Intellectual Property Rights’ (IPR) protection is a very important issue that deserves special attention: in this article we would like to provide our Readers withsome basic suggestions and information, even if we are fully aware that the below content may seems obvious to those companies/individuals with experience in such field.

Many companies, especially in a start – up phase in China, consider an investment in IPR protection a waste of resources:

Why shall we invest in IPR protection when we are not sure whether or not our products/services will be successful in China?

is one of the questions most heard in many years of practice.

“Because if you start protecting your IPR when your products/services are successful, it’s often too late!”

is the obvious answer.

First of all, register!

China, as many other Countries, implement the system for which the owner of IPRs (with exclusion of copyrights) is the subject that first register them! This is why waiting to have a successful product/service is often too late: by the time you may apply for registration your competitor may have obtained your IPR and can stop you from carry out your business activities in China! In fact, according to applicable Chinese laws and regulations, IPR owners may stop infringors with a various types of legal remedies, including lawsuit (requesting cessation of unlawful activities. Imposing of fines, and compensation for damages and losses in favor of the owners) and administrative actions (such as ban from import/export the counterfeit goods, orders to stop the business activities and confiscation of goods, fines and confiscation of revenues derived from the illicit activities. While those remedies may constitute a powerful deterrent when used by the rightful owner of IPRs, if abused by an unfair competitor (such as the one that register an IPR created by a third party) may cause a lot of damage to law-abiding businessmen.

Of course, the law also envision cases in which businessmen unlawfully register IPRs, but, please, be aware that the burden to prove the bad faith in case of unlawful registration of IPR is on the claimant, and that often such proof is not an easy one! Another solution would be to negotiate with the counterpart the purchase of the unlawfully registered IPR: however, such negotiation, when it reaches an agreement between the parties, will also results in a substantial cost for the companies/individuals in good faith (especially if compared to the little sum required for a timely registration). Finally, another preconception that we often encountered is that an IPR registered in a certain jurisdiction (as, for example, in the Country where the IPR owner is located) grants a global protection. That’s generally not true! IPRs enjoy ONLY local protection, valid and enforceable ONLY in the country/ies where they are actually registered!

Protection clauses

As we covered above, register IPRs is the first and undoubtedly the most important level of protection. However, there are other steps to undertake, and one of those steps is definitively the drafting of specific protective clauses in any commercial contract involving IPRs. Such clauses shall in fact govern al issues related not only to the use of the mark by the contractual parties, but also all confidentiality covenants, so to avoid any infringement by third parties that have acquired information from your contractual counterpart. Also very important, even before entering in a commercial contract, is to draft and prepare a non – disclosure and confidentiality agreement that shall set rights and obligations of the parties for use of information exchanged during negotiation phase. Finally, we would like to remind that in case of licensing of IPR, specific contracts shall be signed and registered to competent authorities.

Continuing monitoring

As the enforcement of IPR starts by impulse of the party that sees its rights violated, a continuous monitoring of the market, so to verify the existence of infringors is very important. Of course in a Country as big as China a capillary check may be difficult and quite expensive, however, we recommend to keep monitoring the areas of interest for your business, because counterfeit goods can cause extensive damages both monetary and in reputation.

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