Cross‑border restructuring offers a way to de‑risk supply chains, sidestep punitive tariffs, and build operational resilience without abandoning China entirely. It is not just moving factories from China to Vietnam or Indonesia. It requires a strategic overhaul of tax structures, legal entities, workforce plans, intellectual property arrangements, supplier networks, and leadership models. When done well, it shifts China’s role from a one‑dimensional manufacturing base to a high‑value node in a broader regional strategy.

Why companies are choosing restructuring

Over recent years, geopolitical tensions, especially US–China trade and export controls, have disrupted once‑stable global supply chains. Rising costs and regulatory complexity in China have meant many multinationals are reassessing their entire China footprint. Yet for most, exiting China is simply impractical: the supply‑chain ecosystem is highly specialised; infrastructure is world‑class; R&D capability remains strong; and the domestic market continues to grow.

Instead, cross‑border restructuring provides a more balanced path. Companies can reduce geopolitical exposure while retaining China’s strengths by shifting certain parts of production, typically low‑value or labour‑intensive activities, to ASEAN or South Asia, while keeping R&D, quality control or domestic sales operations in China.

What to keep in China and why

The first step is understanding which parts of the operation truly belong in China. For some businesses, China is an export hub. For others, it’s a domestic market centre, an innovation base or a quality control node. That functional mapping is essential. Labour‑intensive assembly might be moved offshore, but high‑value engineering, regulatory liaison or customer service may remain.

Downsizing China operations isn’t simple. Legal obligations under labour laws mean consultations, severance and possibly union involvement. Equipment sales or asset transfer may require local approvals, particularly in sensitive sectors. And shifting assets can trigger tax liabilities, companies must weigh exit costs against long‑term benefits carefully.

Sensitive relationships can suffer if the process isn’t handled transparently. Government incentives or supplier ties may be put at risk if local stakeholders feel blindsided. Clear communication and compliance are crucial to preserving goodwill.

Choosing a new host location with purpose

The decision of where to locate new operations goes far beyond low labour cost. Strategic choice today must consider trade agreements, regulatory alignment, infrastructure, talent pools, and industry‑specific incentives.

For example, moving final assembly to Vietnam or Malaysia can help firms meet rules‑of‑origin requirements for free trade agreements, qualifying goods for tariff‑free export to the EU or US. But achieving this advantage depends on genuine manufacturing value‑add, not merely repackaging.

Market access also matters: Indonesia may suit consumer‑goods businesses seeking scale, while Singapore could be preferable for regulated sectors needing compliance clarity. Infrastructure readiness varies, from ports to digital readiness, and needs to match sectoral demands.

Many emerging markets now offer sector‑targeted incentives, India’s PLI (Production‑Linked Incentive) for electronics, or Thailand’s R&D grants for biotech. It’s vital to assess these offers relative to specific company needs.

Structuring the new entity and planning the timeline

How new operations are structured affects control, regulatory exposure, and cost. Options include a wholly foreign‑owned enterprise (WFOE), joint venture, contract manufacturing agreement or strategic alliance – all with different implications for tariff control, governance and local compliance.

To qualify for tariff benefits under agreements like RCEP or CPTPP, companies need to ensure local transformation thresholds are met, not just shipment points moved. That shapes decisions around what functions to relocate and what suppliers to localise.

A phased rollout is often wiser than a big‑bang relocation. Pilot operations allow evaluation of delivery performance, compliance fit, quality standards and cost savings before full-scale implementation. Project timelines must reflect construction, licensing, recruitment, training and partner onboarding timeframes.

Tax, transfer pricing and fiscal design

Restructuring often reshapes where value is created, and that impacts tax. Multinationals must ensure operations reflect substance: functions, risks and assets must align with where profits are allocated to avoid transfer pricing disputes across jurisdictions.

China is increasingly vigilant about outbound restructuring, especially where high‑value functions or IP are shifted. Early engagement with local tax bureaus and careful planning of asset transfers, or equity restructuring, is key to managing capital gains exposure and compliance risk.

Transfer pricing models must be updated to reflect new functional roles. Suppose China becomes a limited‑risk distributor rather than the main manufacturer. Then profit allocation and intercompany pricing must align with legal reality, not just historic structure.

People, leadership and morale

The human side of restructuring is often underestimated. Talent is hard to replace, and morale can suffer if staff in China feel abandoned or insecure. Leadership continuity, internal communications, retention plans, or even relocation programmes, must be carefully managed.

Mobilising key personnel from China to the new site raises immigration, tax and cultural adaptation issues. Host countries may limit work permits or raise residency hurdles. Companies need clear plans and legal advice on visas, taxation and support for expat staff.

At the same time, building a skilled local workforce requires labour‑market mapping, training initiatives, localisation planning and collaboration with vocational schools or employment agencies.

Protecting intellectual property and data

Moving operations can expose IP and data to new risks. Protection regimes vary by jurisdiction, patent law enforcement, judicial capacity and digital data governance differ greatly. IP risk assessments should be specific to each location and business model.

Companies must decide whether to hold IP in China, in a regional headquarters, or a neutral jurisdiction, understanding the impacts on tax, licensing arrangements and exit liabilities. Licensing terms between entities need to be clear, reflecting royalty terms, legal risks, and control frameworks.

If operations shift to territories with weaker IP regimes, greater vigilance, not just contracts, is required. Partner vetting, in‑house retention of core know‑how and regional IP strategies help limit leakage.

Managing supplier and customer relationships through transition

Supply change disruption is a real danger. Long‑standing supplier ties and delivery expectations can be upended if operations move too quickly. Identifying sole‑source vulnerabilities or critical clients is essential before the transition begins.

Maintaining customer service levels during the shift requires interim logistics planning, buffer stock, possible dual sourcing and renegotiation of contracts to reflect new transit routes or import/export jurisdictions.

