Sunday, 25th February 2018

China’s IP Landscape

Posted on 02. May, 2011 by in TECHNOLOGY

Silentio, Inc. (fictitious) is a start-up engaged in the manufacture and sale of electronic consumer products. An internal investigation reveals that one of Silentio’s most popular products is being counterfeited by a company located in the Peoples Republic of China (“China”). The product is covered by valid U.S. copyright and trademark registrations as well as U.S. patents. Silentio, however, failed to file for IP protection in China.

This story is not uncommon for many start-ups. Various economic studies estimate that sales and tax revenue lost by U.S. companies as a result of counterfeits goods are in the magnitude of billions of dollars. The unfortunate circumstance is that failing to arm yourself with the proper tools for protecting your technology from counterfeiters could lead to disastrous financial consequences.

The following outlines strategic ways to effectively combat the proliferation of counterfeit goods from China.

Clearly Defined Strategy
An ingenious idea devoid of a well-thought out plan is doomed to fail. Consequently, a strategic planning meeting should involve all levels of management: sales, marketing, legal and engineering. Outside intellectual property (IP) counsel may also be a necessary participant at some stage of the process.
Ultimately, the strategic plan should include at least three things: identifying your IP, protecting your IP and enforcing your IP. A failure to implement any one of these things could adversely impact any opportunity to either prevent the proliferation of counterfeit goods or seek legal redress in the event the counterfeit goods have already reached the marketplace.


PROTECTING YOUR ASSETS IN CHINA
The State Intellectual Property Office is China’s IP enforcement division, responsible for granting patents, and enforcing existing patents. When doing business in China, make sure to have the contacts below on your rolodex.

State Administration for Industry and Commerce (SAIC)
Trademark Office
8 Sanlihe East Road
Xicheng District
Beijing, 100820
Tel: 86-10-6803-2233
Fax: 86-10-6801-0463
www.tmo.gov.cn


State Intellectual Property Office
No 6 Xitucheng Road
Haidian District
P.O. Box 8020
Beijing, China 1000088
Tel: 86-10-6209-3268
Fax: 86-10-6201-9615
www.sipo.gov.cn


National Copyright Administration
85 Dongsi Nan Dajie
Beijing, China 100703
Tel: 86-10-6512-7869
or 6527-6930
Fax: 86-10-6512-7875
www.ncac.gov.cn

Due Diligence Analysis is Essential
Although some start-ups lack the internal resources to conduct a due diligence analysis of its technology, this task can be conducted through outside IP counsel. The end result should be the creation of an IP database which identifies and lists unprotected technology that should be protected by way of patents, trademarks, copyrights and/or trade secrets. Although all identified technology will eventually be protected, it is still a prudent way to begin the process.

Protect in the U.S. and China
Developing a robust IP portfolio is critical. It can serve to motivate competitors into seeking a license rather than risk exposure to a multi-million dollar damage amount in federal court. Although unscrupulous Chinese companies do not always abide by this adage, it is still best to protect your technology to at least mitigate the damage of counterfeit goods.

This involves filing one or more patent applications with claims covering your product. For trademarks, service marks or trade names, this involves filing appropriate trademark applications for registration. For printed copyright products, i.e., books, journals, and other printed materials, this means registering the works of art with an appropriate Chinese agency and the Library of Congress.

Another viable strategy is marking your product or process. Having a pending U.S. patent application permits the business owner to mark its product or process as “Patent Pending.” Once any patent rights accrue, the product or process covered by the patent should be marked with the assigned patent number. Moreover, notice should also be provided on all registered trademarks, service marks or trade names. This means assigning the trademarks, service marks or trade names with appropriate trademark indicia (i.e., ® for registered trademarks, ™ for non-registered trademarks). For copyrights, all copyrightable works of art should be properly designated with the indicia of copyright (i.e., ©, “copyright” or “copr.”), the year of first publication and the name of the copyright owner.

Sometimes the Best Defense is a Good Offense
Aggressive pursuit of counterfeiters means asserting your intellectual property rights against them. In China, this should include filing a criminal complaint, an administrative complaint and/or a civil action with the appropriate Chinese court or administrative body.

Although historically China has been slow in preventing the exportation of counterfeit goods, progress has been made in this regard. This is especially true on the administrative and criminal level where companies are often frustrated when attempting to shut down manufactures of knockoff goods. On the civil level, however, there has been an increase in the number of complaints and damages leveled against infringers.

For products that are covered by U.S. registered trademarks, service marks and/or copyrights, a relatively inexpensive, yet effective option to litigation is having counterfeit goods seized at U.S ports of entry. This is accomplished through use of the intellectual property recordation system (“IPR”) at the U.S. Customs and Border Protection (“CBP”). Startups can enlist the assistance of CBP by recording its registered trademarks, service marks, trade name and/or copyrights. The IPR permits the CBP to enforce your registered IP by targeting, intercepting, detaining, seizing and forfeiting imported counterfeit products bearing a registered trademark or which are copies of copyrighted publications.

Conclusion
There are effective and cost effective ways for startups to mitigate the damage done by counterfeit goods from China. The ability to timely identify, secure and enforce IP rights in your technology are invaluable tools for maintaining an edge in the global marketplace.

Post By Todd_Vaughn (2 Posts)

Todd A. VaughnTodd A. Vaughn is co-founder and managing partner of Sherr & Vaughn, PLLC, an intellectual property firm located in metropolitan Washington, D.C. Sherr & S&V provides strategic counseling and guidance in all phases of patent and trademark law. Its clients include national and multi-national corporations businesses, universities and startups. Todd may be reached through his firm’s website at www.vosslerlaw.com.

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