIQ / SIPO • Investigative powers with ability to impose penalty/sanction but no compensation to IP owner 10
  12. 12. Chinese IP Enforcement• China – many more options: • Administrative Enforcement • Concern that AICs do not want to shut down infringers and harm economic growth – 3000 offices • AQISQ / TSB less likely influenced by localism 11
  13. 13. Chinese IP Enforcement• Administrative Enforcement • SIPO – State Intellectual Property Office (Patent Office) • Fewer resources for patent enforcement than other administrative agencies 12
  14. 14. Chinese IP Enforcement• Civil Enforcement • To obtain damages, avoid AICs, etc. • Forum picking – Court in a big city• Criminal Enforcement • Prosecution by Police in courts • Must meet thresholds and overcome reluctance 13
  15. 15. Chinese IP Enforcement• Increasing sophistication and reliance by Chinese companies• Number of patent infringement suits rivals US• Incidents of Chinese companies suing foreign companies in China 14
  16. 16. Chinese IP Enforcement• Chint Group Co. and Schneider Electric • Chint wins Utility Model suit over Schneider Electric and its sales agent • largest IP verdict (US $4.3M) 15
  17. 17. Chinese IP Enforcement• Lanye Liquor and Shanghai Pepsi • Lanye wins trademark suit against Shanghai Pepsi over Blue Storm brand • Shanghai Pepsi ordered to pay compensation (RMB 3M) and publish apology 16
  18. 18. Chinese IP Enforcement• Neoplan (Man) and Zonda • German bus maker wins $3M design patent fight over Chinese firm (Jan 2009) 17
  19. 19. IP Strategies• Be Prepared: Protect Before You Go • Ensure IP house is in order: • Ownership, NDAs, Non-competes • Register your IP here and protect your trade secrets • Know your IP 18
  20. 20. IP Strategies• Protecting IP in China • Register IP in China • Registered IP is best • Start before you go: e.g. file to protect TMs in China (in English and Chinese) from Canada 19
  21. 21. IP Strategies• Protecting IP in China • Know your partners • Establish who will own new IP • Non-solicitation/Non-competition/Non-use • Can’t make your products for anyone but you • Mandate Trade Secret safeguards • Negotiate rights to monitor/inspect • Put people on the ground as nec. • Employee non-compete / non-disclosure 20
  22. 22. IP Strategies• Protecting IP in China • Know your partners • License IP out, retain ownership • Be selective • Keep secrets at home; Disclose only necessary; Divide between suppliers • Foster culture of protection 21
  23. 23. IP Strategies• Protecting IP in China • Know your partners • Build trusting relationships with key legal / business advisors • Build strong relationships with government 22
  24. 24. Conclusion• Chinese government is committed to improving IP, reducing infringement and fostering culture of innovation• Change is swift• Follow best practices: use prevention and build a trusted support team 23
  25. 25. QUESTIONS? 24
  26. 26. Thank Youmontréal  ottawa  toronto  hamilton  waterloo region  calgary  vancouver  moscow  london