China IP Time and The New York Minute

China’s rapidly growing economy and equally rapidly evolving IP regime shows how different concepts of “time” can be from the United States.

This was brought to mind in a recent meeting when a Chinese official told me that since most Chinese companies don’t last more than three or four years, it is critical that the trademarks those companies own are given validity as soon as possible, notwithstanding that oppositions or cancellation proceedings may be later lodged against their marks.  Otherwise, he said, by the time a valid trademark right is granted, the owner may no longer be in existence.  The odd logic here suggests that it is may also be ok to sacrifice quality, if efficiency and quantity can be sustained.   In some cases, of course, delay does result in a denial of justice.

Another example of China’s shorter notion of time is in its statutes of limitations for all IP rights – two years.  If a rights holder waits two years and a day before he files litigation, he begins to lose one day of damages.  In the United States the SOL is six years for patents, and in some countries it is as long as 10 years.   The short time period is especially challenging for patentees, who may need to conduct extensive research before filing, as well as obtain necessary funding and resources to sustain an extended litigation campaign.    The short SOL has probably also contributed to the high frequency of Chinese civil IP litigation and low damages.  During the last go-around of patent amendments, the Chinese patent office actually wanted to introduce a concept of “laches” for companies that delayed too long – such as over two years, before filing litigation.  The lesson for foreigners may  be that a rights holder should not wait before filing litigation , and also consider filing in a cost efficient way.

When a company seeks to develop a trade secret protection strategy, it should also, consider other time constraints.  Chinese employees are more apt to “jump the grass” (leave their employment) – as frequently as once every two to three years.    Considering the difficulties in protecting trade secrets that already exist in China, the high employee turnover rates further erode the practical possibilities of keeping confidential information within the employer company.

Litigation is also a key example of the short IP time frames.  The six month time limit on a domestic IPR court proceeding of first instance is a “rocket docket on steroids.”  The Eastern District of Virginia takes pride in its one year “rocket docket”. The USITC prides itself on resolving  “Section 337” patent disputes in a year to 18 months,  However, if you think six months is fast consider that  one of the stated purposes of China’s proposed patent law amendments is to further shorten the time frame for patent litigation – which some Chinese companies have complained takes too long.

Chinese companies even prefer shorter rights.  Ten year patents (utility model patents and designs) constitute the majority of all patent filings.    Yes, China has twenty year invention patents too – but less expensive 10 year patents were considered important for SME’s or short life cycle products.  Perhaps foreign companies should consider these rights too.

Even the duration of copyright protection in China is shorter than the United States – about 50 years from publication in China, compared to 95 in the United States.

In a year’s worth of China IP time, the courts, and patents and trademark offices are likely to have grown significantly, as has the overall economy.   Internet and mobile telephone penetration will also have increased.   There will be more luxury goods, more famous brands, more Western pharmaceuticals, more IT products manufactured, more Chinese PCT filings, and more IP lawyers.  Moreover, in a year’s worth of time, there’s also a good likelihood that a sizeable segment of your staff may also have left your company.  It’s no wonder that IP litigation has grown so fast in China.

How much should foreigners consider Chinese “IP time”?   Probably we all need to build our business practices around Chinese IP time frames.  In some cases, however, some additional time might be useful.  For example, additional time seems justified to allow foreigners to respond to a litigation they had not anticipated.   But cases should not go on forever.  Consider the eight year time frame for the final disposition of one foreign-related case in China: Wuhan Jingyuan v. Fujikasui, Huayang (2009).  That’s about sixteen times longer than the time period required for first instance domestic IP cases.

In the United States, it could be argued that Chinese companies don’t have much of a basis to complain that 18 month USITC litigation is “fast” considering the six month limit on their IP domestic IP cases, and requests for delays regarding China-origin discovery might be evaluated in terms of the domestic expectations in China for resolution of disputes.  U.S. companies seeking a shorter resolution of their disputes might also consider bringing Chinese IP cases.

Of course, Chinese time isn’t the only time that goes fast. Some things in the US get done in a “New York minute” – a term that comedian  Johnny Carson defined as the interval between a Manhattan traffic light turning green and the guy behind you honking his horn.  Or consider the Eagles song:

In a New York minute
Everything can change
In a New York minute
Things can get pretty strange
In a New York minute
Everything can change
In a New York minute

(Source: http://www.urbandictionary.com/define.php?term=new%20york%20minute.)

From the city of New York in the United States, I wish you all a Happy Thanksgiving.

Mark Cohen 


2 thoughts on “China IP Time and The New York Minute

  1. He Jing says:

    Very nice piece, Mark! I am smiling and enjoying our China IP minutes.

  2. April S. Blair says:

    Mark,

    I got the conference information under your event tab. Thank you!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s