China is Australia's largest trading partner. With its population of 1.4 billion people, China presents enormous opportunities for Australian businesses. Australia is both a leading source of resources for China and increasingly a supplier of premium goods and services.
Doing business in China
Safeguarding your intellectual property (IP) should be one of your primary considerations when thinking about doing business in China. The first step towards protecting your IP in China is to register your IP rights.
You should seek independent legal advice on how to protect your IP in China from a qualified firm that has extensive experience with China.
Before entering into discussions with manufacturers or potential business partners it is vital to require them to sign a non-disclosure agreement that has been specifically designed for China. In order to be effective, such contracts should usually be written in Chinese, be governed by Chinese law, and be enforceable in China.
You should also register your trade marks, designs, patents and other IP rights in China before entering into any discussions or exhibiting your products at international trade shows.
Even if you are outsourcing manufacturing and not selling your product in China, you still need to secure IP protection in China. If you don’t, someone else could register your IP and stop you from exporting your product.
It is important to do your research and develop a market entry strategy before entering the Chinese business market. Austrade’s website has extensive information about doing business in China.
The China-Australia Free Trade Agreement (ChAFTA) came into effect on 20 December 2015. The full agreement as well as helpful information and factsheets are available on the Department of Foreign Affairs and Trade website (DFAT).
IP Protection in China
In China you can register trade marks, patents, designs and copyright. Registering your IP rights as early as possible will save you significant time and money later.
IP rights in China are registered through several government bodies:
- patents and designs are registered through the State Intellectual Property Office (SIPO)
- trade marks are registered through the China Trademark Office (CTMO)
- copyright protection applies automatically, but can be registered through the National Copyright Administration
Unless you have a residential or business address in China, applications must be filed through Chinese agents or attorneys. Australian and international IP firms with experience in China will coordinate work with Chinese associates, or you can engage a Chinese agent directly. Documents need to be submitted in Chinese, therefore translation fees should be factored into your cost of applying.
- China has a "first-to-file" trade mark system. Unlike Australia, this means that the first person to file a trade mark application will own the mark, regardless of who developed or first used the mark. This is why it is so important to seek IP protection in China early – if you don’t register your trade mark, someone else will.
- “Trade mark squatting” is a common issue in China. Due to the “first-to-file” trade mark system, a company or individual can apply opportunistically for a trade mark with the intent to sell the mark back to its original creator or take advantage of its international reputation. The best way to prevent trade mark squatting is to register your trade mark before anyone else does.
- In addition to your English language mark, you should also develop and register an appropriate Chinese language mark for your brand.
- Trade mark applications can be filed directly with the CTMO, or made through the Madrid system for the international protection of trade marks.
- Registration through the Madrid system can take up to 18 months. A direct registration through the Chinese domestic system may take longer.
- Trade mark registrations may be removed from the register if they are not used for three or more years after registration.
- Two forms of patent protection are available in China:
- invention patents are equivalent to Australian standard patents, with a term of 20 years. Invention patents require a full examination before grant, which may take around 2-4 years.
- utility models (or “mini patents”) last for 10 years and require a lower level of inventiveness. They are similar to innovation patents in Australia. Applications for utility models in China are not substantively examined and are typically granted within 1 year. Utility models can be a useful way to secure protection cheaply and quickly for incremental innovations.
- Applicants may apply for both types of patent protection for the same invention.
- Invention patent applications can be filed directly with SIPO, or through the Patent Cooperation Treaty (PCT) international patent application system.
- In China, designs are known as design patents and are registered through SIPO. A design patent protects the visual appearance of a product.
- Protection is available for a 10 year period. Design patents do not undergo substantive examination and are typically granted within 1 year.
- China is a signatory to the Berne Convention, so copyright arises automatically for any work created inside or outside of China, without requiring registration for protection.
- However, unlike Australia, it is possible to register copyright in China through The National Copyright Administration. It is recommended that rights owners consider voluntary registration to help enforcement actions.
- Trade secrets, unique names, packaging, and ornamentation of well-known goods are protected under the Anti-unfair Competition Law and the Anti-Trust Law.
- It is recommended that you seek advice from legal professionals on how to use non-disclosure agreements, employee contracts and internal systems to protect against disclosure of trade secrets.
- Plant varieties are examined by two authorities, the Ministry of Agriculture (MOA) and the State Forestry Administration (SFA).
- Plant varieties are protected in China for a period of 15 or 20 years, depending on the type of the plant.
IP Enforcement in China
Once your IP rights have been secured in China, it is important to monitor the market for infringements.
Most Chinese e-commerce sites have takedown procedures that allow IP rights owners to apply to have IP-infringing product listings removed.
It can be very useful to register your IP with China Customs to prevent infringing products from being exported or imported. Trade marks, patents, designs and copyright can all be registered with China Customs. Customs offices will check and intercept infringing goods, either at their own initiative or following an alert by the rights owner. Most IP seizures made by China Customs are trade mark infringing goods being exported from China.
Enforcement of IP rights in China is quite different to Australia. Enforcement is available through both administrative and judicial avenues. If you discover an infringement there are three main channels for enforcing your IP rights.
- Administrative enforcement: Administrative enforcement is conducted by local government authorities and is most effective in straightforward cases. Administrative enforcement is fast, inexpensive and typically ends with a fine and/or an order to stop the infringing activity. Compensation to the rights-holder cannot currently be awarded through this channel.
- Civil litigation: IP cases involving foreign entities will typically be heard at first instance at local Intermediate People’s Courts, the second level of a four-tier civil court system. Judicial decisions are usually issued within 6-12 months and both injunctions and damages may be awarded.
- Criminal enforcement: Cases that exceed fixed criminal thresholds can be investigated by Public Security Bureau (PSBs). Administrative cases that exceed thresholds may be transferred to PSBs for criminal investigation. Typically rights holders will provide evidence for criminal investigations.
- Export Council of Australia
- Professional advice – If you are considering doing business in China, it is recommended that you contact an Australian IP adviser with experience in the Chinese market. These advisers can facilitate contact with a Chinese attorney who can represent you before Chinese authorities.
Every effort has been made to ensure that the information provided is accurate, however we accept no responsibility for any errors, omissions or misleading statements in this factsheet. This information is written in general terms and should be used as a guide only. It should not be used as a substitute for professional advice.