The document discusses intellectual property (IP) implications and legal considerations for conducting research and development (R&D) activities in China. It provides an overview of the relevant legal framework in China, including the Patent Law, Contract Law, and Technology Import and Export Administration Regulations. It outlines important IP rights related to R&D in China and abroad, such as rights to inventions, patent applications, and granted patents. The presentation emphasizes that any transfer of patents or patent applications in China to foreigners requires approval from the State Intellectual Property Office of China.

1. This
project
has
received
funding
from
the
European
Union’s
Horizon
2020
research,
and
innova=on
programme
under
grant
agreement
n°645775
Wai=ng
for
the
organiser…
The
webinar
will
begin
shortly

2. This
project
has
received
funding
from
the
European
Union’s
Horizon
2020
research,
and
innova=on
programme
under
grant
agreement
n°645775
R&D
in
China
and
Co-­‐funding
for
Horizon
2020

3. 3
Webinar
interac+on
tools

4. The
China
IPR
SME
Helpdesk
Services
4

5. 5
Start
Date:
1/2/2015,
End
Date:
31/1/2018
Based
upon
the
outputs
and
the
established
mechanism
of
the
previous
DRAGON-­‐STAR
project
The
DRAGON-­‐STARPLUS
is
supported
by
European
Commission
(H2020),
to
provide
services
on
three
levels:
• To
support
the
European
and
Chinese
research
communi=es
to
establish
collabora=ons
under
Horizon
2020
and
beyond.
• To
provide
a
coopera=on
pla^orm
and
tools
to
policy
makers,
aiming
ul=mately
to
support
and
enhance
the
bilateral
coopera=on,
through
the
concept
of
mutual
benefit
• To
provide
a
coopera=on
pla^orm
to
funding
agencies
for
exchanging
best
prac=ces
and
for
planning
joint
ac=vi=es.
Dragon
Star
Plus

6. This
project
has
received
funding
from
the
European
Union’s
Horizon
2020
research,
and
innova=on
programme
under
grant
agreement
n°645775
The
IP
implica=ons
of
undertaking
R&D
in
China
Dr
.Thomas
PaBloch,
Partner
at
Taylor
Wessing,
June
15th,
2016

7. 7
Name:
Dr.
Thomas
Pacloch,
LL.M.Eur
Firm:
Taylor
Wessing
Loca+on:
Munich,
Germany
Thomas
Pacloch
heads
up
the
IP
division
of
the
TW
China
Group
and
is
located
in
Taylor
Wessing’s
Munich
office,
with
regular
acendance
in
the
offices
in
Beijing
and
Shanghai.
He
specializes
in
industrial
property
rights
and
technology
transfer
with
a
par=cular
focus
on
China.
He
advises
on
trademark
and
patent
infringements
as
well
as
copyright
licensing
and
supports
transac=ons
and
licensing
nego=a=ons,
in
par=cular
in
luxury
goods,
lifestyle
and
online
gaming
sector,
but
also
automobile,
pharmaceu=cal
and
electronics
industry.
Besides
advising
foreign
companies
in
China,
Thomas
supports
and
represents
Chinese
clients
in
German
courts.
Today’s
Speaker

8. • Legal
Framework
• Important
IP
Rights
in
R&D
• Patent
Law
• Technology
Transfer
and
Administra=ve
Regula=ons
• Check
List
R&D
in
China
8
Agenda

9. 9
Key
issues
• How
much
technology
should
go
to
China
how
fast?
• How
to
do
it?
• With
whom
to
do
it?
• Risks
and
rewards
• Legal
limita=ons
• A
need
for
a
specific
China
strategy

10. Legal
Framework
• Patent
Law
– Art
10
PL
(transfer
of
patent
applica=ons
and
patents
to
foreigners)
– Art
20
PL
(applying
abroad
for
an
inven=on
completed
in
China)
– Art
6
and
8
PL
(employee
inven=on,
commissioned
and
joint
inven=ons)
• Contract
Law
• Technology
Import
and
Export
Administra=on
Regula=ons
TIER
Rules
• Customs
Regula=ons/MoF/State
Administra=on
of
Taxa=on
on
du=es
and
taxes
on
royal=es
– E.g.
Measures
of
GACC
for
Evalua=on
of
Royal=es
of
Imported
Goods,
30
May
2003
• Foreign
Trade
Law
(Art
16-­‐18)
through
restric=ons,
quotas,
licenses
10

