IP concerns from China

28 China

Throughout history rising political powers have always sought to acquire and exploit technology to speed up economic and social development, so it perhaps comes as no surprise that China is the latest superpower to be accused of doing so in recent times.

A key difference of course in modern times is the dawn of the internet and the technological advances which make it much easier for information to be obtained, and for reverse engineering to be completed in very short periods of time. It is also in part likely to be a cultural issue, with the concept of individual intellectual property ownership not as strongly recognised in Chinese cultures as it is in western cultures.

The threat from online attack has also never been greater than in current times. A recent article published by the Guardian quotes the Director of the US National Security Agency Keith Alexander in 2012 describing commercial cyber-attacks as “the greatest transfer of wealth in history,” with a follow up report estimating such intrusions cost the US economy $300bn a year - with China responsible for up to 80%.

Other sources also report that over half of all Chinese counterfeiting is done simply by copying a design straight from a company’s website, raising the difficult question of how can companies publish technical information to generate sales, without facilitating counterfeiting?

The recent establishment of international treaties to protect rights owners has helped, although China’s first-to-file intellectual property system does mean that if a third party registers a pre-existing international brand in China before the original entity does so, it can be extremely difficult to regain ownership. The Chinese intellectual property legal systems are improving constantly though, and in situations where Chinese national rights have been registered, disputes are increasingly being settled in favour of international rights owners.

There are several steps that can be taken for business owners to mitigate these risks, including:

  • Registering brand names, designs and other IP Rights in China – given the first to file system retrospectively claiming ownership can be very difficult, and expensive!
  • Only working with Chinese companies under contractual agreements that explicitly address intellectual property concerns.
  • Establishing an IT security framework to securely store sensitive information and minimise the risk of cyber-attack.
  • Travelling with ‘clean’ laptops and only sharing need-to-know information.
  • Reviewing all publicly available technical information, including website and marketing material, and enforcing an appropriate level of privacy.

For any aspect of Intellectual Property advice and overall strategy, please get in touch with the ip21 team.

Richard Jones, Business Relationship Manager for ip21 Ltd.