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Chinese Patents – a waste of money?

*first published in The Jerusalem Post 12Apr16

Everyone knows that the Chinese produce inexpensive products. They are also known for making copycat products. Consumers take advantage of this to get products at the prices they like.

The copied manufacturers don’t want cheap versions of their products, which lower their reputation, nor do they like to be copied without payment. Can manufacturers use patent protection and take copycats to court for patent infringement in China? Most people don’t think so. The common consensus is that the Chinese system clearly encourages copying.

In my mind, this view is outdated. For the past 5 years, many of my clients have been involved in the large Chinese market and they’ve been willing to invest their patent portfolio there as well.

Why does this make sense? Because, despite the current downturn, China today is a strong country. Its priorities have changed, and it is willing to protect intellectual property.

When asked about this, I remind my clients of the Israel of 1987, when I made Aliyah. Back then, the economy was in bad straits. Every time we bought a new computer, it would come with a boot-legged copy of Microsoft DOS. Everyone said: “One country, One disk”.

Fast forward a decade. We became the StartUp Nation and Microsoft was successful here. What changed?

I believe that the change occurred as our software businesses changed and grew. Once we were producing our own software, for which we wanted protection, we became more willing to give protection to other companies’ intellectual property. Thus, when Microsoft complained to our government, our software companies were mature enough to realize that what was good for Microsoft was also good for them and started paying for Microsoft’s products.

There is another reason. At about this time, some Israelis abroad started trickling back to Israel. These ex-Israelis, who had experience in US high tech companies, brought with them US ideas of how companies should be run, including making sure their company registered its intellectual property.

I see the same processes occurring to China. In 2006, China created a strategic plan to make China an “innovation-oriented” society. I believe that this caused some Western educated Chinese to return to China, bringing Western ideas. They started companies and R&D centers and created a vibrant high tech eco-system. They are developing new ideas, and thus have a strong push for protection for these new ideas. The strong Chinese Patent Office supports this.

All of this comes on the heels of China’s signing the TRIPS addendum to the World Trade Organization Treaty, as Israel did.

But is your patent enforceable in China? Can you find infringers? A Chinese speaker at the recent AIPPI conference said that foreign companies have won patent battles in the new Chinese IP courts. Recall that, if you file today in China, you will go to court 5 – 10 years from now. The real question is where will China be in 5 – 10 years? With their new intellectual property courts, things are changing.

Should you file? I think so.

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