11. 11
Important
IP
Rights
In
China:
• Right
to
inven=on/right
to
apply
for
a
patent
– Economic
rights
– Personal
rights
• Patent
applica=on
right,
once
applica=on
has
been
filed,
before
applica=on
is
rejected
or
granted
• Patent
right
aier
grant,
before
expiry
of
patent
term,
invalida=on
• Copyrights
• Chinese
law
applies
Outside
China:
• Same
three
types
of
right
for
any
inven=on
made,
but
– Independent
from
rights
in
China
– Following
the
law
of
each
country
where
owner
seeks
protec=on,
thus
a
bundle
of
independent
rights
• Copyright
• Foreign
law
applies
in
principle,
but
does
not
exclude
administra=ve
regula=ons
or
mandatory
law
in
China

12. Patent
Law
and
transfer
of
patents
and
patent
applica=ons
• Any
transfer
of
patents
or
patent
applica=ons
in
China
to
a
foreigner
requires
approval/registra=on
by
SIPO
– Prior
compliance
with
TIER
condi=on
for
registra=on
of
transfer
– Transfer
only
valid
with
successful
registra=on
• No
SIPO
approval
necessary
for
transfer
of
right
to
apply
for
a
patent
• Under
Patent
Law
(not
TIER):
No
mandatory
registra=on/approval
for
patent
licenses
• Addi=onal:
Patent
applica=ons
abroad
for
inven=ons
completed
in
China
require
compliance
with
requirement
of
confiden=ality
examina=on

13. Usual scenarios for technology transfer
Own prodution
facilities in China
Licensing to
third parties
Sale of technology
> Broad scope of application of Art. 2 TIER:
“Import and Export of technologies in these Regulations refer to the transfer of
technologies from outside of the PRC into the PRC or from inside of PRC to
outside of PRC by way of foreign trade, investment, or economic or technological
cooperation. Such transfer includes assignment of patent rights or patent
application rights, patent licenses, transfer of know-how, technical services and
other types of technology transfer.”
What
is
“cross-­‐border
technology
transfer”?
13

14. RestrictedProhibited Free
Approval
content and
contract will be
examined
Registration
no content review;
necessary to remit
royalties abroad
Illegal
14
Category
system
of
technology
import
and
export
Import/Export of technology
Category:
Requirements:

15. Limita+ons
for
technology
import
or
export
• Contract
for
restricted
technology
is
only
valid
once
approved
by
authority;
contract
for
free
technology
is
valid
upon
signing
• For
restricted
technology,
no
substan=al
nego=a=on
and/or
contract
signing
before
obtaining
a
“lecer
of
intent
for
the
technology
export”
by
authority
• For
certain
restricted
technology,
confiden=ality
review
shall
be
conducted
by
authori=es
15

16. Why
register
or
obtaining
approval?
• Remimng
money
abroad
(in
the
past,
s=ll
required
by
some
banks
now)
• Requests
by
tax
and
customs
authori=es
• Transfer
of
patent
right
or
patent
applica=on
right
from
Chinese
en=ty
or
holder
to
foreigner
• Compliance
with
Foreign
Trade
Law
• Avoiding
viola=on
of
administra=ve
law
(offence)
• Serious
consequences
in
case
of
restricted
or
prohibited
technology
(criminal
measures,
fines,
possible
loss
of
foreign
trade
license,
sequestra=on
of
illegal
income)
16

