The cover language from a Bloomberg Businessweek magazine this spring neatly captures a wave of frustration that’s rising among U.S. companies. The headline reads: “Hey China! Stop Stealing Our Stuff.” People have been complaining about Chinese copycatting for a long time now, but if the media is any reflection, anti-China sentiments are running higher than usual. Another story published in USA Today is a too-familiar narrative: innovative American firm invents a clever product (in this case a recreational camper-trailer) only to lose sales to a Chinese factory that knocks off their design and starts selling a cheaper version in international markets.
What’s especially galling to U.S. SMEs, even those that patent their inventions in the U.S., is how utterly helpless they feel when it comes to combating intellectual property rights (IPR) violations by Chinese companies. But they may have more options than they know.
Quoting the U.S. Patent and Trademark Office, the USA Today story notes that just 15 percent of small companies that do business overseas realize that U.S. patents and trademarks protect them only in their homeland. They can get a boost of overseas insurance by filing for patents and trademarks in countries where their products will be made and sold—or, if the risk seems high, where they are likely to be copied.
For U.S. companies that manufacture products in China or are considering selling in China, “it’s highly recommended that they file for patent protection in China,” says David Ho, a corporate counsel for Alibaba.com who handles IPR issues. Small companies lacking large legal budgets can obtain a Chinese Utility Model patent, a simple type of protection because the patent is not examined, in six months to a year for “a few hundred to a few thousand RMB (less than $1,000),” says Ho. You don’t have to do it yourself. Chinese agents and patent attorneys are available who will file on behalf of foreign companies. Ho suggested hiring a Hong Kong attorney. “Having your own attorney to line things up would be beneficial if you can afford it,” he said.
And if you find yourself defending your patent in court? Contrary to conventional wisdom, China’s copyright laws are up to international standards and the country’s patent courts “are quite professional and quite impartial,” Ho says.
Bottom line: a U.S. company without Chinese patent protection is fairly defenseless against copycats on the mainland. But a U.S. company “with a valid, relevant Chinese patent would have a good chance of winning” a patent suit against a Chinese company, Ho says. Of course, it’ll cost money, but patent protection, like a locked door, is better than just yelling at someone to stop stealing your stuff.