Patent Security Interest in China

patent-without backgroundToday’s blog post has been kindly drafted to you by our IPR expert Dr. Toby Mak from Tee & Howe Intellectual Property Attorneys and Ms. Constance Rhebergen from  Bracewell LLP .  In their article, which was first published in UK Chartered Institute of Patent Attorneys (CIPA) Journal,  Dr. Mak  and Ms. Rhebergen give a detailed overview of China’s patent security interest market and explain how to register for patent security. Lending money to patentees with patent on mortgage is gaining popularity in China and this is something that European SMEs could also benefit from. 

In China, intellectual property assets, including patents, have certain similarities to other property rights such as real estate and tangible property, and the owner is able to dispose of such asset in any legally allowable manner. Typical transactions involving real estate include buying and selling, renting, and mortgaging. Although patents are extensively the subject of buying and selling (assignment), and renting (licensing), mortgaging (security interest or pledge) of patent rights is less common and often overlooked. Some top reasons contributing to this include the difficulty and expense in evaluation of security interest status of patents, instability of rights due to invalidation challenges, and the challenge of foreclosing upon a security interest to ensure realization (whether recovery of monies or transfer of secured asset), particularly compared to a required selling of real estate.

While intellectual property shares certain similarities with real estate and tangible property, the treatment of intellectual property differs in important aspects and is not intuitive.  Therefore, expertise regarding intellectual property security should be included in early stage development of strategy to ensure optimization of rights and value, both for financial institutions offering financing and companies involved in transactions.  Notably, while there is large group of patent attorneys knowledgeable about prosecution, managing security interests in patents is not necessarily part of their training.  Similarly, while corporate attorneys focus on security interests and financing, these specialist may be unversed in the unique aspects of intellectual property.  Identifying the right expert early in the process allows for structures and for drafting that will streamline efforts at a later date. Continue reading “Patent Security Interest in China” »

Handling Trade Secrets in China: IP Case Study

MP900387752In today’s blog post we are taking a closer look at a rather overlooked means of IP protection, namely trade secrets. Even though, trade secrets are a type of IP that does not require formal registration, there are still some aspects to pay attention to when using trade secrets to protect your inventions in China. We’ve chosen a case study involving a Dutch SME to highlight some of these aspects. 

Trade Secrets in China 

Nearly all businesses in all industries and sectors possess trade secrets. Trade secrets are a valuable and highly useful form of intellectual property that are nevertheless often undervalued and overlooked by their owners. This is not least the case in the service sector where the relative value of trade secrets as intangible assets can be extremely high. For example, a logistics firm may not hold any patents or few trade marks and substantial copyrights, but the value of its operations could heavily derive from information contained within client lists and standard procedures.

A considerable advantage for trade secrets is that unlike some other forms of IP rights, such as patents and copyrights that have a finite term, trade secrets can theoretically enjoy an infinite term of protection so long as the trade secret remains just that – a secret. The main difference between protecting something by patent or as a trade secret is that, while technical information is publicly disclosed in patents, it is kept away from the public eye in trade secrets. A trade secret can last forever as long as the confidentiality measures that protect it continue to work. An invention patent typically expires after 20 years.

On the other hand, legal protection of trade secrets is easily lost. Once the information becomes public information, it no longer enjoys any legal protection. As a result, prevention is the golden rule when it comes to protecting your trade secrets, because once your secret is out, there is usually very little that you can do about it. China, like most other countries, provides a legal framework for the protection for trade secrets, and the law provides for remedies in the event that your trade secrets are unlawfully disclosed. Continue reading “Handling Trade Secrets in China: IP Case Study” »

Dealing with Partners and Employees: Writing a Good Manufacturing Non-disclosure Agreement in China

MP900438585There are various ways in which European SMEs can protect their IP. The most obvious way is to register IP in the country where SMEs do business in. At the same time, another, sometimes overlooked, way to protect IP is using well-written contracts. The people and companies that SMEs do business with in China, and therefore contract with, will often use the European SMEs’ IP to varying degrees. Therefore, it is also very important for the European SMEs to protect their IP with well-written manufacturing contracts. Today’s blog post gives some  practical tips on how to write good manufacturing non-disclosure agreements for doing business in China. 

Defining protected information: keeping everyone on the same page

NNN agreements should clearly define which rights are being disclosed or licensed, their nature, and their scope. Clear mechanisms for identifying and marking, accounting for, and maintaining secrecy for this information (or indications of who will bear these responsibilities, what general types of information should be considered confidential, or processes for retroactively marking material as confidential) should be present. If desired, additional clauses can also outline what types of information will not be considered confidential. Naturally, before these types of information can be identified, an SME should first understand just what its trade secrets are. Conducting an IP assessment and audit can identify key IP which was otherwise taken for granted or not fully appreciated by the SME and can assign a value to the IP which will make calculating contract damages much easier.

