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Welcome to the E-learning module on

Managing IP as a Business Asset

Scroll-down the mouse or press the keyboard down-arrow
to learn how to include intellectual property in your business strategy, in order
to get the most from your company in China.

 
 

Every company has some intangible assets, such as a trade mark, which can be protected as an intellectual property right (IPR) through registration with the authorities. On average businesses that actively manage their IP and treat it as a financial asset outperform their peers by up to 30%.

A good IP strategy includes identifying which of your intangible assets can be protected by IPR and which can be protected through contracts. Finally you will be able to use your IP assets to leverage access to finance.

A good IP strategy is beneficial in your home country but it is even more important in the international market because of the new opportunities and risks presented. If you are thinking of doing business in or with China, you can take practical steps to protect, manage and enforce your IPR in order to gain the greatest business advantage.

IP can only be effectively protected when it’s registered with the authorities. In Europe conditional protection is granted from the date of filing, but that is not the case in China. Trade mark, patent and copyright registrations are territorial, meaning that they have to be registered in each country you need protection in.

China does not offer protection for IPR based on 'prior use'. China is a 'first-to-file' system which means you need to act fast to register your IP before someone else does. If you have not protected your rights through international conventions you must register your rights in China NOW. If you plan to do business in Hong Kong, Taiwan or Macau you must complete registration in each territory separately.

Trade marks

Your trade mark is essential to protect as it represents your company's brand value but is often easy to copy. To avoid losing your trade mark to a potential counterfeiter or trade mark squatter act as fast as possible to register your trade mark with the China Trade Mark Office.

Chinese consumers often refer to trade marks by their Chinese name and use Chinese characters to identify them. You should develop a Chinese language trade mark and register both European and Chinese versions.

A good way to monetise your IPR is to license your trade mark to another company to use. Trade mark licensing is also common when creating a joint venture in China. A license agreement must be recorded at the China Trade Mark Office within three months of being signed.

Copyrights

Copyright is an automatic right; if you write a song you automatically own the copyright. However, China offers a voluntary recordal of copyright at the National Copyright Administration which is recommended as it acts as proof when trying to enforce the right.

Patents

China offers three types of patents: invention, utility model and design. All three can be useful tools for protecting your business. Invention patents offer exclusive use of an innovation on the Chinese market for 20 years while utility models and design patents each have a term of 10 years.

Definition of ‘Confidential Information’ which determines the scope of the agreement.

“For the purposes of this Agreement, ‘Confidential Information’ shall mean any and all…”

Detailed section to identify exactly what the receiving party is allowed (and not allowed) to do with the Confidential Information.

“The receiving party may use the information for…. The party may NOT use it for….”

The timing for the return of the documents and for the validity of the agreement to continue past the completion of the agreed project.

“All confidential documents to be returned by…. The validity of this agreement will continue until…”

Some types of intangible asset such as business know-how and client lists cannot be protected through IPR. To effectively protect confidential information when building relationships with business partners or employees a non-disclosure agreement (NDA) can be used.

An NDA should be signed before exchanging confidential information with business partners including manufacturers, distributors and potential customers you are providing with proposals or schemes of work. Some companies may say they prefer to develop the relationship based on trust but any honest company should not object to an NDA.

When hiring local employees, signing NDAs, combined with training on protecting trade secrets will help to prevent both accidental and intentional leaks of information.

In addition, treat your confidential information carefully – store it in a secure place, and clearly mark it as CONFIDENTIAL. Those who see it should always have signed an NDA and be regularly reminded that it is confidential. If you cannot prove to a court that the information was actively protected they will not consider it a trade secret.

Map of Success

Only written information can be defined as Confidential Information?

False. Both written and verbally communicated information can be defined as Confidential Information, but both must be formally specified as such.

If a trade mark is licensed to another company a translated contract should be used?

True. BUT the trade mark licensing contract should be registered at the China Trade Mark Office within three months

Chinese Customs have the power to detain infringing goods leaving the country?

True. BUT they will only detain goods if the IP has been registered with the appropriate authority and they are much more likely to act of the IP has been recorded in their system.

When registering IP, translations of patent and trade mark details must be provided by a certified translator?

False. Chinese IP offices will accept any translations. BUT in order to avoid future enforcement problems it should be translated by a legal professional with appropriate English-Chinese credentials/experience.

Copyright registration is required to enforce IP in China?

False. BUT copyright should be registered as it will allow stronger enforcement and can be used as evidence in the case of future infringements.

Contact the Helpdesk for free, confidential advice relating to IP in China. Our expert will reply to you within 3 working days.