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IPR Protection in China for European SMEs: Focus on Creative Industries
IPR Protection in China for European SMEs: Focus on Creative
Industries
Welcome to the webinar
Philippe Healey
China IPR SME Helpdesk Project Manager
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„Contact Us‟ section
The China IPR SME Helpdesk
@iprchina
Fan page: “China IPR SME Helpdesk”
Group page: “China IPR”
"China IPR"
The China IPR SME Helpdesk provides free, confidential, business-focused advice
relating to China IPR to European Small and Medium Enterprises (SMEs).
Helpdesk Enquiry Service – [email protected]
Training & Events
Materials
Online Services - www.china-iprhelpdesk.eu
Today’s Speaker
David Chen, Associate
Hogan Lovells International LLP, Beijing
+86 10 6582 9408
David is a U.S.-trained intellectual property (IP) attorney based in Beijing. He has
lived and worked in China since 2007 and specialises in IP-related commercial
transactions and IP advisory. His practice covers contentious and non-contentious
IP matters in China, including IP litigation, technology transfer, licensing, and patent
landscape and freedom to operate.
David regularly acts for clients in structuring and negotiating IP aspects of
commercial transactions, drafting IP-related contracts, and advising clients on
obtaining, protecting and enforcing their IPR. His clients include companies from a
number of industries including energy, chemical, manufacturing, high technology,
software, telecom, and consumer products.
Poll
Your business is mainly involved in…?
a) Architecture and interior design
b) Product design
c) Fashion and apparel
d) Graphic or web design
e) TV, film, music, performing arts
f) Other
Poll
What form of IP is most important to your business?
a) Confidential information
b) Designs
c) Copyrights
d) Trade secrets
e) Other
Overview
• Back to basics
• Getting started
• Case Studies: Applied art v. designs
• Keys to success in protecting your IP
• Common business scenarios and what to do
• Enforcement options
Brief overview of IPRs
Ideas, Information, Knowledge
Law
Intellectual Property
patents trade secrets
copyrights
designs
trademarks
domain names
trade names
confidential information know how
Key forms of IPRs for creative SMEs
• trade secrets
• know how
• confidential information
• designs
• copyrights
• trademarks
• domain names
www.yourcompany.com
Key IPR concerns for creative SMEs
• Someone stole my idea, what can I do? – identify goals and objectives of enforcement, be practical
– consider enforcement options for serious cases
• I'm just starting out, what do I do about IP? 1. Identify (audit) your IP
2. Register the relevant IP
3. Develop and use a non-disclosure agreement (NDA)
4. Develop an internal IP protection policy
• I don't have a big budget, what can I do to protect my IP? – be proactive with preventative
IP protection
– most IP protection strategies do not require a big budget
– Costs: IP registration, non-disclosure agreements, and enforcement
Getting started
Getting started: IP audit - What kind of IP do I have?
• Step 1: Conduct a simple IP audit to understand
– Do it yourself • Review your designs, prototypes, commercial information and
collective knowledge your company possesses
• Identify who has access or possesses the knowledge or IP
• Determine the importance of each piece of IP to your business. Try to connect each piece of IP to a revenue stream, competitive advantage, or business strategy.
• Determine what IP is critical to your business
– When to call a lawyer • When you have limited time or expertise
• When you have a lot of IP or have acquired IP
Getting started: Register IP
• Step 2: Register your core IP – Copyright
• Cost: RMB 100-2000 depending on the type of work • Time: 30 days after receipt of application materials • Where to register: Copyright Protection Center of China (CPCC) of the National Copyright
Administration (NCA)
– Trademarks • Cost: app. 400 Euro for 1 trademark in 1 class • Time: 12-18 months to grant • Where to register: China Trademark Office (CTMO)
– Design • Cost: RMB1305 (RMB 500 filing fee + RMB 205 patent certificate fee + RMB 600 1st-year annual
fee) in additional to patent agent fees • Time: 6-12 months (from filing of application to receipt of certificate) • Where to register: State Intellectual Property Office (SIPO)
– Tips for registering designs • register the design before using it • must not be an existing design • valid for 10 years from date of application (so long as you pay the annual fee) • for use in multiple countries, consider filing an international patent application
Getting started: IP registration forms
design patent application copyright registration application
Getting started: share when necessary
• Step 3: Develop non-disclosure agreements to use with key employees and business partners
– Cost: EUR 700 up depending on lawyer's fees
• Step 4: Develop an IP policy
– Determine what strategies you will use to protect your IP and how these strategies can be implemented in your business
Case study
Applied art v. designs
Is this a work of art?
a) Yes
b) No
"Mammut" Child Chair made by IKEA
Case Study: Furniture Design
• Inter IKEA Systems B.V. v. Taizhou Zhongtian Plastics Co., Ltd.
IKEA discovered that Taizhou Zhongtian was manufacturing and selling identical child chairs. IKEA lost on its claim of copyright infringement
• Copyright protection is available for applied art and industrial designs, but only as to aesthetic features which involve a high-degree of creativity
Is this a work of art?
a) Yes
b) No
Case Study: Applied Art
• Beijing Chen Xingfu Toy Design Center v. Shanghai Sound Image Publishing Co., Ltd.