Proactive, transparent communication builds trust. Customers and suppliers benefit from clear timelines and commitment to quality. In some cases, joint planning with anchor suppliers or logistics partners can smooth the transition; others may mean onboarding new local sourcing partners in the host country.

When is restructuring the right move?

Cross‑border restructuring may sound complex, but it offers more than risk mitigation. For many companies, it is a strategic move designed to future‑proof operations in a world where agility and resilience matter as much as efficiency.

Businesses must assess their own vulnerabilities: Are specific tariff risks or export controls exposing particular product lines? Is there over‑reliance on a single site or region? Which functions are portable? Which need to stay in China? Will a partnership model or contract manufacturing serve just as well as full investment offshore?

Cost savings alone are rarely enough. Firms must weigh infrastructure limitations, legal unknowns, language or cultural barriers, and balance must favour long‑term operational stability over sheer low cost.

Finally, internal alignment is critical. Leadership must treat restructuring as organisational change, not just logistics: reshaping workflows, managing talent, and preserving morale during the shift, all while sustaining governance, communication and the integrity of service delivery.

The post What is cross-border restructuring? appeared first on Focus - China Britain Business Council.

Understanding China’s IP Framework

China’s IP system has undergone transformative reforms since joining the World Trade Organisation (WTO) in 2001, aligning more closely with international standards such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Key milestones include the establishment of the first Trademark Law in 1982, the Patent Law in 1984, and the Copyright Law in 1990, all of which have been amended multiple times to enhance protection and enforcement. The China National Intellectual Property Administration (CNIPA) oversees patents, trademarks, and geographical indications, while the National Copyright Administration of China (NCAC) manages copyright matters.

In 2021, China introduced the “Outline for Building a Strong Intellectual Property Nation 2021-2035,” a 15-year plan aimed at strengthening IP protection, improving market value, and boosting brand competitiveness. By 2026, the outline targets a 13% contribution from patent-intensive industries to GDP and an increase in high-value patents per 10,000 people to 12. Recent data highlights China’s progress: in 2022, the country recorded 4.21 million valid patents (up 17.1% year-on-year) and 42.67 million valid trademarks (up 14.6%), underscoring its commitment to fostering innovation.

Despite these advancements, foreign businesses must remain vigilant. China’s first-to-file system for trademarks and patents means that the first entity to register IP rights typically secures them, even if they are not the original creator. This system, combined with historical issues like bad-faith registrations, necessitates proactive strategies to protect IP effectively.

Key Steps to Protect Your IP in China

1. Register Your IP Early

China operates a first-to-file system, making early registration critical to securing IP rights. Trademarks, patents, and copyrights must be registered with the CNIPA or NCAC, as IP protection in other countries does not automatically extend to China. For trademarks, consider registering in both English and Chinese (including transliterations) to prevent bad-faith registrations, where third parties register similar marks to extort foreign companies. The CBBC advises seeking professional assistance due to the complexities of the Chinese IP system, particularly for trademarks, which require a comprehensive understanding of local regulations.

Patents in China include invention patents (20 years), utility models (10 years), and design patents (15 years). Design patents, crucial for creative industries, protect the aesthetic aspects of products but must be registered before public disclosure to maintain eligibility. Copyrights are automatically protected under the Berne Convention, but voluntary registration with the NCAC provides presumptive evidence of ownership, simplifying enforcement. For creative sectors like architecture, design, and media, registering copyrights and design patents is strongly recommended to safeguard against infringement.

2. Use Contracts and Agreements

Contracts are a vital tool for protecting IP internally and externally. Non-Disclosure, Non-Use, Non-Circumvention (NNN) agreements, tailored to Chinese law, are more effective than standard Non-Disclosure Agreements (NDAs) in preventing suppliers, partners or employees from misusing IP. These agreements should be bilingual (Chinese and English) and governed by Chinese law to ensure enforceability. Including IP protection clauses in contracts with employees, clients, and partners further strengthens safeguards.

For creative businesses, contracts can delineate ownership and usage rights for collaborative projects. Clear agreements are key in industries like film and design, where IP disputes can arise from ambiguous partnerships.

3. Leverage Trade Secrets Protection

Trade secrets, encompassing confidential business information like manufacturing processes or client lists, are protected under China’s Anti-Unfair Competition Law, amended in 2019 to enhance safeguards. To qualify as a trade secret, information must be non-public, commercially valuable, and subject to confidentiality measures. Businesses should implement internal controls, such as limiting employee access to sensitive data, providing IP training, and incorporating security into facility design. Monitoring for potential leaks at trade shows or online platforms is also essential.

4. Monitor and Enforce IP Rights

Proactive monitoring is crucial to detect and address IP infringements promptly. Businesses should regularly check trademark and patent databases, industry publications, and e-commerce platforms for unauthorised use. The CBBC’s partnerships with platforms like Alibaba and Tencent facilitate dialogue and enforcement, helping British companies tackle online infringement.

Enforcement options in China include administrative action, civil litigation, criminal enforcement, and customs seizures. Administrative actions, handled by local authorities, are effective for straightforward trademark or counterfeiting cases. Civil litigation, increasingly successful for foreign firms, offers the potential for damages and public deterrence. Specialised IP courts in cities like Beijing, Shanghai, and Guangzhou, established since 2014, have improved judicial expertise and consistency.

5. Utilise Technological Tools

China’s adoption of technology to enhance IP protection is noteworthy. In 2024, the Copyright AI Intelligent Review Tool was introduced to streamline the assessment of copyright infringement cases, particularly for images. By automating analysis, the tool reduces human error and accelerates rulings, empowering creators to combat infringement effectively. Businesses should stay informed about such innovations, as they may expand to cover broader IP categories in the future.

