This week Business Beyond Borders is delighted to bring you an exclusive article penned by China IPR Helpdesk’s expert Alessandra Chies. Our guest writer will also be conducting the Guide to IPR Protection in China workshop on the 18th of September at Texworld Paris (14h00 local time), as part of the Business Beyond Borders matchmaking event for SMEs and Clusters.
Intellectual Property (IP) protection is a primary method for securing a return on investment in innovation, offering to IP owners a competitive edge that others will not have. SMEs invest a tremendous amount of time, passion and monetary efforts in R&D and marketing, but often fail to consider that, in most countries, the only way to enjoy exclusive rights over their creative efforts and their business identity (trademark) is through IPRs registration. Considering that in the textile sector one single product can brilliantly encompass almost all form of IP rights, understanding and defending them is a paramount objective: a Patent for the new man-made yarn, the Design for an innovative texture of the fabric, the Copyright for the drawing painted on it, the Trade-secret for the dying procedure and the Trademark as representation of the business identity, all in one small piece of cloth.
The point is that Trademarks, Designs, Patents, are territorial rights and most countries adopt the first to file principle: this means in practice that the IPRs belong to their creator only if their creator was the first one to register it in that Country. And each Country in the world has its set of rules, its peculiarities, its advantages and pitfalls. Without being secured through registration, with the assistance of lawyers, expert in the jurisdiction, your IPRs can be freely exploited by anybody else. Considering the importance of the China market and the wonderful opportunities it offers in terms of production abilities, raw and semi-processed materials and the growing purchasing power and awareness of Chinese consumers, SMEs cannot afford to put-off investments in IP registration and enforcement in China and in the South-East Asian countries that are slowly but steadily emerging.
The aim of the workshop “Guide to IPR Protection in China and South East Asia for the Textile Industry” is not only to offer an insight on basic legal principles of IPR registration and enforcement in China and other core countries of South-East Asia, but also to bring practical case studies and examples to show what can actually go wrong if the peculiarities of the systems are not taken into due account. For example, in China “clothing” and “wedding dress” are not considered similar products, so as “textile products” and “felt”. This is because China adopts a strict system of sub-class division of the Classes of the Nice Classification and products/services falling in different subclass (even if in the same Class) are not considered similar to one another. As a result, if you have registered the trademark for “clothing” you can find another Company owning your same trademark “wedding dress”. To give another example, if a company files for an international trademark extended to China in Class 35 for “retail services”, this trademark will be refused in China, because the description “retail service” is not accepted. For these reasons, among others, it may be often more advisable to file for national trademarks where you can tackle more easily the China Trademark Office practices, rather than international trademarks.
Although China has undergone tremendous progress in the IPR legislation in recent years, and also its enforcement framework has dramatically improved, some issues still remain. For instance, among the biggest threats faced by SMEs in China we can list the proliferation of bad-faith applications. In addition, infringements and infringers are becoming more structured, more subtle (for example by using misspelled version of the trademarks, or targeting Chinese version of the brand, which often has not been registered by the SME in the first place). However, there are weapons to fight against such issues, and SMEs shall be aware of them for avoiding to fall within the loopholes of the system.
For instance, it is possible to enforce registered rights thought different means, and not necessarily by starting costly and lengthy lawsuits: for example, the system of administrative raids, where products are confiscated by the authorities and fines imposed to infringers works quite well in China. The Customs surveillance system is another “weapon” that very few SMEs use: China Customs is among the (very) few Customs that checks not only shipments imported in the Country but also goods that are exported abroad. This means that, by activating Customs surveillance in China, SMEs can be able to stop fake goods that are about to be exported abroad. The most important Trade Fairs in China have set up internal IPR complaint Centers that will remove, upon request of the right owner or the appointed attorney, products infringing registered rights in China, yet very few SMEs know and take advantage of this removal procedure.
Lack of awareness in how to construct a sound IPR registration and enforcement strategy will leave the SME orphan of method to stop someone else to exploit its IPR and also the easy target of bad-faith misappropriation.