Chinese manufacturing has long enjoyed a relative freedom from IP enforcement. Entire cities manufacture fake Gucci, LV, and Prada bags, and the latest DVDs and CDs are all available on the streets for US$1. International buyers and inventors have long lived in fear of their designs being copied in China.

Some have argued that China’s poor record on IP is due to cultural differences or the lack of experience among manufacturers. While this may be true, a great deal of manufacturing in China is done for export and for foreign brands so IP is hardly a major concern. The same lack of transparency which has made it hard for the central government to create and enforce labor, tax, safety and environmental standards, has also prevented improvement in IP monitoring and standards. Below are a few developments which may lead to a gradual change in the way China’s manufacturers police themselves and the recourse available to both foreign and domestic inventors.

Domestic Players Standing up for their IP Rights
The Music Copyright Society of China and R2G, the largest music in China, are suing Baidu for providing access to unlicensed streaming and downloadable music. Wu Jun, CEO of R2G, said of the suit:

This lawsuit is just the early beginning of our anti-piracy action… We will also start to reach out to advertisers in order to save our industry from destruction.” Full Article

International record companies have been involved in law suits against various Chinese search engines and websites for a long time, but this is the first major action we’ve seen from a Chinese organization. It suggests that awareness and concern over IP may slowly become a major domestic, as well as international issue.

China is Innovating More and so has More to Lose
In 2007 the World Intellectual Property Organization received 39,945 international trademark applications, a 9.5% increase over 2006. China was the only developing nation in the top 10 with 1,444 or 3.6% of total filings. China also made 5,416 international patent filings in 2007, a 38.1% increase over 2006 numbers. China’s applications have increased an average of 43% per year for the last five years. Detailed Statistics

Most of these filings are from larger, international Chinese companies like Huawei and Haier, not from smaller, domestic manufacturers or brands. China also has a long way to go before they reach the number of filings made by the US or EU. Still, the trend suggests an increasing awareness of IP issues and their value to businesses.

Global Law Enforcement Is Stepping Up
Interpol has also taken new initiatives to protect IP. Most significant is the release of the Global Database on International Intellectual Property (DIIP):

“The database will be a unique central point for private industry worldwide to provide information on IP crime. One of its key functions will be to maintain reliable data on the scale of counterfeiting and piracy to determine more clearly the nature of crimes against brand and copyright integrity…

David Chavern, USCC’s Executive Vice President and Chief Operating Officer said of the DIIP, “We expect to see major law enforcement actions as a result of this work in the very near future.” Full Article

The database will allow local law enforcement to access global IP records and complaints, but any database is only as good as the information put into it. No doubt it will take time to see how various local authorities and governments react to the announcement and the resources they put toward actively using it.

A New Strategy from the Central Government
In 2008 China will also release a new strategy for dealing with IP rights and infringements. Tian Lipu, head of the State Office of Intellectual Property Office said of the plan:

“So far, China has drawn up 20 methods to protect IPR, including improving the protection system, strengthening law enforcement and raising public awareness. The strategy is vital to fully implementing the power of the country’s intellectual property rights system and to promote the development of the country’s economy and science…China will set up about 40 service centers for IPR protection. The centers will provide consultations and financial support for those who can’t afford to pursue cases.” Full Article

While all of these developments point to a positive trend, it’s clear that the changes won’t occur overnight. The only really effective way to protect your IP is to follow best practice and due diligence. Vet and monitor your manufacturer’s closely.

Further Resources:
American University publishes a history of Chinese IP law as well as a number of links to resources

Intellectual Property News Agency - The Only Specialized Global Intellectual Property News Agency