6. Collaborate with Strategic Partners

The CBBC’s network of strategic partners, including the Alibaba Anti-Counterfeiting Alliance (AACA) and the Quality Brands Protection Committee (QBPC), provides valuable support for UK businesses. These partnerships facilitate collaboration with Chinese authorities and platforms, enhancing IP protection and enforcement. Engaging with CBBC’s IP team can also provide access to tailored advice and professional networks.

Addressing Challenges

Despite progress, challenges remain. Bad-faith trademark registrations continue to hinder foreign companies, requiring costly legal action to cancel or invalidate. The perception that “you cannot do anything if someone copies you” in China is outdated but persists among some businesses, underscoring the need for education. Additionally, cultural differences and varying levels of public awareness about IP rights can complicate enforcement.

Businesses, particularly in creative sectors, may hesitate to enter China due to infringement fears. However, by leveraging China’s robust IP system and taking proactive steps, these risks can be mitigated. Success stories, such as eOne’s recognition of Peppa Pig as a well-known trademark, demonstrate that persistence and strategic litigation can yield positive outcomes.

Looking Ahead

China’s IP environment is poised for further improvement, driven by domestic innovation and international pressure. The 2024 Patent Law amendments, introducing patent term extensions for pharmaceuticals and reinforcing good-faith principles, reflect China’s commitment to a stronger IP regime. By 2025, over 2,000 IP support agencies nationwide are expected to assist businesses, processing 71,000 applications annually.

For British businesses, protecting IP in China requires a proactive, multi-faceted approach: early registration, robust contracts, vigilant monitoring, and strategic partnerships. By staying informed and leveraging resources like the CBBC, companies can navigate China’s IP landscape with confidence, fostering innovation and growth in one of the world’s most dynamic markets.

The post How to Protect Intellectual Property in China appeared first on Focus - China Britain Business Council.

Protecting your trade mark and the distinctive signs and external appearance of your products in China should be one of the first and most crucial steps taken by any company aiming to develop its business or sell its products in China.

Unfortunately, the protection and registration of those assets are often overlooked by foreign companies when facing the Chinese market, who proceed unaware of how a lack of proper legal protection of their distinctive signs may define the success or failure of their business.

A strong trade mark can be instrumental in winning new customers when establishing a brand in China. You invest time and money into building the reputation of your company, so it would be very damaging to your business if someone else began using your name and/or brand to sell their own products or services.

How to register your trademark or other intellectual property rights in China

In China, a trademark can be registered through the ‘national’ or ‘international’ system and can only be effectively protected in China once it has been registered. Due to the particularities of the Chinese intellectual property system, it is advised to register a trademark in China following the national system, i.e., filing an application to register your trademark in China directly before the China Intellectual Property Administration (CNIPA).

Many entities, including CBBC, offer information about protecting and registering your IPR in China. However, when it comes to registering your trademark in China, it is highly advised to obtain professional assistance. There are certain technical details and particularities for which a comprehensive understanding of the Chinese intellectual property system is required, so professional advice from a law firm or intellectual property agency is essential to protect your assets and rights.

Bad-faith trademark registrations can limit a foreign company’s freedom to operate by restricting its ability to enter the Chinese market

Nevertheless, in certain scenarios, trademark registration may not be enough to protect the features that characterise your product or services. It may be the case that certain technical details of your product are unique and represent its main value, or perhaps your product has gained some of its reputation and recognition in the market due to certain specific details of its external appearance.

All those aspects need to be taken into account and can also be protected by means of intellectual property protection tools, such as patents, designs or trade secrets. For that reason, a case-by-case preliminary analysis is essential to define a comprehensive protection strategy for the main aspects of your product or service.

Common obstacles and potential scenarios when protecting your IPR in China

Once you have decided to start the process of registering a trademark in China, it is common to come across similar or identical trademarks already registered by other companies.

As China uses a first-to-file system, many SMEs are caught out because they fail to register their trademark in China, and then when they want to do business here, they find that their trademark has already been granted to a Chinese company. Very often, the Chinese company, in these cases, registers the mark with the intention of selling it back to the foreign company at an inflated price. These tactical trademark registrations are commonly called bad-faith registrations. They can limit a foreign company’s freedom to operate by restricting its ability to enter the Chinese market, or even to source goods from China because the Chinese trademark holder is able to intercept goods bearing the trademark at Chinese customs.

The only tried and tested way to prevent this from happening is to anticipate bad faith applications by protecting (registering) your trademark in China as soon as possible. Nevertheless, if your company is confronted with a situation in which somebody else has already registered your desired trademark in China, there may still be ways to contend it. In that case, it may be necessary to initiate additional specific actions with the China Intellectual Property Office with the aim of either cancelling or invalidating the preemptive registration or negotiating with the registrant.

How to defend and enforce your IPR once registered in China

Finally, once your trademark or other IPR are successfully registered in China and you are using them in the market to promote your products or services, there may also be third companies who, in an attempt to take advantage of the popularity or recognition of the trademark, copy it or use it to commercialise the same or similar products.

These behaviours may cause confusion in the market, casting doubt on the origin and authenticity of both your goods and the third party’s goods. This situation usually represents an infringement of the rights of the trademark holder, harming its interests. Consequently, it is important to tackle infringing activities as soon as possible and enforce the trademark holder’s rights by means of the legal tools provided by intellectual property regulations.

This potential scenario of the infringement of trademark rights is usually mistakenly perceived by foreign companies as one in which you cannot do anything to protect your products and your rights in the market. This myth is enshrined in the expression, “in China, you cannot do anything if someone copies you”, which is still very present in many foreign companies’ mindsets while, in fact, that perception is far away from reality and the actual actions that can be taken to tackle those infringing activities and the infringers itself are numerous.

