This page contains a summary of key tips for research collaboration in China. For more extensive and detailed information, refer to IP Australia’s Guide to Research Collaboration in China.
Australian researchers collaborate extensively with overseas partners, including from China. In addition, Australian research institutions often engage in commercial partnerships with Chinese partners.
A successful collaboration or partnership is one that not only yields research outcomes and publications, but protects the intellectual property (IP) produced by the Australian party. The following information is intended to help you establish successful research collaborations in China.
Due diligence on your potential partner
It is important to carry out basic background checks on Chinese partners before signing any agreements. Does your partner hold the necessary licences and regulatory approvals to meet their commitments? You should aim to verify key information for yourself, not simply rely on the information they provide. Consider engaging a law firm with offices in China to carry out these background checks (also known as due diligence).
Choosing the right form of collaboration
In general there are two kinds of research and development collaborations relating to technology development: commissioned developments and joint developments.
In a commissioned development, one party (the Commissioner) provides funds for another party (the Developer) to carry out R&D in a particular area and deliver the agreed results to the Commissioner. The two parties may decide to either jointly own IP rights in the research achievements, or agree for the Commissioner to own all IP rights in the achievements. The Developer takes on all the project risk and is responsible if the project does not meet its objectives or produce a result.
A joint development involves two or more parties jointly contributing to, and participating in, the R&D. All parties fund and contribute to the R&D and jointly share the benefits, as well as risks, if the project fails to achieve its objectives.
The most appropriate form of collaboration will depend on the specific objectives of the project, and the expertise, funding, and risk tolerance of the parties.
Initiating discussions with potential partners
This will usually begin with an informal dialogue to understand the potential partner’s capabilities and interest. At this stage it can be best to limit the disclosure of information on the specifics of the technology and intended collaboration. If there is mutual interest and trust then the next step is usually for the parties to sign a non-disclosure agreement (NDA) in order to set up a safer framework to discuss and negotiate the key issues for the collaboration.
Keep in mind that a NDA only provides a remedy if there is an unauthorised disclosure. It does not prevent the mishandling of information, and cannot address all the commercial consequences of a disclosure. Even with an NDA in place, you should limit the disclosure of sensitive information.
IP Australia has a template non-disclosure agreement suitable for research collaborations in mainland China available to Australian stakeholders on request. The template agreement is a starting point only, and will need to be adapted to your specific circumstances with the assistance of a China-qualified lawyer. You can request the document by emailing ChinaIP@ipaustralia.gov.au.
Negotiate key issues in the prospective collaboration
The next step is to negotiate and reach in principle agreement on the key issues of the collaboration.
What are the project objectives, and what are the success criteria?
Who will own the IP rights resulting from the collaboration? Joint ownership can lead to disputes about the commercialization. Another option to consider is sole ownership by one party in exchange for reasonable compensation. Be aware that Chinese government funding for the project may come with IP ownership restrictions.
Who will own the commercialisation rights, in which territories? Will the other party receive royalties? How will payments be made? How will funds be repatriated to Australia?
At this stage the parties might negotiate and execute a brief framework agreement, which sets out the key terms of the intended collaboration.
Negotiate and sign a detailed contract
If both parties have agreed on the key issues, it is time to negotiate and sign a detailed research collaboration agreement. A well-drafted agreement will clarify the expectations on both parties, and reduce ambiguity and uncertainty. The agreement should carefully address the key issues above including IP ownership, project objectives, the criteria for assessing success, how the results will be commercialized, and payment.
Chinese research institutes will often transfer their IP or commercialisation rights to an affiliated holding company. You may need to include this company as a party to your agreement.
A research collaboration agreement is a type of contract. For general tips on what makes an effective contract in China, see IP Australia’s Contracts in China page. You should make sure the parties are identified in enough detail, and the contract is validly executed. You should also carefully consider the contract dispute resolution clause. If you want to be able to enforce your contract in mainland China, you will usually choose for disputes to be resolved through litigation in the relevant Chinese court, or by arbitration before an arbitration body in or outside of China.
For more detailed information, refer to IP Australia’s Guide to Research Collaboration in China.
The Australian Government’s Department of Industry, Science, Energy and Resources has produced a Guide to undertaking international collaboration.