Trade War Strategies: Are you at risk of your suppliers violating your patents? Raising the alarm to protect your patents!

Trade War Strategies: Preventing your suppliers from violating your patents
With the China-US trade war lingering. Your supplier may be about to jump into bed with your competitors. Strategies to protect your patents!

With the China-US trade war lingering. Your supplier may be about to jump into bed with your competitors. Strategies to protect your patents!

As the China-US trade war drags on with no indication that things will go back to normal any time soon, Chinese suppliers are actively looking for new orders outside of the US.  That could mean your supplier is about to jump into bed with your European, Canadian or Australian competitors and you will need to protect your patents.

How to ensure your supplier doesn’t violate your patent rights when they sell products to other buyers?

The short answer is to register your Patents and any other Intellectual Property (IP) you may have in advance, in China.  China’s patent system is “first to register” rather than “first to market”.  So, it is essential you make moves to get your patent’s registered before your supplier or even your competition gets an application into Beijing.  The good news is that patent registration is affordable and fairly straight forward.

https://www.asiabridgelaw.com/patent-registration/ explains:

Types of Patents

China admits three patent classifications:

  1. Design Patents - protect new designs of any shapes, patterns or colors (or combination of all three) creating an aesthetic feeling, fit for industrial application. A successful design patent also provides ten years of protection. 
  2. Utility Model Patents - protect ideas providing technical solutions relating to the shape or structure (or combination of both) for practical use. A successful utility patent filing provides ten years of protection.
  3. Invention Patents - protect technical solutions relating to products, processes or improvements. The application process requires a thorough disclosure of the benefits and technical solutions offered by the product or process. A successful invention patent filing grants protection for twenty years.

Why register a patent in China?

Patents are territorial and must be filed in each country where protection is sought.  Even if you don’t plan to sell your product in China, it is wise to register the patent there so that your supplier or competitor can’t take advantage of your gap in coverage.

Since the rights granted by your patent office back home only extend in the territory of the home county and have no effect in a foreign country such as China, an inventor who wishes patent protection in other countries must apply for a patent in each of the other, in accordance with the requirements of that country.

Video Tutorial on Supplier Contracts: Penalty Clauses

After registering your patent and implementing a good contract, the final touch is to build a mechanism to monitor and enforce your intellectual property in China.

 

Important note on China Patent Registration Deadlines:

Please note that you have a 12-month window to apply for your patent in China if you have already submitted a patent in another country.  The “clock starts ticking” from the date of the overseas patent was applied (rather than granted).

Multiple Layers of Patent Protection

In addition to registering your patent in China, it also helps to structure bilingual NNN (Non-Disclosure Non-Usage Non-Compete) terms into your contract. The contract should also state penalty clauses in the event a break of contract is proven.  The penalty clause will make it easy for a Chinese court to rule in your favor and award damages.

What’s next?

Now that you are up to speed on how to register a patent, know that upcoming blog posts will cover three related topics:

  • How to create a contract with a supplier in China?
  • How to monitor that your contract terms and intellectual property rights are being respected in China?
  • How to enforce your patent rights and leverage the penalty terms in your contracts?

In the meantime, here are some additional resources:

1. -More whitepapers & video tutorials on related subjects can be found
..... https://www.asiabridgelaw.com/resources/
2.-10 short videos covering 10 Common Mistakes when conducting business in China.

INSIDERS REPORT & RATE SHEET
China Sourcing: 10 Common Mistakes

 

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About the Author: Michael J. Bellamy

About the Author: Michael J. Bellamy

Originally from Upstate New York, Mike moved to Asia in 1993 and is a China business advisor to both Fortune 500 companies and small businesses.  Recognized as an expert on doing business in China, he has been interviewed by WSJ, CNBC, FT & Bloomberg.

A featured presenter on China issues at seminars, trade shows and corporate events across the globe.

Learn more about Mike and AsiaBridge Law at
https://www.asiabridgelaw.com/business-advisory-services/

Mike is the author of “The Essential Reference Guide to China Sourcing
(available on Amazon).

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