Despite this progress, however, every now and then a
copycat product appears in China that highlights the fact
that the IP system in China is still a work in progress, and
that companies doing business in China need to remain
vigilant.
One recent example is the launch of a vehicle called the
Landwind X7 by Jiangling Motors, which is widely regarded
as a clone of the Range Rover Evoque. In the wake of the
launch of this vehicle, Jaguar Land Rover’s CEO released a
statement saying he believed China’s intellectual property
laws provide little protection.
China is making every effort to reassure international
investors and foreign companies that they can expect their
IP rights to be respected and upheld. One of the most
significant developments is the establishment of specialist
IP courts in Beijing, Shanghai and Guangzhou. These courts
will deal solely with IP litigation, aiming to create more
consistency in protecting rights holders from infringement.
To ensure that decisions of these new IP courts are
consistently of a high quality, the Chinese government is
insisting that judges have at least six years of experience in
handling IP trials before they can sit in the new courts.
Having said that, in China, as elsewhere in the world,
it is incumbent upon organisations to put in place the
appropriate IP protection to safeguard their interests.
For example, laws exist in China to protect designs, and
registered designs can provide very effective protection
there. However, unlike in other territories, China does not
have an unregistered design right; companies wishing to
prevent copying of their designs must therefore make sure
that the designs are appropriately registered before the
Chinese authorities. Similarly, China’s patent and utility
model laws allow companies to prevent unauthorised
use of their inventions, but only if appropriate registered
protection is in place.
Historically, one of the major problems suffered by
companies wishing to trade in China is so-called trade mark
“squatting”, which is where the trade marks of the company
are registered by a Chinese company which then threatens
to prevent use of the mark in China unless the trade mark
owner buys or licenses the Chinese registration.
Again, companies wishing to trade in China must recognise
that the onus is on them to register their rights. China
operates a “first to file” trade mark registration system, so
companies would be well advised to register their trade
marks there early if they plan to trade in China, to reduce the
risk of potentially damaging trade mark squatting issues. In
terms of preventing infringement, trade mark owners must
also be vigilant in monitoring for any potential misuse of their
brands, and must be prepared to take enforcement action to
bring any infringements to a swift halt.
China has been working hard over recent years to change
the attitude towards intellectual property there. As part of
this policy, the country has been urging its own companies
and citizens to seek IP protection using the improved IP
system, in order to encourage home-grown innovation and
foster a greater respect for IP. The establishment of the
new specialist IP courts is the latest step in the process that
started in 1985, of creating an effective IP regime in China.
Our own records indicate a 50 per cent increase in the
number of companies seeking IP protection in China in the
first quarter of 2015, in comparison with the same period
last year. Additionally, a recent industry report shows that
a greater number of foreign companies are winning IP
cases against Chinese rights holders in the Chinese courts,
where previously there was some concern that Chinese
companies were benefiting from an unfair bias in IP cases
against foreign companies.
These statistics demonstrate a growing appetite for
acquiring and enforcing intellectual property in China and,
provided that the new IP courts are seen to be running
fairly and openly, with easily understood and promptly
published decisions of high quality, we expect to see this
trend continue as confidence in China’s developing IP
system increases.
The clear message is that companies
manufacturing and marketing in China
need to ensure that they have the
appropriate IP registrations in place in
order to protect their rights. In comparison
to other countries, the cost of registering
IP rights in China is relatively low, and the
procedure is relatively fast. IP registration
should therefore be high on the agenda of
any company wishing to trade in China.
To find out more
contact Daniel Chew
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