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Intellectual property rights and dispute resolution in China


Intellectual property protection is necessary for any type of business or entrepreneur that deals with creative concepts. Unfortunately, IP protection laws are a little bit messy in China. In the final installment of the Dispute Resolution Series, you’ll learn about intellectual property rights, intellectual property disputes, and how to protect your intellectual property in China. It all comes down to some know-how and having an experienced IP lawyer on your team.

What are intellectual property rights?

Intellectual property rights are specific rights over conceptual creations given to individuals or companies. Typically, these rights will give the creator of a product, brand image, name, or other concepts the right to use their creation exclusively for a period of time.

Types of intellectual property rights

Patents, trademarks, copyrights, and trade secrets all fall under the umbrella of intellectual property. 

  • Patent. A document that gives exclusive rights to the use of your invention for a specific period of time. 
  • Trademark. A symbol, words, or design used to represent a brand, company, product, or individual.
  • Copyright. An exclusive right to print, perform, record, or otherwise reproduce intellectual property.
  • Trade secret. A type of intellectual property that includes concepts like formulas, processes, patterns, or other types of information that have economic value but aren’t exactly a “product” in the traditional sense.

Why are intellectual property rights important?

Intellectual property rights are vital because they protect a wide range of business-related concepts that can easily be stolen, especially in a global context. IP protection helps promote innovation and fair competition, allowing businesses to use their original concepts to generate revenue, gain market share, and more. Without protection, your intellectual property could be at risk and you may not be able to take advantage of your possibly disruptive and groundbreaking inventions. Intellectual property agreements should be a part of every business’ research and development.

Thinking about going to China with your brand? IP disputes, especially infringement violations in China are more common than you think. The Chinese government has agreed to pay more attention to IP infringements that involve trade secrets, counterfeiting, branding, and piracy in the recent Economic and Trade Agreement between the United States and China. While this is a step in the right direction, it’s important to understand how intellectual property rights and disputes work in China before entering this market with your intellectual property.

Challenges for intellectual property rights in China

One famous example of trademark hijacking in China is the case of the clothing brand Zara. The Spanish clothing brand became very successful in China in the late 2000s and operates quite a few stores in the country. They secured trademark registration for their brand name in order to ensure that their trademark wouldn’t be stolen. However, the company only filed for the Latin letter word and not its Chinese equivalent. A hair salon in Fuzhou submitted a trademark for the Chinese equivalent. Despite numerous attempts from Zara to issue cease and desist letters, the application was approved and the hair salon was legally allowed to use the name.

This unfolded because China follows a first-to-file principle. Most other countries base intellectual property rights around who came up with the concept first. However, applications for trademark protection in China are approved on a first-come, first-serve basis.

The Zara incident is not an isolated one, either. China is listed as one of thirty-six chronic IP theft violators, a Special 301 Report in 2019 found. Entering this market has its own set of risks and a well-rounded knowledge of how intellectual property disputes in China work.

How are IP disputes resolved in China?

To be clear, brands shouldn’t be completely put off from entering the Chinese market because of their differing IP laws. The use of well-drafted contracts can help protect your brand against possible IP disputes in China, as can legal representation with IP-specific experience. Knowing the laws and the type of IP registration to apply for in China is also important.

IP contracts or intellectual property agreements in China can ensure that your business’ intellectual property assets are protected. IP agreements can be used between your business and a Chinese supplier or other third-party entity. Such contracts will outline the details, rules, expectations, and dispute resolution mechanisms, helping to protect you and your business.

Intellectual property agreements in China will often contain specific clauses that state that the brand can monitor and inspect the supplier or licensee’s business activities to ensure no illegal use of the brand’s intellectual property occurs. The best way to avoid intellectual property disputes in your future business dealings is to have a contract drafted right away, with assistance from a lawyer who is familiar with Chinese business, language, and intellectual property laws.

The bottom line

The need for clearly defined intellectual property rights and knowledge of IP disputes is necessary for conducting business in China. However, this can be overwhelming as you enter a foreign market, especially if you don’t have a background in law. The best solution is to have a lawyer with extensive knowledge of intellectual property disputes represent you.

Ready to learn more? Sign up for our upcoming webinar to learn more about IP protection in China. We’ll be speaking with some of China’s top legal experts in the space and hosting an interactive Q&A session to help you get answers to your IP-related questions. If you have more specific questions, you can sign up for a free Trustiics account to get quotes from top-rated lawyers and book a free call to get you started.

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