The professional advice is to analyse and define a strategy on how to act against IPR infringers. However, in previous cases, if you are solid and persistent in enforcing your rights and defending the authenticity of your products, market opportunities can also grow proportionally, and that often comes accompanied by increased recognition and popularity of the brand and products among the consumers.

This article is part of a series on exporting to China. See all the articles in the series below.

Part 1: How to conduct market research
Part 2: Protecting your trade mark

The post Exporting to China: Protecting your trademark appeared first on Focus - China Britain Business Council.

In April 2024, a Shanghai court handed a RMB 600 million (£66.5 million) fine to a company for criminal copyright infringement of Lego products and sentenced two key members of the business, brothers Chen XX and Chen YY, to eight and nine years in prison, respectively.

According to China IP Law Update, which translated a notice from Shanghai No. 3 Intermediate People’s Court, between 2016 and 2022, the company set up design, engineering, and production departments to exactly replicate the Lego bricks and packaging, having purchased authentic Lego products as a reference.

This case is the latest in a series of brushes with copyright infringement in China for Lego. The brand won its first copyright case in 2017, and in 2020, the people behind Lego clone Lepin were handed fines and jail terms.

As China IP Law Update pointed out, Shanghai is becoming somewhat of a “preferred venue for foreign rights holders for enforcement of criminal IP laws.” Also in April, the Shanghai No. 3 Intermediate People’s Court upheld a judgement sentencing a counterfeiter to five years in jail and a RMB 2 million fine.

And stronger IP enforcement is not just limited to Shanghai. Over the past year, courts across China have intensified efforts to crack down on counterfeiting. According to China Daily, punitive damages were applied in 319 IP cases in 2023, an increase of 117% compared to 2022.

Are you concerned that your brand’s rights are being infringed in China? CBBC’s new IP Monitoring Service can help. CBBC’s intellectual property team will conduct a thorough search of the major Chinese e-commerce platforms to provide in-depth research into your trademark to see if infringers are selling your goods in China. Click here to find out more.

Photo: Brickset, Flickr

The post Lego wins major copyright infringement case in China appeared first on Focus - China Britain Business Council.

As part of this service, CBBC’s intellectual property team will conduct a thorough search of the major Chinese e-commerce platforms to provide in-depth research into your trademark to see if infringers are selling your goods in China.

Register your interest in this service here

This service will:

• Include a 30-minute briefing call to discuss your China IP strategy.
• Conduct thorough research and provide analysis of potentially infringing sellers on Chinese e-commerce platforms.
• Provide first-line recommendations for addressing infringement, including how to submit notice and take-down requests.
• Provide recommendations for how you could enhance your IP protection in-market, including recommendations for trusted law firms to handle your rights in-market.

The enhanced service will also:

• Conduct a trademark search for similar trademarks.
• Include a search on UK platforms selling from China and provide recommendations on addressing infringement.
• Offer a 30-minute consultation with a member of our IP team to go over the results of the report.

Upcoming IP-related events

Mastering IP in China’s E-Commerce Market: Essential Strategies for Market Success
13 June, London

Join CBBC and your peer business leaders for a crucial summit focused on navigating the complexities of intellectual property in the booming Chinese e-commerce sector. This event features key insights from top experts at the IP law firm Potter Clarkson, and Alibaba, one of China’s e-commerce leaders.

Register now to take proactive steps towards safeguarding your innovations and amplifying your success in China’s competitive e-commerce landscape. This summit is indispensable for any business aiming to thrive in this vast market. Don’t let IP challenges derail your progress – turn them into your strategic advantage today.

Register here

CBBC Legal Advisory Programme丨IP Protection Roundtable
10 July, Beijing and Online

Focusing on IP protection, the first roundtable of the CBBC Legal Advisory Programme will be held on Wednesday, 10th July 2024 in Beijing.

CBBC has invited speakers from the Commercial Legal Service Centre of China Council for the Promotion of International Trade (CCPIT), as well as IP experts from specialist law firms and agencies to share their expertise and key market updates that businesses should be cognisant of.

This programme will provide an opportunity for participants to develop their understanding of China’s IP environment and essential strategies for protection and enforcement from both authorities and professional experts.

Register here

The post CBBC Launches New IP Service appeared first on Focus - China Britain Business Council.

Four Supporting Regulations Issued for the Anti-monopoly Law

Effective from 15 April 2023, China’s State Administration for Market Regulation (SAMR) issued four supporting regulations aligning with the amended Anti-monopoly Law.

The new regulations target:

1. Clarification of Anti-monopoly Law provisions, specifying subjects in horizontal monopoly agreements.
2. Optimisation of regulatory procedures, including suspension and termination procedures during investigations of monopoly agreements and market position abuses.
3. Strengthening legal liabilities, particularly for notifiers of undertakings concentrations, and their agents.

These regulations aim to enhance competition, streamline enforcement, and ensure compliance with anti-monopoly regulations in China’s market landscape.

Provisions on Prohibiting Abuses of Intellectual Property Rights Issued

Staying with the SAMR, revised Provisions on Abuses of Intellectual Property Rights have been published and became effective on 1 August 2023.  The revisions address recent developments in antitrust enforcement and focus on three aspects:

1. A broader scope of “abuses of intellectual property rights to exclude or restrict competition” to cover three primary forms of monopolistic practices – monopoly agreements, abuse of dominant market position, and concentration of undertakings.
2. Enhanced rules for identifying monopolistic practices related to the exercise of intellectual property rights, providing clarity on factors and conditions for identifying relevant markets, dominant market positions, relevant monopolistic practices, and the review of undertakings’ concentrations.
3. Strengthened regulation of typical and special monopolistic practices involving intellectual property, such as prohibiting entities from engaging in monopolistic practices through the exploitation of ‘patent pools’ and forbidding the misuse of standard essential patents by dominant market players.

