Maintaining your IP Portfolio

By Maarten Roos 

To maintain the exclusive rights to IP, an organization must have the mechanisms in place to guarantee continued protection.

First of all, someone must ensure that registered IP rights maintain their validity. Trademarks are registered for 10 years at a time, thus registrations should be extended before the ending of such a validity period. Failure to do so will result in the loss of all exclusive rights to the trademark. Domain names are cheap and easy to register, but a maintenance fee must be paid. Granted patents and designs will have a non-extendable validity of 10 years (for design and utility model patents) or 20 years (for invention) from the filing date, but an annuity must be paid each year to ensure continued validity.

Secondly, an organization can initiate measures to ensure that another party does not register rights that infringe one one’s own. All trademark applications are currently being reviewed by the Trademark Bureau (TRAB) on similarities with existing registered trademarks, before they are published in the Trademark Gazette. But at publication, third parties can still object to the registration of trademarks that may have slipped through the net, which will in any case delay the registration until a review has been completed. Moreover in the near future, changes in legislation will likely retract the TRAB’s responsibility for substantive review, and put the burden of objections on such third parties, making it essential that an organization, either by itself or through a law firm or IP consultancy, monitors publications to catch infringements before they are actually registered.

If a domain name is first registered by a third party in bad faith, the procedure to get such a domain name back is relatively simple – as long as such a procedure is commenced within 2 years of the original registration. If beyond this period, a length civil lawsuit is the only way to cancel the registration of an existing domain name, therefore it is much more efficient to catch malicious registrations early. This is most often done through a regular review of domain names that are or could likely become of value to the company.

The monitoring of infringing patents, due to their technical complexity, is much more difficult. Organizations will more likely choose to wait for infringements and then take filing for an invalidation procedure with the State Intellectual Property Office (SIPO), an approach particularly effective for design and utility model patents. As these are not reviewed substantively during the filing procedure, a court will usually agree to suspend such rights pending a decision on their validity. Invention patents are much more difficult to invalidate, thus some organizations will monitor publications of new, competing patents.

Preparing for Action and Monitoring the Market

What kind of response, if any, is warranted and appropriate when infringements are encountered depends among others on the severity of the infringement, the characteristics of the infringer, and the available evidences of the infringement. Decision makers should have a comprehensive understanding of the situation and the choices available to it, among which the most frequent are:

(1) Spend more resources on finding required evidences; and then
(2) Warn the infringer of pending action to push for a settlement of the case; otherwise
(3) Commence an administrative action through a complaint with the Administration for Industry and Commerce, Quality & Technological Supervision Bureau,  Intellectual Property Office, Copyright Office or Customs Office, with the objective to get an injunction for infringement; and or
(4) File a civil lawsuit with the competent People’s Court, with the objective to get an injunction for the infringement and procure compensation for damages.

A good preparation will make the organization ready to respond swiftly in case infringements are found. This includes preparing in advance the Powers of Attorney, IP certificates and other documentation necessary to take an action.

To make any of the above actions more effective and to avoid that further damages caused by delays, the information on possible infringements should be collected timely. Though depending on the kind of organization and type of products, monitoring the market for possible infringements is usually done by sales people, who talk to customers and may hear of competing products. Some organizations will also appoint one person to monitor the Internet – a popular marketing tool for many infringers. An organization must decide what kind of monitoring system is appropriate, but the emphasis should be on finding out infringements as early as possible, and passing this information swiftly to the IP Manager.

Conclusions

The above comments are designed to assist an organization in building an effective IP strategy in China. The first step is to appoint the right person to coordinate protection and enforcement. This IP Manager should then, with the support of law firm or IP consultancy, build the right framework for protection, with regular IP portfolio reviews and a system to monitor the market and prepare for action. IP infringements are on of the challenges problems for (foreign) companies in China. Deciding on and implementing the right IP strategy will ensure that an organization applies its resources effectively to counter such infringements.

Maarten Roos, Wang Jing & Co

This is the second part of the article Protection vs. Enforcement. Last week we published the first part.