Chen Xingfu discovered that Sound Image Publishing used images of its "Chen Xingfu" Rabbit toy on the CD, CD packaging, and booklet of one of its music CD albums. Chen Xingfu won on its claim of copyright infringement.
• A toy that has a high degree of creativity can be protected as a work of applied art, even where it is mass produced and sold
• 2D photograph of a 3D toy used without permission constitutes copyright infringement as a derivative work
Key points on copyright (applied art)
• Key points – covers applied art
– copyright is an automatic right
– protects original creative expressions of ideas, but not the ideas themselves
– avoid infringing rights of others in your operations, i.e. photographs on the Internet
– author and date all works, use © symbol to provide public notice
– preserve evidence of creation
• Common misconception – 3D manufacturing of a 2D design is NOT considered "copying"
– commissioned works belong to the commissioned party unless otherwise contracted
Key points on design patents (industrial designs) • Key points
– covers industrial designs
– protects novel, aesthetic features (shape, pattern, color) of a product
– Conditions: not an existing design, inventive-step
– Term: 10 years
– copyrights are frequently used to invalidate hijacked designs
– "offer to sale" now constitutes infringement
Innovative router design by Franco Marino
Cagnina, developed for Saudi Telecom
Keys to success
Want to protect your IP?
• if someone stole your IP...
– would you sue?
– could you sue?
• do not rely solely on legal-based strategies
The holistic approach and your IP protection toolkit
complexity of design
continuous innovation
lead-time advantage
IP registration
attitude adjustment
IP audit
Non-disclosure (NDA)
ownership of moulds
business savvy
customs
oem diversification litigation
choosing partners
document management
ownership of commissioned IP
critical components
Internal IP Policy and knowledge training
administrative action
IP portfolio management
non-competes
selective importation
IP policy
Non-disclosure agreements (NDAs)– what goes into it? • Key points on NDAs
– NDAs are cheap, fast, and effective – NDAs are common in China – Requesting someone to sign an NDA will not jeopardize any deal with a serious partner – NDAs are easier to sign before you disclose than after you disclose
• What needs to be in your China NDA
– non-disclosure: include limitation to disclose to any other party, including any subsidiaries or affiliates
– non-use: limit use of information – non-circumvention: restrict solicitation of your customers directly by your business
partner – make sure it is in Chinese
• NDA is signed, but you are not done yet – Tracking and documenting the information transferred and who it is transferred to is just
as important as getting the NDA signed
Common business scenarios …and what to do
What do I do if my Chinese partner is now using my idea?
Key business scenarios involving IPR issues
What do I do if someone asks for samples or a proposal?
My stuff’s on the Internet! What should I do?
What do I do if someone asks for samples or a proposal?
• Scenario: You own an architectural design firm. You meet a Chinese real estate developer who is looking to hire a firm to help design a commercial building. You tell her about some of your ideas and influences. Impressed, she asks you to send her an email with your proposal and some design ideas.
What do I do if someone asks for samples or a proposal? (cont.) • What should you do?
– ask them to sign an NDA – disclose only in-person, perhaps invite her to your office – show only a small sample of your work – if necessary, provide only a paper copy, avoid sending an electronic
copy – sign, date, and © all documents exchanged – take the risk or walk away
• How to prevent and limit IP issues in this scenario: – identify any important designs and register your copyright and design
patents to them – retain organized documents of creation – notarize the work or design, better than "poor-man's copyright"
What do I do if my Chinese partner is now using my ideas?
• Scenario: Your company makes and sells tattoo chairs. Mr. Xu is your OEM manufacturer. You met Mr. Xu at a trade fair in Guangzhou 6 months ago. Since then, you have been sending your designs and prototypes to Mr. Xu to be manufactured. Recently, one of your customers cancelled an order and explained that he found a cheaper, identical chair from a Chinese company.
What do I do if my Chinese partner is now using my ideas? (cont.) • Do it yourself
– Questions you need to ask (and what your lawyer will ask) • what IP rights do I have?
• is there a relevant contract, NDA between your company and Mr. Xu?
• is your IP registered?
• what additional information do you need?
• do you have proof of infringement?
• can you prove that the IP is yours?
• can you prove that your Chinese partner obtained the IP from you?
• can this information be obtained by conducting an investigation?
– Identify and prioritize your goals • stop the infringement
• get damages
• obtain Mr. Xu's cooperation
What do I do if my Chinese partner is now using my ideas? (cont.) • When to call a lawyer:
– To figure out if enforcement a practical option
– If you want to send a warning letter
– To figure out what options you have to protect your IP
• Working with a lawyer: – Develop a strategy
• how strong of a case do I have?
• is enforcement a practical option in light of your goals?
• when should I let Mr. Xu know about the infringing acts?
• how should I restructuring my oem manufacturers to reduce my IP risk?