These new provisions should give users of China’s intellectual property system confidence that rights will be used in a fair and equitable manner.

Scotch Whisky Association Receives a Certification Trade Mark in Hong Kong

Scotch fans and whisky brand owners were able to raise a glass as the Scotch Whisky Association (SWA) successfully completed its registration of Scotch whisky as a certification trade mark in Hong Kong.

A certification trade mark signifies that the goods (or services) in connection with which the mark is used are certified by the owner of the mark in respect of origin, material, mode of manufacture of goods or performance of services, quality, accuracy or other characteristics.

Completion of the registration of Scotch whisky is expected to bolster consumer confidence and facilitate enforcement for whisky brand owners.

The Apostille Convention Officially Takes Effect in China

Foreign companies can now enjoy the simplified use of foreign documents in China as the Apostille Convention officially took effect from 7 November 2023.

The Convention abolishes the lengthy, and often costly, legalisation process and allows for the acceptance of documents that have been certified by a Competent Authority in the country of origin.  Specific changes include:

1. Chinese Embassies and Consulates in member countries have stopped accepting legalisation service applications.
2. Chinese courts will recognise documents with Apostille certification, and legalisation is no longer required.
3. Notarisation remains necessary for non-official documents (e.g. a Power of Attorney), allowing for them to be certified by an Apostille for official use.

Court Rules that AI-Generated Content is Eligible for Copyright Protection in China

As AI-generated content continues to take the world by storm, the Beijing Internet Court’s decision marks a shift in AI jurisprudence by highlighting the need to examine the copyright eligibility of AI-generated content and the level of human involvement in its creation.

To briefly summarise, an AI-generated portrait was used without the plaintiff’s authorisation, with the defendant arguing that AI-generated content is not eligible for copyright protection.

The court found in the plaintiff’s favour, deciding that AI-generated content is eligible for copyright protection provided that it reflects human intellectual input. More specifically, despite AI’s role in generating the portrait in question, the court recognised the plaintiff’s creative choices in conceptualising and refining the image, establishing them as the copyright holder. The court also confirmed that AI itself could not be an author, and the author is instead considered the person who directly made the relevant settings to the AI model according to its needs and choices.

Foreign Geographical Indications Regulations Take Effect in China

Towards the end of 2023, the China National IP Administration (CNIPA) issued new regulations regarding the registration, administration, and protection of geographical indications (GIs). The new regulations took effect from 1 February this year and feature parallel regulations – a regulation for the “Registration and Administration of Collective and Certification Trademarks”, and a regulation regarding GI products.

The regulations cover new application, examination, protection, modification, and supervision procedures. Importantly, the regulations stipulate that geographical indication products must exhibit authenticity, regional characteristics, specificity, and association, and specify circumstances in which they will not be recognised.

Once a product receives GI protection, the owner is required to oversee the use of GI product names and special marks, as well as the products’ distinctive features and quality under the geographical indication.

The revised resolutions strengthen the provisions for both owners and users, including proving basic obligations and rights to each, which can only be good news for users of the systems. Additionally, it seems that progress is being made towards harmonising GI protection in China.

Revised Rules for Implementation of the Patent Law in China

December 2023 saw the publication of revised Rules for Implementation of the Patent Law in China, which came into effect on 20 January 2024. The key points for businesses and practitioners appear to be:

1. The revised Rules expand provisions concerning the novelty grace period. In addition to a first disclosure at ‘academic conferences or technical conferences organised by relevant departments of the State Council or national academic organisations’, the Rules now allow for first disclosure at ‘academic conferences or technical conferences organised by international organisations recognised by the relevant departments of the State Council’. How this will be effectively examined by the CNIPA remains to be seen.
2. Patent applicants are now required to adhere to the principle of good faith, and the revised Rules especially crack down on irregular patent applications, e.g., applications where the right to apply for a patent or designation of inventor is improper.
3. A system allowing deferred examination has been introduced. Previously, the applicant must request substantive examination within three years of the filing date, and failure to do so would be deemed withdrawal of the application. Under the deferred examination system, applicants may defer examination for one, two, or three years enabling them to continue the patent examination process based on relevant commercial circumstances.

With China’s continuing efforts to evolve its intellectual property system, it appears that businesses, both in China and those looking to enter the Chinese market, should look forward to the rest of 2024 with confidence.

The post 2023 China IP overview: A UK-China perspective appeared first on Focus - China Britain Business Council.

China Joins WIPO’s Hague System And The Marrakesh Treaty

Two of the most significant developments of 2022 were the coming into force in China of the Hague Agreement and the Marrakesh Treaty, on 5 May 2022.

The Hague Agreement is an international treaty administered by WIPO (the World Intellectual Property Organisation) that is related to the international registration of industrial designs. The ‘Hague System’ provides simple and convenient procedures for applicants to register an industrial design in multiple countries by filing a single application, filed in one language with one set of fees. China’s entry into the System should help Chinese designers protect and promote their designs in the 94 countries, including the UK, covered by the System more conveniently and cost-effectively. Moreover, foreign designers should find it easier to enter the Chinese market.

China became the 85th party to the Marrakesh Treaty, the only human rights treaty in the world in the field of copyright, which aims to provide access to and use of copyright works for people who are blind or visually impaired, in order to guarantee access to culture and education. China’s entry into the Treaty should increase opportunities for the blind and visually impaired in China to obtain copyright works and promote the overseas dissemination of Chinese works.

China’s ascension to the Hague System and the Marrakesh Treaty represents significant steps in global cooperation of these important agreements and should promote confidence in the users and beneficiaries of those systems.

A Five-Year Plan for the Protection and Use of Geographic Indications

The China National Intellectual Property Administration (CNIPA) introduced China’s first five-year plan regarding the protection and use of geographical indications.

A geographical indication is a sign on a product that has a specific geographical origin and possesses qualities or a reputation specific to that origin.

