Beijing Partner Discusses IP Litigation Issues Faced by Chinese Companies

South China Morning Post | October.03.2012

This Q&A with intellectual property partner Xiang Wang discusses the intellectual property litigation issues faced by Chinese companies in foreign courts. An excerpt from the article is included below.

Why is IP protection so important to long-term business growth?

Wang: Changes in the global economic environment have reshaped the development of modern business models in which IP rights have demonstrated unprecedented value. Major international players in high technology industries are using IP lawsuits as powerful weapons to strengthen their market positions and to weaken or destroy competitors' businesses. Such goals would be impossible to achieve without first establishing a robust IP portfolio and a strong IP protection strategy.

What should Chinese companies do when they acquire intellectual property rights overseas?

Wang: Chinese companies are still at the early stage of going abroad and are often not sophisticated enough to deal with complicated IP issues in mergers and acquisitions. Therefore it is advisable for Chinese companies to first understand how important their target IP assets are, as compared with other assets, and what type of IP rights may deserve more careful evaluation and due diligence than others. This will enable them to understand how much should be spent on what IP due diligence. It is also advisable they obtain legal advice on local laws and practices as early as possible due to the jurisdictional nature of most IP rights such as patents and trademarks. In addition, when acquiring IP assets, tax issues should also be carefully addressed, because the arrangement of IP ownership and licensing among family companies may have an impact on the tax to be paid globally as a whole.

What are the expected trends in the next 5-10 years?

Wang: On the one hand, China will continue to be an important market attracting foreign investment. On the other hand, more and more Chinese companies will continue to expand their businesses abroad and at the same time they will become more aggressive in developing their own IP portfolios globally. As a result, it can be expected that Chinese companies will become more active in defending and asserting IP rights in foreign courts in the not so distant future.