– Conduct an investigation and gather evidence • Cost: EUR 1,500-3,000 depending on complexity
• Time: 1-3 weeks depending on complexity
What do I do if my Chinese partner is now using my ideas? (cont.) • How to prevent and limit IP issues in this scenario:
– sign an NDA, contract manufacturing agreement, and IP license with Mr. Xu
– identify any important designs and register your copyright and design patents to them
– retain organized documents of creation
– notarize the work or design, better than "poor-man's copyright"
– use different OEM manufacturers
– conducted random audits and unannounced visits to Mr. Xu's factory
My stuff’s on the Internet! What should I do?
• Scenario: Your company, Modo, Ltd., designs and sells "Modo" branded apparel targeting young adults at www.modofashions.com. You discover that on the website www.modo.com.cn, a Chinese company has copied pictures of your products from your website and now claims to be selling your original products through this website.
My stuff’s on the Internet! What should I do? (cont.) • Do it yourself
– gather facts by conducting an preliminary investigation • try to identify what IP rights can you rely on • try to identify the website operator • try to identify the registrant and registrar using a WHO.IS search
– discuss with your lawyer before taking any actions or notifying the infringer
• When to call your lawyer – when you need help evaluating your IP or registering your IP – conduct an investigation – notarize the website – send a warning letter or Internet take-down notice – institute a domain name recovery action – file an IP infringement civil complaint
• How to prevent and limit IP issues in this scenario:
– do not send electronic copies of your designs without an NDA – identify important trademarks, designs – register your trademarks, copyright and design patents in China – retain organized documents of creation, include © on photos or a watermark to prove link to your
company – conduct regular audits of large online commerce websites to identify potential infringement
Enforcement
Summary of enforcement options Action Cease &
Desist / Take Down
Administrative Civil (Judicial) Customs (Border Protection)
Relief Available
Voluntary cessation of infringing acts, compensation, undertakings
Seizure, confiscation, destruction of instruments of infringement, administrative penalties, revocation of business licenses
No damages
Injunctions, damages, punitive damages, public apology
Seizure and destruction of potential imports and exports of infringing goods
Includes ad-hoc seizures and routine seizures based on recorded IP rights
Cost >EUR 700 EUR 2-3,500 for basic AIC investigation
Excludes possible administrative fees, investigation fees, travel costs of officials, etc.
EUR 10,000 up depending on law firm to first-instance judgment
Recordal fee:
approx. EUR 85 per right recorded
Seizure bond amount:
- For goods valued at approx. <EUR2,000, equal to the value of the goods
- For goods approx. >2,000, equal to half the value of the goods, but no less than approx. EUR 2,000 or more than approx. EUR12,000
- approx. EUR 21,000 for a general bond
Time < 1 week to prepare and send letter
No guidance. In some cases action can be taken within a few weeks of an application
6 mos. for domestic litigations
18 mos. – 3 yrs. for litigations involving a foreign party
Recordal applications are processed within 30 days.
Ad-hoc applications should be submitted as early as possible before the expected date of shipment of suspected infringing goods.
Where goods are seized, rights holders have 3 days to notify Customs to seize suspected infringing goods and post a seizure bond.
Evidence and burden of proof
• Key points – China has stringent rules on evidence – almost exclusively documentary evidence – documents must be original copies or notarized to be
deemed authentic – burden of proof for plaintiffs is very high – court will make very few assumptions
• Notarization – Notarization is the king of the court – Notary publics are quasi-governmental offices – Cost: RMB500-5000 depending on the notary and type
of notarization – Time: 1-5 working days
• Common misconceptions – photocopied documents are NOT self-authenticating – emails are NOT self-authenticating – certified mailings only certify dates, not contents
Take away messages
• register your core IP
• use NDAs
• keep proper documentation
• use a holistic approach with both legal and practical strategies
• be vigilant
• believe that it is possible to protect your IP in China
Closing Poll
If you have been a victim of IP theft in China, you chose not to enforce your IPR mainly because...?
a) My IP was not registered
b) No agreement was signed
c) It was too expensive or not worth it
d) I did not have any proof
e) I wasn't sure how to
Q & A
David Chen, Associate
Hogan Lovells International LLP, Beijing
+86 10 6582 9408
Upcoming Helpdesk Webinars
Save the dates of our upcoming webinars and events:
• 2 June 2011 – Shanghai: How to protect your creative work in China
• 7 June 2011 – Webinar: Focus on IPR protection for SMEs in the MACHINERY INDUSTRY
• 20 June 2011 - Webinar: Focus on IPR protection for SMEs in the CHEMICAL INDUSTRY
Thank you
The China IPR SME Helpdesk provides free, confidential, business-focused advice
relating to China IPR to European Small and Medium Enterprises (SMEs).
Helpdesk Enquiry Service – [email protected]
Training & Events
Materials
Online Services - www.china-iprhelpdesk.eu
For more information please contact the Helpdesk:
Room 900, Beijing Sunflower Tower
No. 37 Maizidian Street
Chaoyang District
Beijing 100125, P.R. China
Hotline number: +86 (10) 6462 0892