The Plan promotes steady and reasonable growth in both the number of entities using geographical indications and the number of recognised geographical indications by 2025. In addition, China will put into place a series of standards for geographical indications, establish national demonstration areas for the protection of geographical indication products, and help with the protection of Chinese geographical indications overseas.

The CNIPA’s commitment to geographical indications should give consumers comfort in the provenance and quality of well-known and identifiable products and provide producers with reassurance that their efforts will be appropriately rewarded.

The CNIPA Continues To Crack Down On Malicious Trade Mark Registration

Malicious trade mark registration, i.e. trade mark ‘squatting’, has long been a bane of companies looking to enter the Chinese marketplace.

In its ongoing efforts to combat the issue, the CNIPA issued the “Notice on Continuing to Severely Crack Down on the Malicious Registration of Trade Marks”, which indicates that a zero-tolerance approach will be taken against malicious trade mark hoarding and squatting, brand imitation, ‘free riding’ and ‘clout chasing’.  There will also be a general crackdown on illegal acts which violate good faith, public order or good custom, as well as obtaining rights illegitimately and disruption of orderly trade mark registration.

The ‘Notice’ highlights typical illegal acts that will be cracked down on:

1. Applications for registration of marks that are the same as, or similar to, those used by, or in connection with important public institutions and works.
2. Trade mark applications that obviously exceed normal business needs, or are without any real intention to use.
3. Copying, imitating or plagiarising a large number of trademarks or other commercial properties having a certain reputation or strong distinctiveness.
4. Filing a large number of applications for registration marks that are the same as, or similar, to public cultural resources, administrative division names, common names of goods or services and industry terms.
5. Transferring large numbers of trademarks to multiple assignees, disrupting orderly trade mark registration.
6. Situations where a trade mark agency knows or should know that a party is engaging in any of acts 1 to 5 above but nevertheless accepts such a registration or assignment or otherwise acts improperly as a trade mark agent.
7. Other acts that may cause a significant negative impact on China’s trade mark registration management, public interest, or public order.

It seems that there is clear intent on the part of the CNIPA to meet the issue of malicious trade mark registration head-on. It just remains to be seen how effective the above measure will be.

The CNIPA Sets Out Plans To Update Major IP Legislations

The CNIPA published a plan for ‘In-depth Implementation of the Opinions on Strengthening Intellectual Property Protection’, setting targets for updating various regulations and guidelines as well as major tasks to be carried out in the coming years.

Specifically, the CNIPA intends to revise the Implementing Regulations of the Patent Law and the Guidelines for Patent Examination, new guidelines for trade mark law enforcement and cross-border e-commerce IP protection.  The CNIPA also aims to reform the utility model system by introducing an assessment of “obviousness” in its examination of utility models. Other tasks include amendment of Anti-unfair Competition Law, Trade Mark Law and its implementing regulations, Regulations for Copyright Collective Management, and Regulations for Protection of Information Dissemination Right.

These reforms seem to be a clear indication from China of the seriousness of its ambition to become a global leader of intellectual property rights.

Update To The Amendments To The China Patent Law

Of particular interest to patent applicants and right holders are the updates to the 4th Amendments to the China Patent Law, which were originally introduced in June 2021.  The most significant updates include:

1. Increasing the statutory sum of damages to a range between RMB 30,000 and RMB 5 million to take account of the difficulties faced by a patentee when collecting evidence of patent infringement.
2. Improvements to the system for design patents. Specifically, protection for partial design will be allowed, and the period of protection for design patents will be extended to 15 years. Additionally, a six-month priority period will be introduced for domestic design patent applications for the same subject matter.
3. Clarification regarding patent term adjustment (PTA), which allows the term of protection of an invention patent in China to be longer than the statutory 20-year term under certain circumstances. To determine the length of PTA, at the request of the patentee, the CNIPA shall consider any unreasonable delay to the grant of an invention patent, as well as any unreasonable delay caused by the applicant. The update provides guidance as to what does and does not amount to “unreasonable delays” by the CNIPA when granting a patent. These include suspension procedures, preservation measures, administrative litigation procedures, and re-examination procedures in which amendments are made by the applicant.
4. The introduction of an Open Licensing system, where a patentee can declare to the relevant authorities their willingness to authorise another party the right to work under the patent, and specify any appropriate royalties and a payment schedule.

As China begins to shake off the shackles of the Covid-19 pandemic, it is clear that it is continuing to support and evolve its intellectual property system. Businesses, both in China and those looking to enter the Chinese market, should look forward to 2023 with confidence that their intellectual property rights are valuable and will be respected.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can help you find the perfect partner or supplier to support the growth of your business in China.

The post The 5 biggest China IP stories of 2022 appeared first on Focus - China Britain Business Council.

On January 4 2022, the UK government implemented the National Security and Investment (NSI) Act, which allows the government to scrutinise and intervene in certain acquisitions that could harm the UK’s national security. The NSI Act applies to business acquisitions or dealings in intellectual property in sensitive areas such as AI, robotics and data infrastructure and could make transactions in IP, such as patents, subject to government approval.

In a move that will be of interest to universities and others, an IP licensing deal between the University of Manchester and a Chinese company, Beijing Infinite Vision Technology Company Ltd, has been blocked by the UK government.

The University of Manchester and Beijing Infinite Vision Technology Company Ltd had entered into a licence agreement to enable the latter to use IP relating to SCAMP-5 and SCAMP-7 vision sensing technology to develop, test and verify, manufacture, use, and sell licensed products. The technology is seen as having applications in embedded vision applications such as robotics, VR, automotive industries, toys, and surveillance. On its website, the Chinese company describes itself as providing “the cutting-edge 3D rendering technologies to deliver realistic still image, animation and virtual reality for residential cultural and commercial projects”.

