The reason is plain and simple – along with being the main world manufacturer of pretty much everything, China has also become the center of thriving copying industry. Everything is being copied in China nowadays – from snickers and smartphones to industrial machinery and hotel brands. Every company that achieves any degree of success locally is in danger of having their technology reverse-engineered, reproduced and sold at lower cost domestically.

Almost every industry has examples of foreign companies driven out of Chinese market by a local competitor who started selling the low cost alternative. Recent trend has been even more worrying – Chinese companies applying for patents that cover competing technology by practically copying foreign registered patents. Of course, since a foreign patent doesn’t protect the original manufacturer in China, a local company, holding an equivalent of such patent in China, will have the legal right to sue the original maker for IP infringement.

Every company that achieves any degree of success locally is in danger of having their technology reverse-engineered, reproduced and sold at lower cost domestically.

I have recently encountered such case in my own industry where a well-known equipment manufacturer was sued and lost to a local company that reverse-engineered and reproduced their fairly complex product. The original maker tried to fight the copier by trying to invalidate their patents but failed. The local company in question was also enjoying very close relations with the local government which just might have helped them to steer the legal process in their preferred way. As it turns out, that local company has been doing the same trick in the past to other foreign manufacturers and, eventually, drove them out completely.

In general, the process of invalidating patents is very complex in China with very low chances of success, so pursuing this strategy is unlikely to bring any results and also tends to be quite expensive.

What does it all mean to a Western company looking to expand into Chinese market? The critical step is applying for local patents to cover your technology well in advance. This will prevent, or, at the very least, discourage a potential infringer to copy your products. This will also give you an effective way to go after the violators. However, all of this would only be effective if you are the first to apply for a patent which underscores the importance of doing your due diligence ahead of the market entry.

Unfortunately, most companies don’t do it assuming that, even though a foreign patent offers no legal protection in China, the likelihood of someone else being able to pass your technology as their original invention and have a local patent granted for it is low. Apparently, this is not the case as more and more local competitors are increasingly filing patents in bad faith. The upcoming new IP law scheduled to take effect in 2014 is unlikely to change this situation either and it will not be applied retroactively.

In conclusion, perusing a long term IP strategy in China is imperative in any industry and no company is immune from having their products copied and, as a result, being at risk of losing the market entirely. Contacting a reputable local patent law firm on the early stages of the market entry should be an integral part of your overall marketing and selling strategy.

The post IP Protection in China: What You Should Know Before Entering the Market first appeared on Sampi.co.

The post IP Protection in China: What You Should Know Before Entering the Market appeared first on Sampi.co.

If you are planning to establish a long term presence in Chinese market it is advisable to start thinking about Chinese equivalents of your company’s name and other trademarks. This can be tricky as a simple translation or phonetic transliteration of your brand name may not work well enough locally.

Ideally, your Chinese name should sound similar to your English one and, at the same time, contain characters that reflect an intended mood or feeling. Coca Cola’s Chinese name is the classic example of such successful combination: 可口可乐 made of 可 ke3 (being able) 口 kou3 (mouth) 可 ke3 (being able) 乐 le4 (happiness), or “enabling the mouth to enjoy happiness”.

Another example is IKEA or 宜家 in China combining 宜 yi2 (proper) with jia1 (home).

Obviously, not always such successful combinations are available but in either case, the characters should mean something positive and convey proper mood. It means that you should use a native Chinese speaker, or perhaps even a few people, to figure out the most suitable name.

Once the proper name has been found, next step is to register it as your trademark. You may want to register several variation of the same name taking into account local variations but, in most cases, one version will do just fine.

Registering your brand in China doesn’t provide any protection in other Chinese speaking countries and territories where the brand must be registered locally.

Once you have confirmed that no one else has the same name registered in the categories of your choosing, go ahead and file an application as soon as possible.

One should also consider a possibility that your name may eventually evolve or the market will be not receptive enough to it and may require some further changing and tweaking. In this case, you should go back and rethink your choice. On the other hand, if your brand becomes successful, there is always a possibility that someone else will try to mimic its name to create a copycat product. In this case, you should try to lay claim on as many variations as possible, limited, of course, by the depth of your pockets.

Keep in mind that registering your brand in China doesn’t provide any protection in other Chinese speaking countries and territories where the brand must be registered locally. Also, in other jurisdictions such as Taiwan, Hong Kong and Macau, the name should be registered in Traditional Chinese which the main language there. It may also sound and mean quite different things outside of Mainland, therefore it would be a good idea to verify your brand name again before registering it.

The post Trademark Protection in China, Part 2: Language first appeared on Sampi.co.

The post Trademark Protection in China, Part 2: Language appeared first on Sampi.co.

In China trademarks are registered on “first to file” basis regardless whether it’s been in use elsewhere for decades. This basically means that prior art argument wouldn’t work in 99% of the cases if someone has already registered your trademark, even though you may have been using it for years. Big brands have found themselves in this situation and were forced to fork out substantial sums of money to recover their brands.

It would come to no surprise that many people in China have seen an opportunity to take advantage of registering famous brands before their legitimate owner would do so. Since there are basically no effective legal recourse in such cases, companies are left with two choices: negotiate with the registrant to have them transfer your brand back to you for a fee, or re-brand your product for Chinese market.

In China trademarks are registered on “first to file” basis regardless whether it’s been in use elsewhere for decades

As much as upsetting it may be to companies, negotiating and buying back your trademark from a squatter may be the cheapest solution. If you choose this route, it is essential to negotiate through a lawyer or a third party without disclosing yourself as an original owner of the brand. Otherwise, the Chinese registrant of your brand may realize how important it is to you which will be definitely reflected in the asking price.

My company has found itself in a similar situation not too long ago. Fortunately for us, the squatter, as I call it, has registered our old brand, before we went through a major re-branding process a couple of years ago. So, what they got is our old logo but they did register our English company name which stayed the same.

At this moment, we have decided to register our brand and new logo in the other categories, which are similar to the original one, and forgo negotiating with the Chinese registrant. At the same time, we have also applied to register the squatter’s own logo and name as shown on their website to strengthen our negotiating position in case we do decide to recover our trademark name in the original category in the future.

In subsequent post, I will discuss more issues related to trademark protection in China.

The post IP Protection in China: Trademark Caveats first appeared on Sampi.co.

The post IP Protection in China: Trademark Caveats appeared first on Sampi.co.