Home' Australian Industry Group Exporters Guide : Exporters Guide 2015-2016 Contents 66 l AUSTRALIAN INDUSTRY GROUP EXPORTERS GUIDE 2015--2016
TRADING WITH CHINA
China's counterfeit and piracy
market is reportedly the
biggest in the world, with
many manufacturers so skilled at
copying items that it can be diffcult
to distinguish fakes from genuine
products. In fact, the so-called 'fake
markets' have become major tourist
attractions in large cities like Shanghai
However, the Chinese Government has
been steadily increasing its commitment
to the modernisation of IP laws and
stronger IP enforcement. China is
now the largest fler of resident patent
applications in the world, according
to the World Intellectual Property
Offce (WIPO), overtaking Japan in
2010, and Chinese companies are
beginning to enforce their IP rights.
Foreign companies are also becoming
increasingly successful against infringers.
How to protect your IP
Cai Peng, Secretary-General of the
patent committee of the Beijing
Lawyers' Association, encourages
Australian traders to extend their
business into China; however, he
recommends they enlist the help of
a Chinese IP lawyer, and familiarise
themselves with the system and culture
before trading there.
'Australian businesses wanting to
trade in China should not be put off
by the country's system for protecting
intellectual property,' says Cai.
'Although there is some disparity
between the two countries' systems,
they are actually similar.'
In general terms, the process of
registering IP rights in China is slower
and more expensive than in Australia.
Unless an Australian business has
a residential or business address
in China, trademark, patent and
design applications must be fled
through Chinese agents or attorneys.
It is also important to be aware that
documents fled with the patent or
trademark offce in China will need to
be translated into Chinese; therefore,
translation fees should be factored
into the total cost of applications.
'Trademark protection in China is based
on the registration, so the principle to
protect your trademark is the frst to
fle rather than frst to use – this is a big
difference,' says Cai.
This means that even if you are already
operating in China, you may have
diffculty preventing someone else from
registering your trademark if you do
not apply frst.
Pharmaceutical giant Pfzer learned this
lesson the hard way. When it released
Viagra in China, Pfzer chose to market
one Chinese translation, but did not
register a similar Chinese translation
that was being widely used in the
media. When an unrelated company,
Guangzhou Wellman Corp, registered
the popular translation, Pfzer became
embroiled in an 11-year court battle to
claim back the translated trademark, but
ultimately lost (Foley & Lardner 2010).
Protecting patents and designs
Two forms of patent protection are
available in China: invention patents
(equivalent to Australian standard
patents, with a term of 20 years)
and utility models (for lower-level
inventions, with a term of 10 years).
It should be noted that the Chinese
patent law was amended in 2009, and
some thresholds for granting a patent
have been revised.
'Because Australia and China are both
members of the Berne Convention, the
copyright laws are similar,' says Cai.
'However, in China, we have a special
registration process for copyright
protection, which is voluntary
registration,' he says. It should be noted
that the compulsory registration when
importing software has been introduced.
'I think this kind of system has
advantages. If you get this registration for
your copyright, you can get prima facie
evidence of the ownership, which may
be very important and useful when the
copyright owners intend to enforce their
copyright through litigation and lawsuit.'
Unfair competition law
Cai says this is similar to Australia's
Trade Practices Act.
'This law just sets out some principles
regarding the activities of unfair
competition in China and some clauses
to supervise or monitor the behaviour
of the market and set up principles to
protect trade secrets,' he says.
A company wanting to protect its trade
secrets in China should consider not only
the rules and regulations that set out the
specifc ways in which trade secrets can
be protected, but also the corresponding
judicial interpretations that list specifc
details and clauses as to how to protect
your trade secrets in China.'
‘In China, if you fnd copyright,
trademark and patent infringement
activities in the market, you can
go straight to the administrative
authorities -- they have local bureaus --
to complain about the infringement,'
he says. 'And if the complaint is
accepted by the administrative
authority, they have the right to
investigate such infringement activities
and they have the right to make an
administrative decision by themselves.'
The administration has various
mechanisms to enforce adjudication,
including injunctions, imposing fnes
(up to $50,000 in some cases) and
confscations. If the administrative
1 China FactSheet, Department of Foreign
Affairs and Trade 2012
2 IP Australia Export Passport -- China 2011
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