A final order to block the licence agreement from proceeding was made by the Secretary of State for Business, Energy and Industrial Strategy (BEIS), Kwasi Kwarteng, pursuant to Section 26 of the Act.  It was considered that “there is potential that the technology could be used to build defence or technological capabilities which may present a national security risk to the United Kingdom” and that “those risks would arise on the transfer of the intellectual property to the Acquirer.”

As we wrote previously, the NSI Act is actor-agnostic and pre-dates the end of the UK-China ‘Golden Era’, so should not be interpreted as the government seeking to make the UK less attractive to Chinese investors. Nevertheless, since IP licensing forms an integral part of the university business model, universities will need to re-evaluate their risk assessment processes and voluntary notification procedures.

As of March 2022, the government had received 22 notifications under the Act, of which 17 had been called-in for assessment. BEIS recently published a set of market guidance notes providing practical advice in making notifications, information about whether certain types of acquisitions are qualifying acquisitions, and help for higher education institutions to decide whether to notify the UK government under the Act.

Entering China is a key decision for businesses of all sizes. Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can provide you with the platform to unlock your potential in a rapidly changing market.

Jason Teng is a partner with Potter Clarkson LLP, a full-service intellectual property law firm.

The post Why UK universities in China need to be mindful of the NSI Act appeared first on Focus - China Britain Business Council.

1. Will China be an IPR leader by 2035?

The best place to start with this round-up of 2021 is the release of the Outline of Building An Intellectual Property Rights (IPR) Powerhouse (2021-2035). Why? Because the Outline sets specific five-year development goals aimed at transforming China into an IP powerhouse.  

For 2025, the key development goals include the following:

• The added value of patent-intensive industries will reach 13% of GDP
• The added value of copyright industries will reach 7.5% of GDP
• The total import and export of IP royalties will reach RMB 350 billion
• The number of high-value invention patents per 10,000 people will reach 12

By 2035, the aim is basically for China to become a world leader on IP rights. To achieve these development goals, the Outline identifies tasks such as “constructing an IP protection system that supports a world-class business environment” and “participating in global IP governance.” Overall, it seems that China is intent on shifting its IP rights system away from quantity towards quality, which is good news for everyone.

2. China’s IP boom continues

China topped the ranking for total IP filing activity in the annual World Intellectual Property Indicators Report published by the World Intellectual Property Organisation. China was first in each category of IP applications (patents, trademarks, industrial designs, etc.), except for geographical indications, where it ranked second behind Germany.

It is hardly a surprise to see China topping the listing for IP filings in terms of pure numbers.  But what is interesting to note is that only approximately 7% of all applications from China were filed abroad. This very much points to an emphasis on quantity over quality. That said, with the new 2021-2035 ‘Outline’, it appears that the focus of IP in China will move from the pursuit of quantity to an improvement of quality.

3. Big news for pharma: China gets a US-style patent linkage litigation system

A development welcomed by pharmaceutical patentees in China, both big and small, has been the introduction of a new US-style litigation system, tying regulatory approval to the resolution of IP disputes. 

After a few initial teething issues, such as a lack of final implementation regulations, the system came online in July 2021. Notably, it appears that new medical uses for biologics are included in the system, while polymorph drug patents have been excluded. Of particular interest is the confirmation that generic pharmaceutical manufacturers are required to notify patentees within 10 days of their marketing authorisation application.

Further boons to life sciences innovators in 2021 included China’s introduction of patent term extensions for pharmaceutical-related patents, and a new process for requesting patent term adjustment to account for delays attributable to the China National Intellectual Property Administration (CNIPA) during patent examination.  

4. China introduces its first comprehensive data protection law

The Personal Information Protection Law (PIPL) was adopted on 20 August 2021 and entered into force on 1 November 2021. The PIPL adopts many of the principles and rules of the EU and EEA’s General Data Protection Regulation (GDPR), such as clear provisions on individual rights and obligations for personal information handlers. It seems that China intends for the PIPL to be seen as forming part of a common international legal system. 

An interesting aspect of the PIPL is its applicability to state actors. It seems that the PIPL has primary applicability in the field of personal information protection, and so the state must respect and protect the right to personal information. Nevertheless, it remains to be seen exactly how state actors will comply with the PIPL and which provisions and obligations apply. 

5. Official IP protection guidance by China and the UK 

2021 marked the 25th anniversary of the formal establishment of cooperation between the UK Intellectual Property Office (UK IPO) and the CNIPA.  To mark the occasion, the two offices published bilingual guidelines for IP protection in the UK and China, with the aim of providing further guidance on the Chinese and British IP systems and delivering better services to innovators. 

The CNIPA’s guidelines (found here) focus on the legal protection and enforcement of Chinese trademarks.  The guidelines published by the UK IPO (found here) give an introduction to IP, guidance on applying for and protecting IP rights in the UK, and outline changes to the UK’s IP framework after Brexit.  

Once again it appears that, despite the uncertainties created by the Covid-19 pandemic, China’s ambitions for IP continue to evolve. 2022 should start to reveal the results of many of these changes, and we can look forward to continued cooperation between the Chinese and British IP systems.

Peter Mumford is an associate with Potter Clarkson LLP, a full-service European intellectual property law firm.

The post The 5 biggest China IP stories of 2021 appeared first on Focus - China Britain Business Council.

In October 2020, Dow and Johnson Matthey won a major intellectual property case against Shanjun Clean Energy Technology over the two companies’ jointly owned Oxo alcohol technology. Dow and JM have licensed their Oxo alcohol technology for over 20 years in China and this dispute was not the first time that they have fought legal battles over the product in the country.

This case is just one of many recent successful rulings in favour of foreign firms in China, highlighting the significant progress in how intellectual property disputes are handled in China and a growing professionalism within Chinese courts. While foreign firms have in the past feared lax legislation regarding intellectual property, this is increasingly not the case. However there remains much progress to be made.

