4 Top Tips Protecting Your Intellectual Property when Sourcing from China

by Tom McGrenery (Content Lead)

IP protection is vital. Registering your ownership is how you ensure that you can reap the benefits of the designs, brands, breakthroughs and other intellectual property you’ve spent so much time, money and effort on creating.

And if your product crosses borders, it’s not enough just to register your IP in your home jurisdiction and consider it done. Each territory is different – and in an ideal world, you'd take the time to register your IP in each and every one of them around the world. In practice, the priority has to be staking your claim where your product is sold and where it's made. In this article, we'll look at how to do that when you're sourcing from China.

4 Top Tips Are Listed as Below

1. Register your IP rights in China – early

Don't rely on the IP protection that you already have in your home jurisdiction or destination markets for your products. As soon as you are thinking about manufacturing or otherwise doing business in China, you need to be registering your IP there with the relevant bodies. They won't provide ironclad protection, but if you don't register in China, you'll have no protection there against other people using your hard-earned intellectual property.

We'll cover some specifics on how to do that for different kinds of IP later on in this article.

2. Have China-specific contracts

It should – but sadly doesn't – go without saying that you must have a contract with any company you're working with in China. A common contract used in China for IP protection is an NNN (Non-Use, Non-Disclosure and Non-Circumvention) Agreement. This is like an NDA (Non-Disclosure Agreement) only more so, prohibiting not just the sharing of confidential information or other protected elements but also stopping, say, a manufacturer from using your mold designs for their own-brand products. And the non-circumvention clauses head off, as far as possible, any skirting around the written rules.

Dan Harris has an in-depth explainer about NNNs on the China Law Blog, covering why NNNs work in China while NDAs don't, and how to draft them properly. That being said, you should retain the services of a legal professional for this, one who's familiar with Chinese IP rights and has created similar contracts before.

PRC authorities do not enforce judgements from foreign courts, so the contract should state that disputes will be resolved in China. This makes the contract enforceable in China. Note that in a bilingual contract the Chinese text always prevails, so ensure the accuracy of the translation, if you don't read Chinese yourself.

3. Be vigilant

Once your IP is registered, no one is going to be keeping an eye out for infringements if you don't.

“It's recommended that you work with a lawyer that's familiar with IP law in China to help you protect your IP and perform takedowns if needed,” says US-Australian design firm Metafuro. “Using search engines to search for IP infringement is a great starting point and cost-efficient. You're able to use Google to search for your trademark or similar words as well as images that are related to your product or service.”

4. Register your IP with Chinese customs

The General Administration of Customs can halt goods leaving China that are suspected of infringing IP rights and seize them if they are found to be doing so. Customs officers can do this ex officio – that is, they spot something they suspect of being a knockoff and investigate the shipment on their own initiative – or by request, when an IP rights owner reports an infringing shipment. In the latter case, the customs officials won't investigate but they can detain the reported goods while the IP owner takes legal action.

For either of these to happen, though, you need to register your IP with the IPR Enforcement Office of the Department of Policy & Legal Affairs, under the General Administration of Customs.

How to Register Different Types of IP

1. Patents

There are three types of patents in the PRC: design patents, invention patents, and utility model patents.

Metafuro describes the differences:

Design patents protect the appearance of a product and give you the right to exclude certain people from manufacturing, selling or using your product or idea. They are granted after passing a preliminary examination, which can take up to six months. The design is published and then the patent is enforceable straight away.

Invention patents are the same as an American utility patent, meaning that they must be new, be different from existing technology, be able to be used in an industry and lasts up to 20 years from the filing date. They are usually filed through the Patent Cooperation Treaty (PCT) but can also be directly filed with the China National Intellectual Property Administration (CNIPA).

A utility model can be used to protect physical products, but not chemical compounds or processes. They are fast to obtain and reasonably cheap and are enforced as soon as they're granted. It's filed the same way as the invention patents, a preliminary examination will be performed and once the application is accepted, the patent will be granted.

2. Trademarks

The PRC operates a first-to-file systems, which means that the first successful applicant for a trademark owns it, regardless of who created or first used it.

You can register a trademark in China by:

• Filing an application with the China Trademark & Patent Office
• Extending an existing trademark to China via the Madrid Protocol, provided your existing jurisdiction is a protocol member (there are 108 members, covering 124 countries, so your chances are pretty good)

Either way, it's a good idea to contract a lawyer with China trademark law experience to handle this.

3. Copyright

Strictly speaking, copyright is automatically created and protected as soon as you create the work in question, which may anything from a book to music to a computer program, database or technical drawing.

However, for additional peace of mind, you can also register your copyright in China to establish the details of the protected work and who owns it.

Copyright can be registered with the Copyright Protection Center of China. Processing usually takes a few months.

Global Sources LIVE Sourcing Talk

Protecting Your IP & Designs When Sourcing

Your intellectual property (IP) and designs are valuable assets of your business that must be protected, especially when sourcing from overseas. Join us LIVE at the next Buyer Fireside Chat as we talk about IP and design protection with two leading attorneys specializing in commercial law in China and India – Dan Harris, also known as “Super Lawyer”, and Rishabh Dheer. They will also be answering your questions live. Catch the live panel discussion on September 17, 2021, at 10:00AM GMT+8.

Watch from our social media pages, follow us to get notified: Facebook LinkedIn YouTube.

Host: Meghla Bhardwaj

Further Reading from China Law Blog

The four best ways to protect your IP from China

“In this post we set out the four most important steps you should take to both minimize the likelihood of having a China IP problem and to maximize your chances of prevailing should such a problem actually arise.”

Manufacturing in China: Control your Molds

“The trick to hanging on to your molds is to have a good mold retention provision in your China manufacturing contract in the first place. Otherwise, our role as lawyers is mostly trying to negotiate the lowest price for the molds and then drafting an agreement that will make sure that if our client pays that price, it will actually get the molds.”

China Trademarks: Counterfeit Goods and Parallel Imports

“Our international IP lawyers do a lot of work for clients seeking to remove listings of counterfeit goods from Chinese e-commerce sites. Most of these listings are for obviously, sometimes extravagantly counterfeit merchandise … But for some listings, it's not so clear the merchandise is counterfeit. … Many clients still want these listings removed because the sellers are unauthorized resellers, but a takedown request may not be the appropriate strategy.”

Make China Trademarks a Priority

“As part of the IP modernization begun under Deng Xiaoping's leadership, China acceded to the Paris Convention in 1984. Under the Convention, if you file a trademark application in one Paris Convention country, and then file an application on a priority basis in another Paris Convention country within six months of the date of the original application, you can claim the first filing date as the date for your subsequent applications as well.”

China Design Patents: The Extreme Basics

“Design patents are now established as an essential component of our clients' China IP portfolios. They are reasonably priced, can be secured relatively quickly, and provide pretty good protection. That said, it is important to understand the limitations of Chinese design patents.”