Intellectual Property (IP) law and the perceived failure to enforce IP rights have been a source of contention between China and other nations. Cross-border enforcement of IP rights is a particularly complex issue, involving problems of international jurisdiction and co-operation.
Administration and enforcement of IP laws in China is quite different to Australia, and enforcement of IP rights is available through both administrative and judicial avenues. IP protection remains a challenge in China, where misappropriation of trade secrets and other forms of IP is commonplace.
The underlying problems of enforcement of the intellectual property laws in China are complex. Political and economic issues, local protectionism and even cultural factors all play their part in infringement.
Recently, the Chinese government has stepped up its efforts to improve the IP enforcement regime, with the aim of transforming China from a manufacturing economy to a high-tech innovation economy. Chinese Company Law was recently completely rewritten to conform more closely to international standards for company formation and management.
Foreign and domestic companies can set up trading companies but the time frame for approval of incorporation is never certain. It depends on the type of project and the location, and foreign investors must be prepared for this uncertainty from the outset.
Doing business in China will still present a huge challenge for foreigners. Fortunately, we have the benefit of some of Chinas’ leading law firms in a cooperative association (Patent Lawyers Asia) which provides legal solutions in a very cost effective way.
Our legal assistance covers all forms of commercial activity and market entry, including the formation of companies, joint ventures, syndicates, franchises, agencies and partnerships.
For example, we advise on the most effective methods and steps required to form a Wholly Foreign Owned Entity (WFOE) or to register other forms of entities in China, such as a representative office (RO) or a contractual or equity joint venture (JV). Each of these forms of foreign invested enterprise (FIE) is subject to its own specific laws and to numerous regulations that apply to all FIEs. Every FIE is formed as a Chinese limited liability company (LLC).
It is strongly recommended that Australian businesses prepare a cogent plan of action and have in place formal legal protection of IP rights well before entering the Chinese market.
Proactive trademark and copyright registrations are essential first steps in preventing IP infringements.
Registration of IP Rights
You can register intellectual property (IP) in China for trade marks, patents, designs and copyright. Patents, trade marks and copyright protection in China is administered by separate government bodies. Copyright protection can be applied for through the National Copyright Administration of China.
In general terms, the process of registering IP rights in China is slower and more expensive than in Australia. Unless you have a residential or business address in China, applications must be filed through Chinese agents or attorneys.
Documents filed with the State Intellectual Property Office of China or the Chinese Trade Mark Office need to be submitted in Chinese, therefore translation fees should be factored into the total cost of applications.
The State Administration of Industry and Commerce is responsible for administering trade marks, which are registered through the China Trade Mark Office.
China follows a “first-to-file” rule for obtaining trade mark rights. This means that the first person to file a trade mark application will generally have priority over a prior user of the mark in China. It is advisable to file trade mark applications in China as soon as possible.
Three-dimensional shapes and colour combinations can be protected as trade marks in China. Other non-traditional marks such as sounds and smells are not yet registrable, although extending protection to these marks is currently being considered.
Enforcement of a trade mark without registration is possible, although the process tends to be more expensive and less predictable.
Since 2004, Customs Recordation of IP Rights has offered cross-border measures to protect IP rights.
Trade mark registrations may be removed from the register if they are not used for three or more consecutive years after registration.
The State Intellectual Property Office is responsible for administering patents, which are registered through the Chinese Patent Office.
Two forms of patent protection are available in China: invention patents (equivalent to Australian standard patents, with a term of 20 years) and utility models (for lower level inventions, with a term of 10 years). Inventors may apply for both patents for the same invention.
Certain types of subject matter are not patentable in China and the patent examination process in China tends to be longer than in Australia.
In China, designs are registered through the Chinese Patent Office. Protection is available for a 10-year period. Known as design patents, they do not undergo substantive examination and can be obtained relatively quickly.
Unlike Australia, it is possible to register copyright in China. The National Copyright Administration Office is responsible for administration of copyright.
Unique names, packaging, and ornamentation of well-known goods are protected under the Anti-unfair Competition Law and the Anti-Trust Law.
Plant varieties are protected in China for a period of 15 or 20 years, depending upon the type of the plant.