So what’s changed in the IP environment in China over the past year?

Since the announcement in January 2021 within China’s new Civil Code that infringed parties would soon have the right to claim for punitive damages in IP litigation cases, 2021 has seen a series of important changes with regards to intellectual property rights (IPR).

On 1 June 2021, a series of amendments to PRC intellectual property policy came into effect. This has led to changes to patent and copyright law and seen new national standards and administrative measures drawn up.

Building on the establishment of a punitive damages system, the Amended Patent Law improves the system for service inventions, establishes an open-licensing scheme for patents, and establishes a patent term extension and a patent linkage system for pharmaceutical patents.

Alongside the legal amendments, two new national standards approved in 2020 also came into effect: one a guide to navigating patents, and the other relating to IP protection for e-commerce platforms. The changes have also introduced new administrative measures for resolving major patent infringement disputes.

Introduction of a patent open-licensing system and an improved system for service inventions

Rouse, a leading global legal firm specialised in intellectual property, believes that the new rules represent significant steps forward for China’s IP environment. Speaking to FOCUS, Rouse shared the following key benefits of the policy development.

“We think the establishment of the system could greatly promote the conversion and use of the patents. For example, it enables parties in request to obtain patent licenses in an open, reasonable, non-discriminatory way, which reduces the difficulty of license negotiation. At the same time it may increase the willingness of licensees to transform patents, which is conducive to enterprises in obtaining more patent commercialising activities.”

Rouse is hopeful that the open licensing of patents will enhance the market competition mechanism to allow the market to provide more high-quality and inexpensive new products and new technologies, which is beneficial to both companies and the public.

The amendments to service invention legislation develops property rights incentives and should further stimulate innovation. Article 15 of the Amended Patent Law states: “The State encourages enterprises that have been granted patent rights to implement property rights incentives, to adopt the means of stock shares, options, dividends, etc., so that inventors or designers can reasonably share the benefits of innovation.”

According to Rouse, the new rules represent the first time that the Chinese legislature has written “property rights incentives” directly into the law and is of great significance. “The implementation of this new rule will greatly stimulate the motivation of scientific researchers to transform their achievements… eventually realising a strategy of property rights-driven innovation and innovation-driven development.”

China’s ‘Outline for Building a Powerful Intellectual Property Country (2021-2035)’

On 22 September 2021, China’s state council announced the ‘Outline for building a strong intellectual property nation 2021-2035,’ a 15-year plan for vastly improved IPR and governing frameworks in China. Within the first five years until 2026, the outline aims for stricter IP protection, better market value of IP, and significantly enhanced brand competitiveness.

In more concrete terms, the outline envisions patent-intensive industries contributing 13% added value to GDP, annual import and export royalties of intellectual property to reach RMB 350 billion (£40.8 billion), and for every 10,000 people there will be 12 high-value patents.

The new outline follows on from the 2008 ‘Outline of the National Intellectual Property Strategy,’ which pointed out that IPR needed improvement in China and that public awareness of it remained relatively limited. This strategy aimed for a much-improved legal environment for intellectual property, accompanied by considerably higher numbers of domestic patents.

Progress in Chinese IP

Once infamous for its fake markets and copycat ‘shanzhai’ industries, Chinese firms now have an ever-increasing amount of their own intellectual property to protect. While counterfeit goods are still very much a presence in China, their prevalence is dying down and authorities look increasingly less favourably on them.

CBBC Business Environment Director Yuan Yuan believes that progress is now tangible, despite the continued need for improvement. “In recent years, China has made a lot of effort to improve its IP framework. It is now easier to enforce rights in China, which makes China’s business environment more conducive for foreign companies to enter the market. However, given Covid-19 and the lack of travel opportunities, these improvements are not necessarily well understood by British businesses.”

Considering some of China’s major growth areas, such as the high-tech sector, demand for heightened IP protection should come as no surprise. It should also come as a relief to businesses who fell victim to China’s former copycat habits in the past. Even if the new policy first and foremost aims to protect domestic companies and encourage economic growth, more robust intellectual property rights should better protect all businesses operating in the country.

The statistics show that foreign businesses are already benefitting from the rapidly improving legal environment, and that the courts are enforcing the changes. According to China’s Supreme People’s Court, China’s courts accepted over 480,000 IP related cases in 2019, an increase of 40% on the previous year. Fighting against preconceptions that the courts may lack goodwill towards foreign parties, the Chinese government has explicitly prioritised the fair treatment of foreign businesses.

Data from RPX suggests that foreign plaintiffs have won patent cases at a very similar rate to domestic parties in recent years. Between 2015 and 2019, foreign plaintiffs won around 77% of the time in litigation against Chinese defendants, while domestic plaintiffs won in about 74% of cases. The high success rate and relatively equal standing with domestic business in the courts certainly suggest that the stronger patent laws are helping provide foreign businesses operating in China with much more legal protection than in the past.

In 2020, Australian wine company Treasury Wine Estates won the trademark to Ben Fu, the transliteration of its flagship brand Penfolds, following a decade of litigation and enforcement. This particular case was not without its twists and turns. TWE won a lawsuit against Rush Rich in 2019 but it was overturned by the Beijing Intellectual Property Court. Only after an appeal was TWE successfully awarded its trademark rights.

One of the main purposes of IPR is to encourage innovation, and China certainly is innovating. China overtook the US in 2019 as the largest generator of new patents in the world, generating nearly 59,000 patents. This was the first time that the US had lost the top spot since 1978. To give a sense of just how rapid Chinese innovation has grown, patent applications have grown by 200 times over the past 20 years.

The post How safe is your IP in China in 2022? appeared first on Focus - China Britain Business Council.