June 29 2009
The cost of piracy in relation to IP rights has reached an estimated $200 billion a year worldwide. The recent World Trade Organization ruling criticizing China's customs law procedures and copyright protection highlights the continuing need for businesses operating in China to review their supply chain and distribution networks to reduce the possibility of IP rights leakage.
Theft of IP rights in China has developed from small-scale 'cottage industries' producing poor-quality counterfeit fashion goods and accessories to large-scale manufacturing plants that produce cheap copies of goods such as home entertainment products, electrical appliances, foodstuffs and medicines. Counterfeiters increasingly deploy advanced reverse-engineering techniques, file pre-emptive trademark applications and patent challenges, and find new ways to infiltrate legitimate distribution networks, both in China and abroad.
These threats remain despite many continuing efforts by central government, including the IP Rights Protection Action Plan, published in April 2009, which includes a commitment to carry out nine separate campaigns to boost IP rights enforcement. Among these, 'Project Thunderstorm' focuses on patent infringement and fraud, and 'Project Skynet' is aimed at online piracy (and other copyright infringement over IT networks) and improvements in software verification.
Businesses should take a holistic approach to developing an IP rights strategy that includes operational protocols and procedures, both internally and across the relevant supply chain and distribution network. Legal measures are a key element, but are not a complete answer to this business risk - it is essential to create as many disincentives as possible throughout the business to minimize the risk of IP rights leakage.
Businesses can take a range of measures to safeguard their IP assets and effectively manage infringement issues:
For further information on this topic please contact Connie Carnabuci or Victoria White at Freshfields Bruckhaus Deringer's Hong Kong office by telephone (+852 2846 3400) or by fax (+852 2810 6192) or by email (firstname.lastname@example.org).
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