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Safeguarding one’s intellectual property in China

Despite intellectual property protection improvements, American businesses remain cautious about doing business in China. IP is at the center of their concerns.

Commentary in The Heartland Institute publication mentions the value American companies place on IP protection. The U.S. Chamber of Commerce ranks the U.S. as first in IP protection.

In China, it is a very different story. Chinese officials place conditions upon companies wanting to do business there. This includes requiring such companies to share technology and intellectual property with local firms. Under Chinese regulations, their trademarks will be registered by a Chinese business. And with such forced sharings, there is no guarantee that intellectual property will remain undisclosed.

Chinese officials may wish to keep such policies in place. The policies concerning technology sharing allow them greater access to the intellectual property of foreign firms.

Yet such sharing comes at a heavy loss to U.S. companies. Estimates of losses to U.S. companies could be anywhere from $200 billion to $500 billion. And there’s little a U.S. firm can do to receive restitution due to IP theft.

Setting up of an intellectual property rights court

China’s Supreme People’s Court has set up a branch to hear intellectual property rights cases. In a recent article, a Chinese intellectual property judge pointed out that, since this is under the jurisdiction of China’s highest court, Chinese officials are taking the problem of IP theft seriously. She added that in addition to “improving the transparency, unifying judicial standards and enhancing efficiency, our mission is to build the intellectual property court to help boost technological innovation.”

The Supreme People’s Court first established an intellectual property division in 1995. There has also been recent expansion of the number of IP courts. And the courts have also been more willing to hear cases from foreign businesses. Last year, over 20 percent of cases heard concerned foreign entities.

While we remain hopeful that conditions will continue to improve, it is still wise for American companies to remain cautious protecting their intellectual property interests. Having access to legal counsel who understands the issues you face and has experience dealing with the Chinese legal system remains invaluable.

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