Special Report – Belt and Road

China seeks to offer greater protection in emerging markets

‘Belt and Road Initiative’ has many doubters, with some observers sceptical about protection of IP. But there are ways to mitigate the risks

PUBLISHED : Thursday, 20 September, 2018, 11:45am
UPDATED : Thursday, 20 September, 2018, 11:45am

China’s grand scheme to export goods across half the globe seems like a nebulous concept to many, particularly as it includes jurisdictions where intellectual property (IP) is not strongly protected.

Elliot Papageorgiou, partner at Clyde & Co, has practised IP law on four continents since 1995. He believes there are ways to protect IP when entering emerging markets.

“If you compare China to the US, the UK and the rest of western Europe, there is still a need to catch up on IP. But out of the 65 countries that China has identified as part of the ‘Belt and Road Initiative’, around 60 have, in some areas, a weaker IP protection system than China,” Papageorgiou says.

The Chinese government has every incentive to protect IP because the issue is starting to affect a critical mass of Chinese-owned IP.

The Chinese government has been making all the right noises in terms of IP protection. It has hosted conferences about the topic, and engaged experts. But observers wonder if this will lead to IP protection in countries along the path of Beijing’s global trade initiative.

“The Chinese government has every incentive to protect IP because the issue is starting to affect a critical mass of Chinese-owned IP. China is going to be the origin of much of the trade along the Belt and Road [route], so it will also run a risk of its indigenous IP being lost,” Papageorgiou says.

Estimates indicate that more than 98 per cent of the 213,000 new IP litigations started in China last year were Chinese companies litigating against other Chinese companies.

Most of the products on the Belt and Road [route] will originate from China, while the resources will flow in the opposite direction. So it is imperative for China to seek ways to protect its own IP.

“Do I have confidence that companies can protect their IP in the ‘Belt and Road Initiative’?” says Papageorgiou. “Yes I do, if you keep investing in IP protection and enforcement in China. Yes I do, if China continues to take IP protection seriously vis-à-vis its own firms.

“If China is protecting its own IP, if China is the origin of many of the products, and there are enough Chinese companies with an IP at stake, we will see protection of IP at the origin of the ‘Belt and Road Initiative’,” the partner explains.

When filing IP, it is critical to expand your strategy to China, and target the markets your product will appear in. For companies engaged in oil extraction technology, it would be advisable to seek IP rights in countries along the Belt and Road [route] like Kazakhstan, which are essential for such industries.

“For SMEs with limited financial resources, this means invest in IP in China, thereby stopping problems at their source. The next priority is to cover IP in your market destination countries,” says Papageorgiou.

“If there are infringements outside China, you will still need to take action elsewhere. Infringements will always exist, and people will always find ways to manoeuvre around your China IP protection measures,” he adds.

It is useful for SMEs who need to maximise their time, money and resources to cover China in addition to markets relevant to their product. For instance, while investing in IP rights that cover the EU, [firms should] file an EU trade mark via the European Union Intellectual Property Office. “EU IP rights are excellent value – often you can file a single application covering all the countries of the relevant treaty,” says Papageorgiou.

“So for what is basically a set price, a filing can cover the EU and more countries when they join the relevant treaties.

“That’s because there is an excellent chance of securing automatic extension of those rights to the countries which are joining.”