Angela Beckenbauer

How Managers Protect Intellectual Property Rights in China Using De Facto Strategies

Foreign firms trying to protect their intellectual property rights (IPRs) in emerging economies are suffering real pressures because these economies usually offer little or no enforcement of IPR. Foreign firms therefore have to resort to approaches unlike those they use in developed countries. This paper explores what managers of foreign firms in China have already tried in their efforts to achieve effective IPR protection - specifically, they have crafted de facto strategies that can protect IPR without using Chinas legal system or engaging in lawsuits against imitators. These strategies work, and this paper explains how and why, thus offering a potential template for IPR protection in other economies with weak appropriability systems.

Profiting from innovation in China

- Gives advice how Western firms can benefit from innovation in China - Provides real-life cases - Offers useful checklists for managers ? China is dramatically catching up and is rapidly becoming a leading technological innovator on the global scale. The number of Chinese firms with global ambitions is growing fast, more and more technological innovation is coming from China, and the number of patents in China is also growing steadily.The negative side of this development is the still insufficient protection of intellectual property in China. The phenomenon of counterfeits originating from China has increased constantly over the past two decades. Moreover, within the past ten years the scale of intellectual property theft has risen exponentially in terms of its sophistication, volume, the range of goods, and the countries affected.This book addresses managers dealing with innovation in China, and offers concrete advice on how Western firms can benefit from these innovations. Among others, it provides examples and checklists to help decision-makers active in China.?

Using the IP Protection Star Effectively

The protection means, technology, human, market and business are vital to embrace the dynamics of IP threats in China. The piracy intelligence and identification of IP infringements is challenging. Due to the dominant view that IP professionals autonomously man-age IP activities, the traditional IP protection is mainly characterized by the application and management of proprietary rights. However, one has to acknowledge the emerging principle that IP protection creates value, which, in itself, creates protection. The protection of the value proposition creates differentiation to competitors, which in turn creates the appropriation of returns from innovations. Institutionalizing IP protection creates change and comprises task ownerships with clearly defined responsibilities. The pervasiveness of the view that IP protection mostly consists of legal protection is incomplete. The refinement of legal and factual protection means into a human-, market- and business- as well as legally- and technology-driven protection leads to a comprehensive view on IP protection options.

Dimensions of IP Protection in China

The application of intellectual property protection means depends on the type and the characteristics of a threat. Common intellectual property threats in China concern legal infringements such as patent, trademark, design or copyright infringements. Yet intellectual property rights infringements are only part of the IP threat environment in China. In addition to such legal-illicit threats, also legal-licit, that is to say uncertainties within the boundaries of the law and factual challenges are predominant in China. In China the impudence and creativity of infringements show that the extent of IP infringements and challenges remains a difficult task to counteract.

China as a Place to Innovate

Many western firms have to find an answer to the massive and aggressive Chinese growth. In the past it has been relatively easy: China was a destination for low cost manufacturing and a market for low cost products. Today this is different: China has become very competitive in many technological areas. And as such more and more transnational companies have identified China as a preferred place to conduct offshore R&D activities. Today we see many firms that go beyond simply innovating for China. Their Chinese R&D labs are responsible for many of their breakthrough-innovations in recent years.

Integrated Management of Piracy Intelligence

In many firms, the IP management is an isolated unit with little contact with the daily business. Yet, the management of IP protection, the identification of piracy and the application of countermeasures require the involvement of many roles within the organization. Since IP departments are often organized as central units in a firm and are responsible for all IP management tasks and related services, the requirements of an integrated protection system are not met. In most organizations, an integrated management approach that involves different departments to identify and counteract IP threats is missing. The need for such an approach is often only realized after the occurrence of an infringement or serious IP threat.

Protection of Intellectual Property in China

Globally, three quarters of all imitations originate from China. Within the past 10 years the scale of intellectual property theft has risen exponentially in terms of its sophistication, its volume, the range of goods, and the countries affected. In this context, the protection of intellectual property and their associated rights remains a challenging task for any industrial firm. The development and elaboration of effective and solid protection strategies, including legal and factual protection means, need to receive careful managerial consideration.

The IP Protection Star

Firms need a holistic piracy intelligence and IP protection to profit from innovation. They also need to develop strong brands and to manage technology-intensive processes in China. The different facets of legal and factual protection means need an overall perspective of directly or indirectly protecting IP.