Protecting IPR When Conducting R&D in China. 26 April 2012

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1 Protecting IPR When Conducting R&D in China 26 April 2012

2 Welcome to the webinar Philippe Healey China IPR SME Helpdesk Project Manager

3 Webinar interaction tools Hide control panel here Turn on full screen here Raise your hand here Send the IP expert a question here Webinar 24 hour technical support number: Contact Us section

4 The China IPR SME Helpdesk The China IPR SME Helpdesk provides free, confidential, business-focused advice relating to China IPR to European Small and Medium Enterprises (SMEs). Helpdesk Enquiry Service Training & Events Materials Online Services - Fan page: China IPR SME "China IPR"

5 Today s Speaker Place photo here He Jing ZY Partners Law Firm Direct Dial: ext. 273

6 Agenda Introduction to R&D Develop your R&D strategy Ownership of IP IP Licensing Building valuable IP portfolios SME case study Key take-away messages for SMEs

7 Introduction to R&D What counts as R&D? You do not really need a lab or a team on the ground. Why IP is important?

8 Develop an IP Strategy Where is your market in your current business model? Who will be the inventors? Is the technology going to be useful for other areas? Are you willing to give away your IPR in exchange for equity? What if your business fails in China?

9 Ownership Sole ownership of all the IPR by the European SME. Sole ownership of all the IPR by the Chinese business partners. Co-ownership, shared between the European SME and the Chinese business partner. Terms of the co-ownership can be largely defined by contracts.

10 IP Licensing What is licensing? Where, when, and how is the IP exploited? Closely tied to business models.

11 Key Terms Territory of the Licence: Does the licence cover China or is it applicable worldwide? Is it better to have a licence that covers a certain specified geographical area in China? Duration of the Licence: When does the licence expire? How should it be renewed? Can the licence be terminated under certain, defined, circumstances?

12 Terms of License Licensed IP: Categories of IP (patent, copyrights and trade marks). Graphic user interface, sensitive client information, special skills. Licensed products covered by the Licence The scope of product or service depends on the business model Royalties: Lump-sum payment. Running royalties. Even operate royalty-free for a certain period of time and then start charging. Issues like tax and auditing should be addressed as well.

13 Poll Which of the following statements are false? A. IP license is the same as IP ownership. B. IP license must define licensed IP and licensed products/services. C. A royalty-free license is never good for the licensor. D. I can not license my know-how to others.

14 Special Issue on Joint Development Chinese laws do not allow foreign companies to obtain ownership of improvements for free that are made by Chinese parties. Chinese parties must be remunerated in some way for these inventions. This remuneration could be in the form of cash, shared profits, equity interest, or other types of property rights.

15 Check-List for Building an IP Portfolio in R&D Quality patent drafting Foreign filing licence Filing entity Transfer of patents Registration of IP licence Employee remuneration

16 Quality Patent Drafting Invention patent v. utility model Translation issues

17 Foreign filing license What is it? If your inventor is a Chinese citizen, you must get a foreign filing license if you want to file first outside China Is it difficult to get the foreign license from the State Intellectual Property Office?

18 Transfer of patents Transfer of Chinese patents to an overseas entity need to go through extra approvals The way China regulates technology transfer (from China to overseas) Freely tradable technology Catalogue of Export Restricted Technologies Catalogue of Export Prohibition Technologies For example manufacture of traditional Chinese medicine, land surveying, breeding of livestock, encryption, and computer network security

19 Remuneration for Employees A touchy issue for employers If the employer fails to specify this in a contract with its employee, the employee may come back to claim profits out of the invention What could be said in the contract or employment manual?

20 Poll Which of the following statements are correct? A. I can file patents in China in English language. B. If my Chinese engineers come up with an invention in Beijing, I can file it first in Germany. C. If I do not pay any remuneration to my Chinese employees for their patents, I may be sued. D. I licensed my patents to a Beijing company. I should register the licence with the government before I can transfer the royalty out of China.

21 Case Study A European SME has come up with a very unique algorithm and prototype software in the video searching field. The SME has identified a promising business partner in China with whom to conduct joint R&D. The purpose of the joint R&D is to launch a software product suitable for Chinese search engines. The Chinese business partner has a R&D team and impressive marketing capability in China. The Chinese business partner is offering equity in its current company in exchange for the IP rights to the future R&D. How should the IPR issues be handled?

22 Advice IP ownership A joint ownership in China and full ownership outside China? Licensing Potential applications other than search engines? Exclusive licence to the Chinese business partners for the search engine sector. Retain the right to use the technologies for other business applications. IP Portfolio Enter into a contract with the business partner to dictate how the patents are going to be filed. Define how to manage the non-patented technologies, source codes, etc.

23 Key Messages for SMEs Effective planning of your IP strategy. Structure IP ownership and IP licensing. Implement key aspects of building IP portfolio.

24 Q&A Place photo here He Jing ZY Partners Direct Dial: ext. 273

25 Helpdesk Guide: Guide to R&D in China for European SMEs (new!) To access all our publications click here

26 Upcoming Helpdesk Events and Webinars Save the dates of our upcoming events and webinars How to Enforce your Intellectual Property Rights in China: 15 May, Wuxi How to Enforce your Intellectual Property Rights in China: 16 May, Suzhou Crossing the Great Wall: Doing Business in Chinese second-tier Cities: 17 May, Dublin FinNode China Annual Conference 2012: 23 May, Helsinki Business Opportunities in China: Protecting IP when Conducting Technology Transfers to China: 24 May, Budapest Webinar on Online IPR Protection: 19 June 2012

27 Thank you The China IPR SME Helpdesk provides free, confidential, business-focused advice relating to China IPR to European Small and Medium Enterprises (SMEs). Helpdesk Enquiry Service Training & Events Materials Online Services - For more information please contact the Helpdesk: Room 900, Beijing Sunflower Tower No. 37 Maizidian Street Chaoyang District Beijing , P.R. China Hotline number: +86 (10)

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