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

1. Doing Business in China
IP Issues Before You Go

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 program
Intellectual Property
Network of Chinese IP and business law professionals
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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
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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
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5. “As a matter of general principle, a patentee and
a licensee are free to contract as they see fit and
a consideration of problems in licensing
involves a consideration of as many facets and
legal situations as the ingenuity of the
negotiating parties may devise.”
Gordon F. Henderson, Q.C., “Patent Licensing, Problems from the
Imprecision of the English Language”, 63 CPR 99, at 100.
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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
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7. Chinese IP Protection
• Comprehensive Protection in China
• Patent - Invention, Utility Model, Design
• Trademark
• Copyright
• Trade Secret
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8. P/UM/D Application Filing Statistics
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9. Chinese IP Enforcement
• Major differences between Canada and China
• Different government institutions and court
systems
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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
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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
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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
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13. Chinese IP Enforcement
• Administrative Enforcement
• SIPO – State Intellectual Property Office (Patent
Office)
• Fewer resources for patent enforcement than other
administrative agencies
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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
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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
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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)
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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
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18. Chinese IP Enforcement
• Neoplan (Man) and Zonda
• German bus maker wins $3M design patent fight over
Chinese firm (Jan 2009)
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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
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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
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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
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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
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23. IP Strategies
• Protecting IP in China
• Know your partners
• Build trusting relationships with key legal / business
advisors
• Build strong relationships with government
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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
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25. QUESTIONS?
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26. Thank You
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