Baxter Discusses IP Law and China at ACC Conference

Boyle Fredrickson attorney Keith Baxterrecently presented “International Intellectual Property Protection” at the third annual Mini Conference for the Wisconsin Chapter of the Association of Corporate Counsel (ACC ). As part of his presentation, Baxter addressed the basic concepts behind protecting intellectual property outside the United States and paid special attention to the complexities of doing business in Chinese markets.

Baxter reminded the audience that international patents do not exist and each country has its own unique set of laws that govern intellectual property (IP) related issues. Baxter stressed the importance for companies to file patent applications before public disclosure to prevent those disclosures from barring patent protection. He also outlined several categories where patents often face international restriction including software, medical treatments and business methods.

According to Baxter, it is beneficial for corporate counsel practitioners in companies looking to invest in foreign markets to have a working knowledge of international IP law. Baxter then highlighted China as an example of a country with a legal system still in its relative infancy where specifics pertaining to IP rights and issues remain undiscovered.

“There are many particulars that companies should be aware of before doing business in China,” Baxter said. “Although the potential exists for great rewards, there are important considerations in IP licensing and IP enforcement that are unique to China. As such, it is not uncommon for some U.S. companies to fall victim to the subtleties of China’s legal system and international business practices.”

In 2006 more patent infringement cases were filed in China than in any other country. According to Baxter, IP rights owners prevail in over 75 percent of such cases in China. In contrast, Japanese courts find in favor of patentees a mere 10 percent of the time.

“Because examples of infringement seem to be so egregious in China, case outcomes are often a foregone conclusion,” Baxter explained. “That seems to account for some of the discrepancy between the Chinese system and its Japanese counterpart.”

Another statistical anomaly in the Chinese legal system finds foreign entities standing victorious approximately 90 percent of the time in IP disputes. Baxter notes, however, that most patent litigation in China leads to damage settlements of only $100,000 or less. According to Baxter, these damages often make it impractical for companies to pursue legal action against offending parties as the resulting legal fees many times would offset potential damage settlements.

Boyle Fredrickson encourages companies to consult dedicated attorneys specializing in foreign IP matters before doing a heavy volume of business overseas. Contact Boyle Fredrickson at mail@boylefred.com or 414-225-9755 with any questions. For a version of the slides presented at the ACC conference, contact Keith Baxter at kmb@boylefred.com.