Navigating China Guide (2012) - New Zealand Trade and Enterprise

It is also important to put IP issues in perspective. Some
companies in China are prepared to accept borderline imitation
of their products because they feel it does not harm their core
business. Others want to take a tough line against infringers
because they fear infringements will multiply if they are seen
to be passive.
You should also outline with your local partners and/or counsel
what you, as the rights owner, are prepared to accept in the
market and what you are not.
You should also be clear and firm about your IP with your local
partners. Many IP problems arise within supply chains and sales
channels, because your partners abuse your IP, deliberately or
otherwise. Ensure that you have Non-Disclosure Agreements
signed before you reveal any confidential information and have
contracts in place that ensure your partner cannot take liberties
with your IP.
Prevention is the best strategy. Communicate to your partners
early and often that your IP is important and do not brush
issues under the carpet. You should not enter into relationships
on blind trust or assume that contracts cannot be enforced –
they can.
Protecting patents
Under China’s Patent Law three types of IP can be protected:
• invention patents – lasting 20 years
• design patents – 10 years
• utility model patents – 10 years.
Food, beverages, flavourings, chemical and pharmaceutical
products are all patentable. There are some items that cannot
be patented in China, including plant varieties and, scientific
discoveries. Software can be protected as a patent for certain
applications.
Applications to register a patent in China go to the State
Intellectual Property Office (SIPO). New Zealand companies
which do not have a business office in China must apply through
a registered patent agent.
Applications must be in Chinese and include relevant drawings,
details of any claims and a description of the technology.
Design patent applications require drawings or photographs
of the design.
If SIPO decides the application complies with the Patent Law it
will issue a certificate, register the patent and issue its decision.
Patent rights are effective as of the date of publication.
There are two key dates:
• publication, whereupon the previously filed patent can be
viewed by the public and objected to
• the grant, which can be some years later.
After the patent is published, the patentee has the right to
request damages from any alleged infringers, but this right is
not yet enforceable. Once the patent is granted you can go back
and claim damages for any infringement during that period.
You also have a fully fledged patent right, meaning you can
claim proper damages calculated from the date of granting as
well as court injunctions to actually stop infringers. At present,
publication of invention patents in China is always either six
months from when the patent is filed in China or 18 months
since it was first filed anywhere, whichever comes later.
Design and utility patents usually take about a year to register,
though it can take two to three years to register an invention
patent. You can register a utility model and invention patent
simultaneously for the same invention, meaning that the utility
model is granted first, then if the invention patent is granted,
you have to abandon the utility model. This is more expensive
as you are filing two applications, but allows you to obtain quick
protection from the utility model first, and then your protection
switches to the invention patent. This can be useful for very
valuable inventions that you want some early protection for.
Protecting trademarks
The best way of protecting your trademarks is registering them
so they are covered by Chinese law initially for 10 years, but this
is renewable.
You should register both an English and Chinese translation
of your trademarks, logos and domain names with China’s
Trademark Office.
If you don’t have a physical presence in China, you must register
your marks through a trademark agent. However, lawyers or
your Chinese agent may prepare the application. If you have a
Chinese company or a representative office they can register
your trademarks directly.
Failure to create and register a Chinese version of your
trademark opens up the chance that the market will give your
product a ‘nickname’ which you may not like and have no rights
to. Also someone else in China could even register your
trademark or the Chinese ‘nickname’ as their own, forcing
you to buy it back.
Trademark applications can cover words, designs, letters,
numbers, three-dimensional signs and colour combinations,
as well as combinations of these elements.
If you let another party use your trademark under a licensing
arrangement, under Chinese law you must execute and register
a trademark licensing contract. This is not only good practice
but allows the licensee to remit royalty payments overseas in
foreign exchange.
The cost of having an application prepared to trademark one
brand in one class is around NZ$650. This includes the official
filing fee, administration fees and disbursements. The application
must be accompanied by specimens of your trademark and all
documents must be submitted in Chinese.
China uses the International Classification of Goods which
categorises commodities and services into 45 classes.
A trademark must be registered in connection with at least one
particular class of goods. Each category must be registered
separately in Chinese.
Registering a trademark can take 18 months, although
examination periods are now falling to close to 12 months.
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