For a long time, China has been considered the black hole of IP (Intellectual Property) laws: foreign companies and tech entrepreneurs saw China as a law-less place full of copyright-copycats and intellectual property thieves. However, in recent years, China’s IP laws have changed dramatically, and China has revolutionised the way IP is governed.
Trademarks and patent effectiveness is improving dramatically in China. Through current governmental focus on revamping the IP processes, China has incentivised the IP system to continue to improve and it is set to continue developing over the years.
Additionally, “laowais” (foreigners) are no longer discriminated against in the Chinese courts simply for being foreign; great news for foreign tech startups! Though, going toe to toe with and SOE (state-owned enterprise) is still likely to be a very tough battle.
All these improvements in the Chinese IP system have shown that the Chinese market is turning out to be a great place for tech startups to start their business. This article will provide a lowdown on how IP works and will provide tips for tech startups on how to deal with Chinese IP laws.
1. How the Chinese IP System Works:
As any type of foreign company it’s important to know one thing: Your global patents are worthless in China. If you want to be protected here, you need to have filed locally for all your IP & patents.
The types of IP you can file in China:
How do you protect the registered IP?
You will need to be proactive and enforce your IP to be taken seriously by other companies here. If you aren't, you will get pushed around.
The Chinese system is a “first to file” process meaning that the first person who applies for the patent will be the one who is awarded it despite being able to prove first use. In most other countries, if you can prove through sales or other means that you are the deserving party you will be awarded the patent. This is not the case in China, and as such, reinforces the need to update every iteration and change you make to your IP.
Specifically for tech companies, the process for applying for an IP is slightly different. In order to file for IP you will need to disclose the first and last 50 pages of code for your copyright application, so this should be taken into consideration when doing any coding.
2. How to Protect Your IP and Business in China:
When doing business in China as in any country, you will often find yourself partnering with other businesses or individuals and ultimately sharing your IP. This is especially common for tech startups that may need to construct a supply chain within China.
However when sharing your IP as tech startup in China it is important to tread carefully as you should always be extremely careful about what you disclose to any potential partners. There are four main steps any savvy businessperson should take:
Protecting your business and IP is especially important for tech startups entering into a JV (joint venture). When writing up the contract or agreement for the JV it’s important that you clarify exactly who will own the IP rights & any ideas generated throughout the partnership.
3. How to Protect Your IP In the Manufacturing Process
Once you’re ready to begin manufacturing your product, it’s important to know that your IP troubles may not end there. Apart from using non-disclosure agreements with manufacturers, protecting your IP is also about designing the manufacturing process in a way that stops people from stealing your ideas.
Along with signing NDAs with manufacturers, implementing the above steps will ensure your tech startup faces little harm from attempts to copy your IP.
4. The New Cyber-Security Law Coming into Effect on June 1st
The new Cyber Security Law passed by the Standing Committee of the National People’s Congress is set to have huge impacts on IP when it comes into effect on the 1st of June. Here are some of the most important changes (and possible changes) involving IP that can affect tech startups:
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