A Case Study on IPR Protection in China

Protecting intellectual property in the medical devices industry in China

New medical devices are being created faster than ever before and ensuring that one’s intellectual property (IP) is not stolen has become increasingly important. European experience in the medical device industry has been important to China as they have begun developing their own products. The China IPR SME Helpdesk provides a case study, along with some helpful advice on what recourse a European business can take when a Chinese competitor copies their product.

Case background
A European company in the dental instruments sector was selling their product in China through a Chinese distributor. They discovered a competitor in China was offering a similar product, but built to lower-specifications that used an identical exterior design, colour scheme and control interface. The technical manual, diagrams and parts of their sales brochure appeared to be directly copied from the European dental instruments company. Overall, the competitor’s product gave the appearance of being similar in function to that of the European company, although its performance level and price were much lower.

What actions did the European company take?
The European company’s representatives had previously approached the company at a trade fair to
complain about the infringement of the company’s IP but had not received a positive response.

The European company then proceeded to seek legal advice on what could be done. The company did not have a design patent to protect the overall appearance of their product, nor were there any patents covering the product’s function, so trying to claim the Chinese company committed patent infringement was legally possible but extremely difficult to do. The only legal recourse the company had was to argue copyright infringement of the technical manual.

Instead of taking the legal route, the company decided to send a warning letter through their local lawyers that alleged infringement of the product’s shape—even though they were not on strong legal ground—and copyright. The letter implied that the company would take the matter to court. The law firm, and representatives from the European company, followed-up the letter and met with the Chinese company. The European company argued that a lawsuit would be waste of time for both parties and that even if they were not successful in court, the Chinese competitor’s imitation of the European product would harm their corporate image in the long run. As a result, the infringing company decided to change a number of exterior features of the product and produce new manuals and brochures which greatly reduced the similarities to the European product.

Although the European company did not have a very strong legal case to make, in this instance, a warning letter followed by a round of negotiation was able to produce a satisfactory result.

Lessons to take away
• The European company would have had an even better result if they had a design patent or a standard patent for their product in China, which would have given them clear rights over the design. Therefore, European small and medium-sized enterprises (SMEs) should make sure they register their IP as soon as possible, to ensure maximum protection.
• Do not assume that litigation is the only way forward. Make use of the full intellectual property rights framework that exists in China.
• The use of a warning letter can be a viable alternative to criminal prosecution or civil litigation. Issuing warning letters in combination with determined negotiations can, in some cases, lead to satisfactory results.
• Always enforce IP rights. If a business manages to create an image of being litigious then infringers are less likely to steal its intellectual property.

The China IPR SME Helpdesk supports SMEs from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to China, Hong Kong, Macao and Taiwan, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential
advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (question@ china-iprhelpdesk.eu) and gain access to a panel of experts, in order to receive free and confidential first-line advice within three working days.

The China IPR SME Helpdesk is co-funded by the European Union.

To learn more about the China IPR SME Helpdesk and any aspect of intellectual property rights in China, please visit our online portal at http://www.iprhub.eu/.