Customizing IP protection strategies for China

By Frank Liu, Jincheng Tongda & Neal
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When answering questions in relation to intellectual property (IP), the author found that most IP holders were scrambling for immediate solutions against IP infringements and seeking advice on how to confirm and authorize their IP ownership. The least asked question, however, was how to figure out effective strategies of IP protection in China.

Frank Liu-cutout
Frank Liu
Partner
Jincheng Tongda & Neal

Likewise, with a human being, acute illness is the most critical and pressing health problem, but individual-based health plans and a comprehensive disease prevention system give you the most benefits with the least resources. With respect to IP protection, it seems that taking appropriate solutions on individual cases are the most urgent and important, but actually only customized strategies can provide long-standing and effective protection against potential infringements.

Importance of IP strategy. The importance of IP strategy does not necessarily mean that individual action plans are not important. These action plans, such as trademark & patent registration, crackdowns against counterfeits, and civil, administrative and criminal proceedings, are important as well. The sticking point, however, is that most IP infringements in China do not simply involve trademarks or patent disputes; instead they are much more sophisticated and complicated, and may also be entangled with domain names or corporate name infringements, and the infringers might exploit complex corporate structures to manipulate premeditated and co-ordinated attempts against legitimate IP holders.

Under this kind of circumstances, if we roll out targeted actions against individual offenders without analyzing their behaviours, motives, plans and measures, we would be unable to root out the problem for good. As a result, we might score legal victories on individual cases, such as a successful crackdown against counterfeits or nullifying hastily registered trademarks, but suffer substantial losses in IP protection strategy and business interests.

In a show of strong commitment to IP protection, an IP holder must have a clear mind about its proprietary IP resources, and get to know the suspected infringer’s background, corporate structure, existing IP resources, ongoing IP applications, business development plans, potential IP conflicts with the IP holder in the Chinese market, as well as infringements that have already taken place.

Based on a full knowledge of the above-mentioned information, the IP holder must predict prospective infringements or hostile registrations, and craft a comprehensive action plan to fight infringements in a timely, targeted and effective manner.

Every action or step is critical in IP protection, but our attention cannot be only limited to the success or failure of individual cases. We should have a whole picture in mind, take integrated and co-ordinated action through
organization and time planning to maximize the effect and efficiency of a well-established framework of IP protection strategies. In short, IP protection strategies are designed to make effective arrangements under limited budget resources and maximize the effect of IP protection.

Why strategies must be customized? Every IP holder faces different circumstances in China. If we applied the same strategies to all IP holders, the approach of IP protection would probably be unsuccessful, or at least ineffective. In addition, after years of crackdowns against illicit IP practices, Chinese infringers are very familiar with commonly-used IP protection strategies. Many infringers prefer to use more complicated or indirect tactics to circumvent and neutralize the pervasive crackdowns.

Many IP holders have never considered adopting IP protection strategies, or have adopted generally used template strategies to reduce cost. Numerous legal cases have demonstrated the principle that anything free ends up being the most expensive. Generally used template strategies are applicable to a huge number of customers, and the time cost for individual strategies is very low. But since these strategies do not take into account the holder’s proprietary IP resources, the purpose of defending its IP ownership, as well as the prospective rival’s legal tactics, the rate of success is doomed.

Under that circumstance, the IP holder appeared to have reduced its legal expenses, but lost valuable opportunities to defend its rights, and to file the same case again after its initial litigation failed. As a result, business losses were incurred due to its failed attempt to stem IP infringements.

Taking individual actions without a full spectrum of IP protection strategies will not root out the fundamental problem. Most IP holders have found they are deeply troubled by complicated infringements, and counterfeits tend to mushroom at a faster pace as they intensify crackdowns.

In conclusion, with respect to IP protection in China, any hasty actions against individual cases are becoming increasingly futile. Individual action plans and their success are important, but crafting customized strategies is essential in order to give IP holders comprehensive and effective protection against IP infringements.

Frank Liu is a partner in the Shanghai office of Jincheng Tongda & Neal

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