Experts: U.S. Companies Complain, But Often Don’t Act To Protect Rights in China

WASHINGTON, February 11, 2011 — Despite U.S. companies’ loud and frequent complaints about rampant intellectual property infringements in China, relatively few of them use China’s legal system to stop it, according to a group of legal experts who spoke on the subject of China and intellectual property rights Tuesday.

“You have this odd misbalance,” said Mark Cohen, Microsoft’s director of international intellectual property policy. “You have a lot of [International Trade Commission] cases in the U.S., a lot of civil patent litigation involving Chinese defendants in the U.S., yet you have a relatively low incidence of foreign-initiated patent infringement litigation in China.”

Cohen, a former U.S. intellectual property attache in Beijing, spoke on his own behalf and said that none of the views he expressed are those of Microsoft’s.

U.S. companies lack of awareness of the Chinese legal system is a concern that is often mentioned by lawyers working in China on their behalf, as well by legal experts in the United States who say that U.S. companies often don’t file patent applications in China, which leaves them vulnerable.

The panelists spoke at a Tuesday Intellectual Property Breakfast Club meeting on the subject of China and intellectual property.

Fuli Chen, China’s intellectual property attache at the Chinese Embassy in Washington, D.C., said that the statistics show that when foreigners use the legal system in China, the rate at which they win infringement cases is very high.

Chen said that he was speaking on his own behalf, and that his opinions were his own and did not represent official policy.

He also noted that the judicial system is becoming more efficient, and the law on intellectual property is becoming clearer.

“For those who use it, it’s very successful,” he said.

When asked why U.S. companies don’t use China’s legal system, Chen replied: “I think it is the habit of companies. Once they have problems, their first choice is to bring their complaints to the U.S. government.”

“I have met with a lot of complaints through a lot of different channels,” he said. “The first thing I ask is whether they’ve used the tools in China … if you find that the procedures are not working, then we can have a discussion about why the system is not working.”

Like a lot of people with experience of working in China, Cohen noted that intellectual property enforcement varies wildly by region.

“Rightsholders need to look at IP in China in general as a rather inefficient market, but it is a market for IP enforcement,” he said. “It’s probably a more complex market than the U.S., which is to say that you have administrative enforcement, and you have civil and criminal enforcement … You have differences by region, you have differences by resources, and you have sometimes counterintuitive activities taking place where remote courts will do very good jobs, and very busy inner city courts, which people think are more predictable, may be OK, but which are not nearly as experimental and interesting.”

And contrary to popular perceptions about China being a lawless pirate state, “right now, China is probably the most litigious society in the world for intellectual property in terms of civil litigation.”

Just over half of those cases concern copyright infringement, he said.

And unlike so-called “rocket dockets” in the United States where patent infringement cases get resolved within a year to 16 months, Chinese courts resolve disputes within six months.

That speedy time frame doesn’t apply to foreign companies, however.

“The [IP] litigation grew by about 35% last year, but patent and trademark cases in terms of the federal docket for 2009 was still two to three times more than the U.S,” he said.

Most of the cases, he said, are “the Chinese suing the Chinese.”

Video of the event can be found here.