Canadian Plastics

IP PROTECTION IN CHINA: 20 PREVENTATIVE STEPS

1. Start early -- register your IP in China.

October 1, 2008   Canadian Plastics



1. Start early — register your IP in China.

2. For patents, do prior art searches in Chinese.

3. For trademarks, register in several classes, and choose a Chinese version of the mark.

4. Do not commence entry without first retaining advisors with specialized knowledge of China.

5. Select what will be made in China carefully — perhaps withhold the most innovative or high-margin products, or separate functions so that no one manufacturer makes the whole product.

6. Consider doing an IP audit on the project components.

7. Make sure that your project is economically feasible.

8. Build enforcement costs into your project feasibility plan.

9. Know your limit on losses from the project in

advance, and do a thorough risk analysis. 10. Know the authority of the government that you are dealing with, and understand the true division of powers.

11. Use non-competition covenants. For employees, ensure that they conform to Chinese law.

12. Do not rely on the advice of your Chinese partner as to the enforceability of the contract.

13. Contracts should be in Chinese.

14. Negotiate in good faith and disclose material facts — required by Article 42 of the Contract Law.

15. Plan for the collection of evidence. In China, as in other civil law jurisdictions, the courts focus on written evidence. There is no discovery, and there are limitations on the affidavits that a notary will formalize.

16. Provide for monitoring mechanisms.

17. Have an enforcement plan for minor breaches — international arbitration is expensive.

18. Know in advance what you will do if the contract is breached — plan for trouble.

19. If you plan to take legal action, know what country the relevant assets or people are located in.

20. Remember: China does not enforce foreign judgments, U. S. judgments in particular.

Source: Paul Jones


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