U.S. Tariffs and China’s IP System

The U.S. tariffs being implemented against various goods imported from China has raised a lot of questions around IP protection strategies.

            Historically, enforcing IP rights in China has been difficult, primarily due to a lack of recourse and structure for enforcing rights against infringers. However, in recent years there has been an initiative in China to revamp their IP system, and the result has made filings in China stronger for foreign filers.  

            So in view of recent tariffs, what makes sense for intellectual property strategies? The answer, is “it depends”.

            For companies in industries that are particularly competitive in China right now, such as artificial intelligence, it would be wise to build a portfolio of filings in China regardless of manufacturing location. This approach may prove helpful downstream to block direct competitors from using the same technology. Moreover, if your industry is particularly competitive in China, there may be a greater chance for your suppliers to come from China (especially for specialized parts). Thus, Chinese filings may also prove helpful for protecting your IP against potential suppliers, even if the final products are assembled outside of China.

            For companies which have R&D or manufacturing in China, building a portfolio of filings in China is critical. Even if a company does not intend to sell their goods in China and is solely using facilities in China for R&D or manufacturing, Chinese filings are critical to help preserve recourse against potential infringers. By filing in China, you are in a position to take advantage of China’s patent system and have improved chances of stopping potential infringers.

            However, in a situation where a company may be moving manufacturing from China to the U.S. in view of the new tariffs, there may be further considerations. For example, if a company manufactures their products in the U.S. and does not intend to sell their products in China, it could make sense to focus filings only within countries where the goods will be sold, with the knowledge that there will be no recourse for knock-offs made and sold in China. These U.S. based companies may have the ability to stop infringing goods from being imported into countries where they have protection without having to pay for filing Chinese patents.

          There are many factors that come into play when implementing an IP protection strategy, and companies may be pivoting their IP approach in view of the recent policy changes.