While the contract is in force, these rules should be strictly followed. Over the course of the contract, additional IP may be generated as a result of the work of employees or independent innovations on the part of the manufacturer. NNN agreements can also include clauses which dictate that all such IP belongs to the SME and can thereby avoid future disputes. Note, however, that China places restrictions on the export of some technology—meaning that agreements automatically granting new IP to the SME could be struck down in court. Continue reading “Dealing with Partners and Employees: Writing a Good Manufacturing Non-disclosure Agreement in China” »

Drug Innovation through Better Enforcement: IPR Protection in the Pharmaceutical Industry in China

singapore-desig_20936179_291437f5e9d7dd7c8ce0b4b67e7eddf6629f8e0d (1)Underpinned by the governmental support, the pharmaceutical industry is booming in China, offering some promising business opportunities for the European SMEs. However, despite the improvements in Chinese IP laws and regulations, IP infringements are still commonplace in China. Thus, European SMEs wishing to do business in the pharmaceutical sector in  China need to pay attention to IP issues. Today’s blog post discusses IP protection measures in the Pharmaceutical industry, focusing especially on patents and trade secrets as the main IP protection measures in the Pharmaceutical Industry. 

IP Protection in the Pharmaceutical Industry

China is one of the largest pharmaceutical markets in the world. Its development is high on the government’s reform agenda, as they seek to provide stimulus and intensify research and development (R&D) activity. This, coupled with enhanced health awareness among a rapidly growing patient pool, makes the country an increasingly attractive market for foreign business. The China IPR SME Helpdesk explains the current intellectual property regime in China, and says that better enforcement will create a more secure environment that can attract more R&D and stimulate higher levels of innovation in China’s pharmaceutical industry.

The level of intellectual property (IP) enforcement in China has constrained pharmaceutical companies’ efforts in carrying out R&D activities in the country. However, China’s Patent Law is soon due to be revised, and is expected to foster greater innovation and slow the proliferation of counterfeit drugs. A growing number of companies have become increasingly attracted to having an R&D center in China, as a local presence provides generally lower cost base and favorable tax rates.

Patents

China’s Patent Law protects technological innovations for active pharmaceutical ingredients, drug combinations, pharmaceutical formulations, preparation processes of pharmaceutical products, new medical indications of a known drug and medical devices, among others. Most pharmaceutical innovations are protected by invention patents which provide 20 years’ protection. Continue reading “Drug Innovation through Better Enforcement: IPR Protection in the Pharmaceutical Industry in China” »

Trade Marks in China: Q&A for the International Comparative Legal Guide to Trade Marks 2017

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For any EU SME operating in China, Trade Marks will be an important IP asset to have. So in order to meet any questions you might have, our China IPR SME Helpdesk expert Mr. Charles Feng from East & Concord Partners based in Beijing has kindly drafted for us a very useful and informative blog post on Trade Mark Protection in China. In this comprehensive Trade Mark guide, our Q&A with Mr. Feng will give you all the answers you need on Trade Mark protection in China. 

1          Relevant Authorities and Legislation

1.1       What is the relevant trade mark authority in your jurisdiction?

The Trademark Office (“TMO”), which is affiliated with the State Administration for Industry and Commerce, is the authorised government agency in charge of trademark administration including examinations of trademark applications, oppositions as well as the cancellation of trademark registrations for three years of non-use.  The Trademark Review and Adjudication Board (“TRAB”) oversees the examination of various applications for appeals against the TMO’s decisions, as well as trademark invalidation matters.

In addition, local Administrations for Industry and Commerce (“AICs”) or Market Supervision Administrations (“MSAs”) are in charge of the administrative enforcement of trademark rights.

People’s Courts have jurisdiction over trials for trademark-related administrative or civil litigation.

1.2       What is the relevant trade mark legislation in your jurisdiction?

The most fundamental legislations include the Trademark Law of the People’s Republic of China (“PRC Trademark Law”), the Implementing Regulations of the PRC Trademark Law as well as multiple Judicial Interpretations related to trademark law which are issued by the Supreme People’s Court.

In addition, the Anti-Unfair Competition Law of PRC provides protection to unregistered marks such as distinctive names, packaging or decoration of famous goods.  The criminal code provides protection against counterfeiting activities where the illegal turnover exceeds a certain amount.

Continue reading “Trade Marks in China: Q&A for the International Comparative Legal Guide to Trade Marks 2017” »