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Thursday, 8 April 2010

IP enforcement in China: myth or reality?

Louise Pentland (Senior VP and Chief Legal Officer, Nokia Corporation) opened the China and IP Enforcement slot in this year's Fordham Intellectual Property Conference. There are always solutions if you're prepared to look for them, she said, drawing on her company's experiences. Don't draw conclusions and make generalisations, she warned, since the country is far too big and varied to permit them to be valid. Issues however include local protectionism, varied quality of legal judgments, low levels of damages (though this is gradually changing).


The legal environment is also quite different -- there's no discovery of evidence; documents produced in court can be used outside it; courts can go straight to an infringing company's bank accounts or close its entire factory. Both parties can lobby and pressurise the courts -- which are also vulnerable to pressures from government. Parties that lose proceedings shouldn't blame the system, but rather should examine their own IP monitoring and exploitation policy. Best practices are easy to identity: file, just as the Chinese do, whenever there's something you can file for; then you can countersue. Employ forum-shopping and get the other party out of its home territory. Nokia's experiences of IP litigation have been very positive recently, being based also on efforts to do long-term relationship-building and showing that they're there for good, not just indulging in one-off raids. Nokia relies heavily on Chinese Customs, and has set up a programme with its own recyclers for the destruction of proven infringements; this is funded partly by Nokia, partly by the recycling companies. Patience is also required: the pace of change is fast by Chinese standards.

Professor Peter Yu (Drake University) then spoke on China's fortunes before the World Trade Organization, where that country has been charged with various failings under TRIPS. The WTO required some fairly small changes in China's copyright and customs laws, which have since been made. Peter made a plea to the audience to understand, as Louise Pentland mentioned, that the country is large, far from homogenous and not at all amenable to generalisations concerning attitudes towards IP. Encouraging local businesses in order to promote local innovation is more likely to change attitudes than anything else, since it makes local stakeholders.

Don't assume that the Chinese prefer administrative enforcement, but do appreciate and understand how it works, particularly in light of the manner in which the public sector operates on the basis of the exercise of discretion. This is a major concern regarding corruption, but the system can be made to work -- particularly if you remember that the big issue in China is not IP as an end in itself but market entry. And don't assume that all foreign business decisions are IP-or law-driven (for example, Google's withdrawal from the Chinese market for search services). The scope of disputes between Chinese and foreign businesses can be widened by emphasising cultural differences; this should not be done, since it serves only to exacerbate matters

Professor Haochen Sun (University of Hong Kong) then spoke about tackling infringing culture in terms of addiction (by analogy with drug addiction) and Shanzhai -- the creative counterfeiting which is so popular in some circles. Here, IP enforcement can be seen as an assault on Chinese culture itself.

In the discussion session, Jennifer Choe Groves (Hughes Hubbard & Reed) observed that China was able to suppress counterfeit products during the Beijing Olympics. If this could be done then (presumably without upsetting local cultural sensitivities), why could it not be done on other occasions too? Peter Yu thought otherwise: fake products might not have been on view in Beijing, but they were still on offer everywhere else, since the political will to get them off the streets could not be matched on the ground.

The future of Chinese paten litigation was raise by Jason Albert (Microsoft), asking whether that jurisdiction might be planning, as has been rumoured, to introduce an equivalent to the International Trade Commission in the USA.

1 comment:

Japser said...

The legal environment is also quite different -- there's no discovery of evidence;

Is that really so different from the situation in Europe, Nokia's home base?

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