Corporations that are thinking of doing business in the People's Republic of China are typically fearful of IPR (Intellectual Property Rights) piracy. And for good reason. In the most populated country in the world, that has one of the fastest growing economies, piracy is rampant. Just ask Pfizer (maker of Viagra) and GSK, the top two pharmaceutical companies in the world. It was estimated that in 2004, 97% of China's chemical drugs were generic knock-offs copied from patented drugs (China Daily newspaper). Or ask General Electric, who recently reported that 80% of a certain best-selling electrical product in China are fakes (and that even the GE engineers could hardly tell the difference between the real ones and the fakes).
So what do corporations do? On one hand, IPR piracy can undermine the very existence of a company. On the other hand, do you walk away from the world's largest market due to this fear?
There is no simple answer or solution, but the general trend in China is heading towards IPR protection. The following are some of the developments in this direction:
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In its 1992 Patent Law, China began to tighten IPR regulation and forbade copying of foreign patents.
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In 2000, China performed major revisions to its Patent law after being accepted to the World Trade Organization (WTO).
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The Chinese government has implemented customs measures against IPR infringement. Manufacturers can register their products with the SIPO (State Intellectual Property Office, the Chinese patent office) and customs officials have the authority to seize shipments with infringing goods.
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Courts have recently started awarding cash payment to victims of IPR piracy and many cases are now being settled out of court due to the increasing pressure on IPR pirates. Courts have also been recognizing acts of counterfeiting as criminal activity.
So doing business in China is getting easier for IP-savvy Western companies. But the catchword is caution. Companies that do business in the PRC should have legally-binding confidentiality agreements, non-compete agreements and patents. Since all these documents must be written in Chinese, good language services are key to proper communication between your corporate legal department and your Chinese operation. Upper-level corporate management must be on top of the day-to-day operations in China, and good translation services are essential for success in China.
Stay tuned for a future article in this blog about patent filing in China.
1:19:12 PM 
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