Baxter Says Emerging Chinese Markets Require Special Attention

Boyle Fredrickson attorney Keith Baxter presented “International Intellectual Property Protection” at the third annual Mini Conference for the Wisconsin Chapter of the Association of Corporate Council (ACC) America.

Baxter’s 50-minute talk on Friday, May 16 addressed basic concepts of protecting intellectual property outside the United States. Baxter’s presentation also paid special attention to the complexity of doing business in Chinese markets.

As an overview on international intellectual property (IP), Baxter reminded the audience that international patents do not universally exist and that each country has its own unique set of laws that govern IP-related issues. Baxter also discussed the need for companies to file patents before public disclosure to ensure a patent is granted its proper protection. He continued by outlining 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 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 make it even less practical for companies to pursue legal action against offending parties as the resulting legal fees many times would offset potential damage settlements.

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