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Q.  Our company is considering setting up a new Wholly Foreign Owned Enterprise in China, however are concerned about copy-cat products appearing in the market-place. How would you advise us to go minimizing the risk of this happening?

A.  IPR protection is a serious issue not only in China but in any foreign market. The first rule of thumb is to ensure you are prepared before you enter the market. China operates a ‘first to file’ system. This means that even if you hold patents in other regions, if you have not registered in China, other companies can register that IP and legally hold the right to use it as they see fit.  Remember that no protection equals no rights (with exception of copyright). Get protection.

Do your homework and plan and research carefully.   Identify and clarify what your IP and trade secrets are, what you are going transfer. Carry out a risk assessment to investigate whether any potentially infringing products are already registered or in existence. If you plan on using business partners, due diligence is essential.

The biggest threat to a company’s IP is not external but internal. Companies need to be especially vigilant to theft of confidential trade secrets including manufacturing processes, designs and systems. It is collusion between dishonest employees and other companies that, most often, leads to counterfeit products appearing in the market. Do not rely only on legal measures to protect your IPR in China.

Question answered by Michael McCourt. For more information or to submit your questions, please email enquiries@cbbc.org

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