Lax IP enforcement incentivizes counterfeiting

[Spencer, 6/10/2019, CNBC, “US small businesses are fighting an uphill battle against counterfeiters in China: ‘It’s like whack-a-mole’”, https://www.cnbc.com/2019/10/06/how-us-small-businesses-are-fighting-counterfeiting-in-china.html, accessed 7/8/2024, LR]

Lax enforcement

The problem with intellectual property theft in China is not due to a lack of legislation, according to Fred Rocafort, a former U.S. diplomat who has worked on IP issues in Asia for more than a decade. The domestic legal framework is adequate in China, Rocafort said, and Beijing is a signatory to several international agreements on intellectual property.

“The problem emerges when you start looking at the enforcement, which takes place at the more local levels than at the national level,” said Rocafort, now an attorney at the international law firm Harris Bricken. “There’s a corresponding loss of enthusiasm for enforcement as you move down the chain.“

Combine the lax enforcement with the fact that China is the world’s manufacturing powerhouse, and the result is a pervasive problem with counterfeiting and intellectual property theft. Despite the challenges, Rocafort said American businesses can have success protecting their intellectual property by working within the Chinese system.

First and foremost, you have to register your intellectual property in China to have any chance of protecting it there, Rocafort said. This is where Brons’ problem started.

She decided against patenting her invention in China when she was starting her business. At the time, she didn’t see the point. China seemed far away and she had heard the courts didn’t really enforce U.S. intellectual property anyway. Brons expressed regret about her decision, but she said getting a patent in China was just too expensive for her at the time.

“I could not have afforded it,” she said. “I’m just a violin teacher.“

But the costs associated with not registering your intellectual property are also steep. Brons said she’s spent at least $100,000 fighting counterfeiters in China, a substantial sum of money for her small, family-owned business. She has since registered copyright protection in China to cover the design of her product, after hearing that Beijing was doing a better job of enforcing intellectual property rights.

China has indeed instituted reforms in recent years as Chinese President Xi Jinping has made public commitments to strengthening intellectual property protection, but the U.S. has said implementation has not been sufficient.

Washington and Beijing were reportedly making progress on the issue before trade talks collapsed in May and the trade war escalated with several new rounds of tariff increases. The U.S. accused China of backtracking on its commitments, which reportedly included strengthening its laws to protect intellectual property. Beijing denied that accusation.

U.S. and Chinese trade negotiators are set to meet this month in Washington, D.C., for another round of talks.

“A lot China’s push to improve its IP enforcement is a result of outside pressure,” Rocafort said. “Frankly, left to their own devices there would probably not be a lot of progress in terms of strengthening enforcement.”