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China IPR SME Helpdesk
Protec8ng your IPR in China: Prac8cal
Strategies for EU Cleantech SMEs
Peter Corne & Janet Wong 13 March 2014
13 March 2014 1
Webinar Interac8on Tools
13 March 2014 3
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13 March 2014 4
Today’s Speaker Peter Corne Managing Partner, Shanghai Office Co-‐Chair, Asia PracGce Group Dorsey & Whitney LLP Tel: +86(21) 6135 6100 Email: [email protected]
13 March 2014 5
Today’s Speaker Janet Wong Partner, Hong Kong office Dorsey & Whitney Tel: +852 2105 0266 Email: [email protected]
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Agenda: • Introduc8on– IP management in China
• How? Difference between patents and trade secrets
• Key quesGons to consider when structuring an IP porTolio
• Common piTalls
• Prac8cal strategies for protecGng your IPR
• Case studies
• Take – away messages
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Poll 1 Which cleantech sector best describes your business?
A: Power generaGon (wind, solar, Gdal, marine)
B: Biofuels / Energy efficiency
C: Power storage
D: Recycling and waste
E: Others
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Introduc8on: ü China presents great opportuniGes for cleantech ventures but this market
is highly compeGGve
ü Building, formulaGng and management of IPR is important for cleantech
ventures in China
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Common Ques8ons 1. Do we have to file patent applica8ons for all technologies in China?
2. How can we do that given a limited budget?
13 March 2014 10
Patent vs. Trade Secrets
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Patent Trade Secrets Length of protec8on
20 years for invenGon patents; 10 years for uGlity model patent and design patent
No Gme limit; as soon as it has been kept confidenGal
Strength of protec8on
• RelaGvely strong • Can protect technologies which are
vulnerable to reverse engineering
• RelaGve weak • Independent R&D and reverse
engineering is not barred • No risk of compulsory licensing
Requirements for protec8on
• RegistraGon requirement • Rigorous examinaGon and straight
patentability criteria
• No registraGon requirement • Subject to definiGon given by
statutory and judicial opinion
Timing • May take years to complete the registraGon to gain full protecGon
• Full protecGon takes effect immediately
Patent Trade Secrets Exclusivity • Enjoy exclusivity during the
producGon period • Cannot exclude bona fide third
party from independent R&D, reverse engineering and reasonable use
Publicity • Mandatory disclosure during patent registraGon, no maAer whether the patent is granted or not
• The technology will eventually enter into the public domain
• Can be kept out of public domain so long as confidenGality can be successfully maintained
Costs • Patent applicaGon fee • Progressive annual fees
• No registraGon fee • Cost to maintain confidenGal status
(can be very high)
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Patent vs. Trade Secrets (Cont’d)
Key Ques8ons to Consider when Structuring an IP PorTolio 1. How long is the lifespan of the innova8on?
2. Will the technology be granted a patent?
3. What will the commercial value be?
4. How important to keep the relevant technical details out of the public
domain?
5. To what extent does the company need market exclusivity?
13 March 2014 14
Key Ques8ons to Consider when Structuring an IP PorTolio (cont’d) 6. How important will a strong defensive posi8on be?
7. How vulnerable is the technology to independent R&D and reverse engineering?
8. How important is the innovaGon to provide leverage for licensing and partnering opportuni8es (such as joint ventures) or increasing valuaGon?
9. What approach will beAer build business credibility and boost investor confidence?
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Ac8ve Areas of Cleantech-‐related Patents • Smart grid • Enabling and interfacing technology • Energy storage • Carbon capture and storage / recovery • Emission calibraGon • Offshore wind • Electric vehicles • Nuclear • Combined heat and power
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Common PiTalls • Fail to iden8fy IP assets • Fail to take out appropriate measures to protect IPR promptly • Assume that IPR will be automa8cally protected or owned by your
company • Assume that the IPR protec8on environment is same as your home
country • Fail to put in place contractual safeguards (e.g. confidenGality or non-‐
compete) with: – Employees – Business partners – Other third parGes
13 March 2014 17
Enforcement of IPR in China • Administra8ve ac8ons
– Intellectual Property Offices (IPOs) – AdministraGons for Industry and Commercial (AICs) – Quality and Technical Supervision Bureaus (QTSBs) – Copyright Bureaus
• Criminal sanc8ons – Public Security Bureaus (PSBs)
• Customs ac8ons • Civil li8ga8on
– specialized IP courts
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Prac8cal Strategies for Protec8ng your IPRs • Assess strengths and weaknesses of your technologies vis-‐à-‐vis compe8tors • IdenGfy the appropriate technologies for seeking patent inven8ons
– in the right countries – in the right types – using the right strategies (e.g. keep related applicaGons patent pending,
expedite examinaGon of patent applicaGon or defensive publicaGon) • Don’t forget to seek registered protecGon for other registrable IPR
– Sopware – Copyright – Trade mark – Customs recordaGon
13 March 2014 19
Prac8cal Strategies for Protec8ng your IPRs (cont’d) • Take out adequate measures to protect trade secrets
– physical / technical – contractual
• Put in place contractual safeguards or incenGve programs for employee-‐inven8ons
• Explore opportuniGes to leverage off other IPR, e.g. – strategic acquisiGons – joint R&D – cross-‐licensing – improving exisGng technologies from others
13 March 2014 20
Case Study 1 • A foreign energy technology company accuses its former customer, a PRC
company, of (a) copyright infringement, (b) thep of trade secrets, and (c) unauthorized use of certain turbine control sopware source code and the binary code or upper layer of its sopware.
