On the 29th April,  Founder of Crayfish.io Ting Zhang held the third session of the ‘China -Let’s Talk Business’ webinar series on the topic of how to protect your IP in China. Ting was joined by guest speaker Luna Zhang who is a senior Lawyer at Kangxin Partners and has been practising for 15 years. Together they looked at intellectual property protection in china: understanding the basics of IP in China, the common issues for newcomers in China and tips for protection from both a trademark point of view, as well as a patent point of view.

Understanding IP in China

Intellectual Property rights provide a creator with the exclusive rights to use their creation for a certain period of time. There are two types of IP rights: copyright and rights related to copyright, and industrial property (trademarks and patents). Due to the lack of international treaty between countries for intellectual property protection, when foreign companies enter China they must be aware that they need to apply for the trademark rights or patent rights again specifically for China. Let’s take a closer look at the two different types of intellectual property you can apply for in China:

Trademarks

Understanding the basics:

When you enter China, before you file a trademark, you must understand the trademark lifecycle.  This starts with doing a search before you file for your trademark, ensuring no one has filed an identical trademark registration before you. After your registration is successful you will need to monitor your trademark to protect your own rights, and then renew it every ten years for your brand’s protection.

Common issues for trademark filing in China:

One of the most common issues for trademark holders in China is trademark squatters. China has a reputation that there are a lot of bad faith filers who register the brand name before you enter into the China market. This is because China works on a first-come-first-served basis. This means that whoever is first to file, they will give the rights to that person, overlooking other elements such as if they are the true, deserving owners of the trademark. When you prepare to enter into China market, whether that is with business operations or selling a product, you need to pay attention to these squatters. If your mark has been rejected, there must be a reason, for example, there are some marks that are similar or identical and so your registration is blocked. In this case, you need to change your mark, or you need to analyse the marks and see if they are in use. Some marks may be registered on certain goals or services which do not affect yours and so you will be able to overcome this.

It is also important to be aware of the infringement. This can happen online and offline, though in the last five years it has tended to be more common online. When you check the infringement of your trademark, you need to combine online and offline leads so that it is easier to find infringers and you can get through comprehensive information about them, like how many products they have infringed and how much revenue they get.

The final issue with trademark filing is Chinese language trademarks. In China, it is important to have a Chinese trademark, because Chinese people master Chinese language more than English. This is a better way to keep your brand in China more relevant and well known.

Protection tips for your trademark in China:

• When you start to file for trademarks in China, it takes around 1 year, so you will need to be prepared to wait. However, if you are already selling your products in the China market, you need to register as soon as possible!
• You need to be aware of the implications of Chinese language trademarks – firstly if your lawyers help you to translate your brand into a Chinese trademark because Chinese characters can have such a diverse meaning, you want to make sure the translation is in line with your organisation’s feel. You should also check the trademark of this new Chinese name because China has the largest trademark database, already consisting of 49 million trademarks, so it is difficult to find something unique.
• Always monitor your trademark to avoid trademark squatters taking advantage of your rights.

Patents

Understanding the basics:

There are 3 types of patents available in China:

1. invention patent
2. utility model
3. design

Whereas in Europe, design is treated as a trademark, in China it is treated as a patent. It is important to know which kind of patent you are choosing before you file for it, for example when you want to find a new technical solution for a product or process, you will need an invention patent.

When filing for a patent, you have a few options:

• You can file for a patent directly, but in this case, you must use a local patent agency to manage the patent.
• You can also file a patent application first in your own country and then file a patent application in China, claiming the priority date of your first application in your home country.
• For those that want to cover a lot of countries with your patent application, it is possible to file an international patent under the patent cooperation treaty pact. You can then select china as one of the designated states.

Common issues for patent filing in China:

There are some issues that will arise with patent filing in China. Firstly, infringement still occurs. Also, discovery of these infringements is limited; the system requires plaintiffs to build much of their cases on evidence obtained through private investigations efforts. Finally, language is a significant barrier. The application should be filed in Chinese, but there is a lot of technical languages required for patent applications, including very specific descriptions of technology. Some law firms may translate without the technical knowledge and background, and therefore it is important to ensure that your invention and the description of your technology is understood well by the translator and other’s who speak Chinese to help your patent application go smoothly.

Protection tips for your Patent in China:

• Conduct the search before you file the prior art search, and register as soon as possible. It takes time for the patent to be filed and if after a year it gets blocked due to a lack of research before it was filed, it will waste time and resources to repeat the process.
• In regards to the time it takes to file for patents, there are ways to fast track your application process. Firstly you can take the ‘Patent prosecution highway which is where you already have patents in another country when you start filing in China. It allows you to be immediately assigned to a patent examiner after the preliminary examination, speeding up the process by 9-10 months. The other option is to prioritise the examination, which is specifically for companies with the highest technology as defined by the Chinese government. The whole process only takes one year.
• Be careful of OEM – many companies engage in OEM in China and therefore it is essential to conduct due diligence and draft enforceable contracts to avoid dispute. In licensing agreements, there should be clear obligations and restrictions on how the IP can be used. As the owner of the IP, you should monitor the use as much as possible and ask for reports on how the license is being used. Within the agreement, punishment or compensation can also be mentioned for the misuse of the IP to discourage any misconduct and defend your IP further.
• Engage with a local patent agent to review the validity of the patent and file an administrative or civil case in court.
• From the 1st of June 2021, China is going to use the new amendment of patent law which has much higher and stronger protection for patents, whereby the compensation for the misuse of patents is five times more than before and will therefore discourage or completely stop infringement of patents.

Overall take-aways

As a newcomer in China, you will need to tailor your IP strategy to your needs; different business goals will require different approaches to the protection of your IP. In order to keep safe, finding a local agent or law firm is very important and ensure that the agents are internationally recognised firms in rankings such as WTR, IAM1000 or Chambers and Partners. Finally, it is essential to do thorough preliminary research and register your trademark or patent as soon as possible.

Whilst China does not have the best reputation for strong IP protection, Chinese authorities are working hard to stop the infringement and protect the rights of companies, and are aware that in order to attract more foreign investment in China, there needs to be a strong IP framework. Therefore, the 2020 foreign investment law in China has developed a transparent and enforceable legal framework and provides the promising potential for the future of IP protection in China.

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