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Intellectual Property

(January 14th, 2016)

What foreign companies need to know about the Chinese law!

The following article explains the Chinese legal framework and points out what you should know as a foreign company to secure your intellectual property appropriately in the long run.

The protection of intellectual property is always a sensitive topic. Especially foreign companies who consider to expand in China are worried about the security of their trademark or copyright. However, such considerations should not be the reason to avoid the Chinese market. Contrary to many rumors picturing China as the hatchery of piracy, there actually is an extensive legal framework to protect foreign as well as local intellectual property. Especially since joining the World Trade Organization in 2001, China has strengthened its legal framework. This lead to a far reaching compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) since every member nation of the WTO has to include universal minimum standards in the individual national law. Apart from the WTO, China is also member in several international organizations related to IP rights: Paris Convention (priority rights) – since 1985; Berne Convention (copyright) – since 1992; Patent Cooperation Treaty (patents) – since 1994; Madrid Protocol (trade marks) – since 1995. Therefore the regulations regarding intellectual property in China are almost the same as in the EU and other countries. However, it is important to know the differences in order to protect your IP Rights in China effectively. According to the WTO Intellectual Property is defined as follows: “Intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time.” In China, the legal framework for IP protection is built on three national laws passed by the National People’s Congress: the Patent Law, the Trademark Law and the Copyright Law.

Patent law

The Patent Law of the PRC, firstly presented in 1984, was passed to encourage inventions and to support the development of science and technology. Since then it was already updated three times: in 1992, 2000 and 2009. Different from other countries and very important to know is the fact, that China applies the first-to-file system on patents, which means that those who file first get the patent, even if they are not the original inventors. This emphasizes how important it is to start the patent registration as soon as possible.

The patent applications are conducted in Chinese, so the documents (if originally non-Chinese) must undergo a precise translation by an expert to secure the completeness of all relevant points. Also, foreign companies who don’t have a registered office in China must use the help of a local patent agency which is legally based in China. Furthermore, a patent attorney for filing the patent is needed. The administrative authority responsible for patents is the State Intellectual Property Office (SIPO). The SIPO is also responsible for IPR issues in general.

Trademark law

The trademark law secures the owner’s rights on trademarks and sustains the quality of products or services bearing the registered trademarks. Also, according to the Paris Convention, China has to grant the right of priority to trademark applications submitted by the nationals of the Paris Convention member countries.

China has, as already mentioned, a ‘first-to-file’ system. This also means that the ones registering the trademark don’t need any evidence of prior use or ownership. That’s why third parties can also register popular foreign marks without really “owning” them. A registration at the China Trademark Office as soon as possible (trademark as well as Logo) is highly recommended if your company plans to enter the Chinese market. Only accepted and registered Trademarks by the Trademark Office in China are protected by law. The owner has then the exclusive right to use this trademark. Also, we recommend to register an appropriate name for your product in Chinese, since the customers will recognize and also pronounce it easier. Acting fast should have high priority – a trade mark registration usually takes over 1 year and the trademark itself is further valid for ten years with the option to renew it for another ten years period.

There are certain facts you should consider when planning to register your trademark in China. The newest amendments to the Trademark Law were made in 2013 and since the effective date on 1st May 2014, not only visual trademarks like logos or pictures, but also sounds can be recognized and hence registered. For the trademark registration, China uses the international classification of goods according to the Nice agreement. Recently changes according the registration procedure were made. You don’t have to register the different classes separately anymore but can use only one application for many various categories.

Copyright law

The registration of copyright in China is not mandatory. However, a registration of copyright could help in case of difficulties or conflicts with other parties for proving the ownership. Protection to persons from the countries belonging to copyright international conventions and agreements of which China is a part is secured. Thus, many decide to register voluntarily at the National Copyright Administration (NCA) just to be safe in case of trials.

The period for copyright protection is divided into two possibilities. Depending on the type of the subject, the copyright period is either the life of the author plus 50 years more or, in case of film, photographs and television 50 years after the first publication.

As a conclusion, it is always important to be well prepared before taking actions. For example, you can consult other individuals who are familiar with the law in China, inform yourself on websites or brochures on doing business in China. It is highly recommended to seek professional advice as well, at lawyers, consultants or other experienced firms. Since China is a lot about networking, try to maintain good relationships with the local organizations that can help you. Consider also the fact that laws change frequently, so stay updated.

Remember: if you do not register your rights you will not be able to enforce them!

 

Please note that this article only contains the most basic information about the Intellectual Property Law. For further, more comprehensive information and assistance please contact richard.hoffmann@ecovis-beijing.com

 

Richard Hoffmann Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States and China for various prestigious law firms prior to joining ECOVIS. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: richard.hoffmann@ecovis-beijing.com 
Ecovis Beijing is the trusted tax and legal advisor of several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our Newsletter, give us a call +49 (0) 6221-9985639 or contact us directly via Beijing@ecovis.com
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Author:
Richard Hoffmann
richard.hoffmann@ecovis.com
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