• The foreign company has brought a series of proceedings against the PRC company in, inter alia, China.
• The local Intermediate People’s Court threw out the suit of the foreign company on jurisdicGonal grounds that this is a contractual dispute between the parGes which should be governed by the Beijing ArbitraGon Commission.
• The foreign company appealed this case to the Supreme People’s Court (SPC) on the basis that it is purely a copyright infringement dispute rather than a contractual maAer. The SPC has accepted the appeal and transferred this case back to the Immediate People’s Court for trial.
It is important to properly manage and safeguard your IP assets and be prepared to enforce them! 13 March 2014 21
Case Study 2 Tesla Motors v. Zhang Baosheng
• ZHAN Baosheng, a Chinese businessman, applied for a series of TESLA / Te Si La (特斯拉) marks in China between 2006 and 2009 prevenGng the U.S. electric car designer and manufacturer, Tesla Motors, from using and registering these marks.
• Zhan also operated a website using a “Tesla Motors” .cn domain (www.teslamotors.com.cn) and a Tesla-‐branded account on the Chinese microblog site Sina Weibo.
• Tesla Motors subsequently filed a series of opposiGon and cancellaGon proceedings against ZHAN’s filings for the TELSA / Te Si La marks.
• According to public reports in Jan 2014, Tesla Motors has resolved a trademark issue that had long prevented it from using “Te Si La”, its preferred version of its name in Chinese, in China (by way of seAlement?).
Trade mark rights cannot be neglected in the first-‐to-‐file country!
13 March 2014 22
Case Study 3 Huge fine imposed on a French winemaker suspended
• Castel, a French winemaker established since 1949, had been using the Chinese characters Ka Si Te (卡斯特) for its markeGng in China but failed to get this name registered as a trade mark in China.
• Castel sought to cancel a trade mark registraGon for Ka Si Te used by a local wine company.
• In return, Castel was sued for trade mark infringement. • Castel was order by the Intermediate People’s Court in Wenzhou to pay a fine
of RMB34 million (around 4 million Euro) for trade mark infringement. The said ruling was uphold by the Wenzhou High People’s Court.
• The highest court, Supreme People’s Court, recently ordered a re-‐trial in this case which will have the effect of suspending the payment of the fine.
13 March 2014 23
Case Study 4 • Employee X was involved in developing certain technologies for Company A.
Employee X lep Company A and joined Company B. His role is to develop technologies similar to that he was developing at Company A.
• Employment Contract between Company A and Employee X was silent regarding restricGon or prohibiGon from working on similar technologies for compeGtors aper terminaGon of employment.
• Company B files a patent applicaGon for technologies developed by Employee X.
• Employee X asks for compensaGon in connecGon with technologies covered by the patent applicaGon.
• Company A is considering whether to sue Company B and former Employee X in connecGon with technologies developed by former Employee X.
13 March 2014 24
Take Away Messages
ü Iden8fy and assess your IPRs
ü Take out protec8ve measures to
safeguard your IPRs
Ø Not only your technologies but also your brands!
ü Exploit your IPRs
ü Seek legal advice
13 March 2014 25
Q&A
13 March 2014 26
Peter Corne Managing Partner, Shanghai Office Co-Chair, Asia Practice Group Dorsey & Whitney LLP Tel: +86(21) 6135 6100 Email: [email protected]
Janet Wong Partner, Hong Kong office Dorsey & Whitney Tel: +852 2105 0266 Email: [email protected]
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Join our upcoming events!
Click here to access our Event Calendar.
19 March, Taicang, China: European SME Business Networking
20 March, Shanghai, China: Winning in Today’s China Market
24 March, Beijing, China: China for Beginners Mission
24 March, Florence, Italy: SME Support to Protect and Enforce IPR
26 March, Webinar: IPR Protec8on Strategies for German SMEs
Thank you Both the China IPR SME Helpdesk and ASEAN IPR SME Helpdesk provide free, confidenGal, business-‐focused advice relaGng to China IPR to European Small and Medium Enterprises (SMEs).
v Helpdesk Enquiry Service – quesGon@china-‐iprhelpdesk.eu / quesGon@asean-‐iprhelpdesk.eu
v Training & Events v Materials
v Online Services -‐ www.china-‐iprhelpdesk.eu / www.asean-‐iprhelpdesk.eu For more informaGon please contact the Helpdesks: Room 900, Beijing Sunflower Tower No. 37 Maizidian Street Chaoyang District Beijing 100125, P.R. China Hotline number: +86 (10) 6462 0892
13 March 2014 28