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Chinese IP owners are not always what you expect

Emma Barraclough

It was Managing IP’s fourth China-International IP Forum in Beijing last month. We had a great turnout of in-house counsel from Chinese companies and plenty of questions for the panellists at the end of each session – always something we conference organisers like to see.

Unsurprisingly, speakers from Chinese companies with real-life experience of protecting and enforcing their rights overseas got the most enthusiastic response (one adjunct professor in the audience repeatedly implored Alex An, the CEO of JK Sucralose, to go and speak to her students about his company’s successful defence of an ITC action).

The event encapsulated many of the questions about innovation in China: are Chinese companies doing it, and if so, how, where, and how are they protecting it? Of course every IP professional knows that telecoms companies Huawei and ZTE have been racing up the PCT top users’ list over the past decade, but how many can name a dozen IP-rich companies in China?

There’s Lenovo and Haier, of course, but neither company is (nor has positioned itself as) a cutting-edge international innovator. Instead, they specialise in making dependable products for the mass market. There are also companies that largely mirror innovations going on beyond the Great Firewall, as the FT said this week: Baidu is to Google what Renren is to Facebook. Then there are the behemoths of Chinese industry: the utilities, banks and construction companies (often state-owned) where innovation has traditionally played a less important role than market share and economies of scale – China Mobile, Bank of China, Bao Steel, China Life Insurance and so on.

Below these, however, are a growing number of companies, often private and almost always young, that are doing much of the most innovative work. Many are in the pharmaceutical and IT sectors, and they are often connected to university research (universities dominate the list of the biggest filers at SIPO).

But here’s the problem for foreign lawyers wanting to advise these companies as they plan their strategies for overseas expansion: Not only do the language barriers make it difficult to find out who they are and what they do (it’s not that these businesses are always small: smartphone maker Xiaomi, for example, whose in-house counsel spoke at the Forum, has sold more than 7 million MI phones within three years of its launch), it is that the business culture is confusingly unfamiliar.

Most in-house counsel in European and US companies worked for years in private practice before making the switch in-house. Some might have moved back and forth across the divide throughout their careers. In-house decision makers are usually senior and generally look the part.

That’s often not the case in China. The IP profession is young and IP lawyers are in demand. That means that it isn’t unusual to find twenty-something professionals in charge of managing their company’s IP portfolio.

Nor can non-Chinese lawyers rely on the usual sartorial clues to identify their Chinese counterparts. There were few in the audience last month wearing business suits – and a colleague reports that one in-house delegate at our Shanghai event last year arrived wearing what she describes as pyjamas and slippers. It turned out he was a senior patent lawyer at one of China’s biggest IP filers.

All this makes it difficult to navigate China’s fast-moving IP scene. But that doesn’t mean that overseas firms wanting to win Chinese work should be deterred. Finding China’s next Huawei or ZTE might be difficult, but there are plenty of small, increasingly innovative companies in China whose IP portfolios are only going to grow. Foreign lawyers just need to challenge their preconceptions if they want to cultivate a long-term relationship with them.


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