BY: ANTHONY DEFRANCESCO
Administrative enforcement and litigation are the two major approaches that have been utilized in safeguarding intellectual property (“IP”) in China. Generally, administrative enforcement is considered to be “cheaper, quicker, more flexible, and less antagonistic” than litigation in addressing IP issues and can be very effective in some ways. On the other hand, administrative enforcement may not provide an organization with the benefits that judicial enforcement can provide in terms of “protecting rights holders from corruption and local protectionism while allowing for damage compensation and pre-litigation remedies.” Of note is also the fact that the court systems are continuing to improve in terms of intellectual property expertise, especially in major cities like Beijing. Rights holders also utilize criminal enforcement, enforcement through customs control and litigation in the U.S. and international markets to create precedent and influence countries to develop their intellectual property rights in cooperation with other major global players.
Additional alternative measures that foreign corporations can employ for intellectual property enforcement include competition strategy, shaming, education, co-optation, reinvestment and isolation. By competing directly against infringing parties, companies can be proactive in IP protection. Examples of competition strategy include making products hard to reproduce, upgrading packaging and overall product quality, and including special offers, such as prizes, that counterfeiters are not able to provide to consumers. In terms of digital competition strategy, this can involve package offers and also provide unique content access to consumers who purchase directly from the legitimate source. Shaming involves the utilization of the media and other public resources in order to make the public aware of infringers and publicly reprimand them. This strategy, while more based on emotional consequences, can help to avoid consumer confusion and help gain public support for anti-counterfeiting policies. Shaming may also include tying counterfeiting to public health issues, criminal activity, and overall social welfare.
Education is another effective measure for combating intellectual property infringement. By educating the public on why intellectual property protection is vital to the global economy and to the promotion of beneficial joint-ventures with foreign companies, companies can help foster an understanding of intellectual property rights and create local stakeholders and interests. Education can also make individuals aware of untapped resources in local economies as well as additional revenue sources for law-abiding citizens. Education can be implemented through media outlets, litigation, and publicized raids in order to raise awareness of intellectual property rights in a given country. Co-optation
involves the purchasing of pirate factories and actually working with the pirates instead of taking legal measures against them. By showing good will in effectively allowing pirates to continue operations under the pretense of adhering to licensing arrangements, former pirates can continue to earn income and avoid criminal or financial repercussions while a foreign company can benefit from the creation of a new manufacturing partner without significant expenditures.
Reinvestment is another strategy for combatting piracy. This strategy involves giving back to the local community and fostering good will among citizens. Foreign businesses can ask for penalty awards in the form of cultural or educational benefits instead of money damages and also invest in local funds and industries in order to promote intellectual property protection. Lastly, isolation can allow companies to protect key technologies by separating the production of low-technology and high-technology components regionally or internationally. This strategy is the farthest removed from engaging with the local economy in which a foreign corporation is attempting to operate, but it may be necessary if all other measures prove ineffective in protecting one’s IP rights.
By using a combination of these alternative enforcement strategies along with litigation, foreign companies attempting to do business in countries such as China, where protecting IP can be a significant challenge, can be proactive in protecting their intellectual property rights while simultaneously fostering social change that may benefit them in the future.