E3G

Intellectual Property Rights in China: Myths versus Reality

By Ian Harvey and Jennifer Morgan

Case Studies

The two short case studies below outline the key elements of a successful company IPR strategy in relation to doing business in China.

Phillips started its IP strategy in situ in China in 2001. Key points in its IP strategy are IP creation, counselling, enforcement, licensing, and standards. Phillips has about 50 IP lawyers in China, 95% of whom are Chinese. It currently has 11 research laboratories and 11,000 patents in China of which 1500 were generated in China. Also, the company has 560 trademark registrations and 550 design rights in China. Phillips has funded IP Academies in 3 universities, organises IP seminars for knowledge sharing and runs open discussions at the IP Media Club. The company’s focus is on establishing IP partnerships and talent growth. As a result 15% of Phillips’ global patents now originate in China and it is predicted that this number will increase to 50% over time.

Zwilling J.A. Henckels AG. faced counterfeiting problems in the 1990s and sent its head of IP to China to work with the local council on IP issues. The company now has registered its IP rights, monitors the market for potential infringements, initiates opposition proceedings to trademark applications for marks that are misleadingly similar to its own registered ones, and protects its rights by making active use of the enforcement system. 20 raid actions were initiated in 2002/3 (in some cases counterfeiting items were seized within 3 hours by the local AIC!). In 2004 no raid actions were instigated – there was no infringement. The company organises IP training for the local authorities it works with, has allocated adequate resources for IP protection and now operates very successfully in China, its head of IP having learned to speak Chinese.