17. Sanc=ons
17

18. Art.
61(2)
and
(3)
Foreign
Trade
Law
• Anyone
who
imports
or
exports
any
technology
that
is
banned
from
import
or
export
or
unlawfully
imports
or
exports
any
technology
that
is
restricted
from
import
or
export
shall
be
ordered
by
the
foreign
trade
department
of
the
State
Council
to
correct,
and
be
fined
two
=mes
up
to
5
=mes
the
illegal
proceeds
and
the
illegal
proceeds
shall
be
confiscated.
Where
there
are
no
illegal
proceeds
or
the
illegal
proceeds
are
not
as
much
as
10,000
RMB,
it
shall
be
fined
10,000
RMB
up
to
50,000
RMB.
If
the
offence
cons=tutes
any
crime,
it
shall
be
subject
to
criminal
liabili=es.
• As
of
the
day
when
the
decision
on
administra=ve
sanc=on
as
described
in
the
two
preceding
paragraphs
takes
effect,
the
foreign
trade
department
of
the
State
Council
or
other
relevant
departments
of
the
State
Council
may,
within
a
period
of
three
years,
refuse
to
accept
the
offender’s
applica=ons
for
import
or
export
quotas
or
licenses,
or
prohibit
the
offender
from
engaging
in
the
import
or
export
of
relevant
goods
or
technology
within
a
period
of
one
year
up
to
three
years.

19. Limita+ons
e.g.
for
technology
import
• During
the
validity
term
of
a
technology
import
contract,
the
achievement
of
improvements
must
belong
to
the
party
making
the
improvements
• Mandatory
guarantee
for
non-­‐infringement
of
third-­‐party
rights
• Mandatory
guarantee
that
the
imported
technology
is
complete,
correct,
effec=ve
and
capable
of
achieving
the
pre-­‐determined
technological
objec=ves
• If
not
s=pulated
in
contract,
restric=ons
on
use
of
jointly
innovated
technology
• No
“monopolis=c”
clauses
in
contract
allowed,
such
as
condi=on
for
purchase
of
non-­‐essen=al
technologies,
raw
materials
etc.
• “Rule
of
reason”
required
for
certain
other
restric=ons
19

20. Risk
assessment
and
best
prac+ce
• Choice
of
law
clause
may
not
exempt
the
Chinese
mandatory
liability
• Risk
of
loss
of
ownership
for
any
IP
developed
or
co-­‐developed
with
Chinese
partners,
if
no
appropriate
agreement
is
in
place
• Nego=a=on
with
State-­‐owned
Chinese
partner
will
be
“IP-­‐driven“
to
secure
ownership
– Low
risks
for
pure
licensing
contracts
– Higher
risks
if
adapta=ons
to
processes
or
further
development
based
on
Know-­‐how
of
licensor
– Commissioned
and
joint
development
– Ques=on
of
access
right
of
Chinese
government
in
case
of
lack
of
use
in
China?

21. Check
list
R&D
in
China
• R&D
environment/policy
background:
• R&D
capabili=es
in
China
• R&D
incen=ves:
Taxes,
import
du=es,
visas
• Government
policies
(indigenous
innova=on)
and
government
procurement
• Protec=on
and
use
of
R&D
results
• Use
requirements
for
patents
obtained
through
public
funds
• Compulsory
licensing
in
China
and
An=-­‐Monopoly
Law
• Level
of
infringements
in
China
• Know-­‐how
protec=on
• Enforcement
of
locally
owned
rights
• Enforcement
of
jointly
owned
rights

22. Check
list
R&D
in
China
• Joint
innova=on
and
improvements
by
partners
• Contractual
agreements
on
(unilateral)
grant-­‐back
clauses
• Contractual
agreements
on
improvements
• Joint
inven=ons
• Commissioned
research
• Employee
inven=ons
• Remunera=on
risks
(adequate
levels,
liable
party)
• Securing
inven=ons
from
employees
• “Job-­‐related
technology
results“
and
pre-­‐emp=ve
rights
• Employee
crea=ons/copyright
and
securing
ownership

23. Check
list
R&D
in
China
• Technology
transfer:
• Restric=ons
on
transfer
of
Chinese
owned
patents
to
foreigners:
Art
10
Patent
Law
• Technology
transfer
in
and
out
of
China:
TIER
rules
• Mandatory
contractual
clauses
and
warran=es
• Limita=ons
in
case
of
technology
investments
and
tech
transfer
(contribu=on
in
kind)
• Taxes
• Patents
and
protec=on
of
inven=ons:
• Patent
filing
–
op=ons
and
limita=ons
for
patentability
• Restric=ons
on
free
patent
filing:
confiden=ality
examina=on
• U=lity
models
and
defensive
filing
strategies

24. This
project
has
received
funding
from
the
European
Union’s
Horizon
2020
research,
and
innova=on
programme
under
grant
agreement
n°645775
THANKS