Navigating the Great IP Wall of China

China is Australia's largest trading partner and with a population of over 1.3 billion people, its market presents enormous opportunities for Australian businesses.

In this guest piece from Australia’s intellectual property (IP) Counsellor to China, David Bennett shares the commercial IP decisions to consider when taking your business to China.

Register your IP rights in China

IP rights are territorial; your registered Australian trade mark, patent or design has no power in China. In order to enforce your IP rights in China, you first need to register in China.

Mainland China, Hong Kong, Macau and Taiwan all have separate legal systems, and you need to register separately in each territory.

Register your trade mark in China

If you’re manufacturing or selling a product in China, or are even thinking about doing so in future, you need to register your trade mark in China as soon as possible.

China has a first to file trade mark system which means the first person or company to file a trade mark application is generally granted the trade mark and becomes its legal owner. The trade mark owner can then sue for infringement, and have Chinese Customs seize infringing goods leaving or entering China.

Failing to properly secure your brand in China can be an expensive mistake. This issue affects all companies, big and small – even Apple and Tesla have had to buy back trade marks in China at costs of tens of millions of dollars.

In addition to your English language brand, you should develop and trade mark a Chinese language brand that will appeal to Chinese consumers.

With over 13 million registered trademarks in force in China, you also need to check that you’re not infringing on any existing trade marks.

There are two ways you can apply to register a trade mark in China. In order to be successful, it’s virtually essential to use a trade mark attorney. You should speak with an Australian trade mark attorney who has an understanding of the Chinese trade mark system. You could also go directly to a China-based law firm.

Legally enforceable agreements

Unfortunately, there are some manufacturers and businesses in China who will seek to acquire trade marks, patents, trade secrets and know-how belonging to foreign companies.

Before you disclose important information to a local manufacturer or potential business partner, you should conduct due diligence to find out more about them and consider making them enter into a non-disclosure, non-circumvention and non-use/non-competition agreement specifically designed for China.

In order to protect trade secrets, access should be limited on a need-to-know basis and you should educate your employees and commercial partners about your businesses confidentiality requirements.

It’s important to create a contract which is enforceable in China, remembering that China does not enforce foreign court judgements. You will need legal advice to draft appropriate contracts or agreements from lawyers who are experts in the Chinese legal system.

IP Counsellor in China

My role as IP Counsellor to China involves supporting Australian businesses to navigate the Chinese IP system, providing guidance on IP registration, enforcement procedures.

If you’re expanding your business to China and would like guidance on IP, take a look at our suite of resources, starting with trade marks.

Written by David, IP Counsellor to China

More information

Published: 
21 April 2017