Registering IP is an important part of launching your products on new markets, since lack of IP protection can have a negative impact on SMEs’ business competitiveness and resilience. As IP is territorial, the IP rights that EU SMEs enjoy at home do not automatically extend to other markets, unless specifically registered there. Thus, SMEs should identify the core IP they own and consider registering it in the countries and territories they plan to do business in/with.
In some cases, it can also make sense to register IP in the countries and territories where an SME is not immediately planning to do business. In particular, this is recommended in case SMEs plan to attend trade fairs, conferences or business missions in these countries. Moreover, it may be useful to register your IP in countries and territories that are close to SMEs’ target market and where flows of counterfeits might originate from. Legal professionals and SME IP support initiatives such as International IP SME Helpdesks can offer valuable advice to SMEs that are struggling with understanding where and how to register their IP. From another side, EU-funded project IP Key China promotes intellectual property rights in China, and engage in cooperation activities with Chinese IP authorities. Through years’ efforts, IP Key China has become a well-known brand for EU-China IP cooperation, which is featured by a wide range of stakeholders, including government, businesses, academia, service providers, industrial associations, research institutes, and by a broad geographical scope, from Changchun in Northern China to Haikou in the South.
The first case study, following the IP registration process of a Dutch SME InMotion VR, demonstrates the importance of having a comprehensive IP strategy in place that defines the jurisdictions where IP should be protected as well as adapts to the opportunities and challenges posed by the legal frameworks of different jurisdictions. The SME in question consulted with China IP SME Helpdesk to develop an IP strategy for China’s market. The advice received from the Helpdesk allowed the SME to confidently enter China’s market, knowing that they will have an adequate IP protection strategy in place.
“We were put in touch with the helpdesk, and this was really helpful for us to get started in that market...it really made us aware of what we needed to do. It provided us [with] a lot of free advice, saving us time and precious money, but it also helped us speed up entry into the Chinese market,” explains inMotion VR's CEO, Gert-Jan Brok, to Euronews.
- SME: InMotion VR
- Nationality: Dutch
- Industry: application of virtual reality in the field of healthcare
- Status in China: Market entry
A Dutch start-up InMotion VR, providing virtual reality solutions in the field of physical therapy, recently managed to secure a new important client in Hong Kong. The new client would not only become one of the biggest clients for the company, but would also be the company’s first Asia-based client. This business opportunity could potentially lead to several new ones, especially in Asian markets.
As the SME relies on innovative technology, the owners were well aware of the importance of IP protection when entering new markets, so they were ready to invest in IP protection. The company understood the importance of software protection via copyright as well as the need to register company’s trade marks (including company name, product name and logo) and took the necessary steps to protect their IP in Europe. Furthermore, the company also decided to invest in design patents to protect their Graphic User Interface.
As the SME was not familiar with IP rules and regulations in China, they contacted the China IP SME Helpdesk for advice on how to protect IP when entering China’s vast market. During the online consultation session with the Helpdesk IP Business Advisor, the SME learnt that when it comes to IP protection, there are, in fact, 4 different and distinct jurisdictions in China: Mainland China, Hong Kong, Macao and Taiwan. To enjoy full protection in Greater China, 4 different IP registrations must therefore be done.
The IP Business Advisor also highlighted some key differences between the jurisdictions. For example, the fact that Hong Kong cannot yet accept Madrid System trade mark applications means that while it is possible to use one international application to obtain trade mark protection simultaneously in the EU and in Mainland China, the SME would currently need to draft a separate application for Hong Kong, which would have to be filed with the Hong Kong IP Office. Another relevant difference concerns software protection – while software is protected as copyright in all jurisdictions, Mainland China, in some specific cases, also accepts software patents.
The Dutch SME finally had to choose the jurisdictions in which to protect their IP. Their main client in Asia was based in Hong Kong and the SME would initially be doing business only in that jurisdiction. However, the SME quickly realised the big potential for new clients in Mainland China as well as understanding the risks involved in not registering their IPRs in the jurisdiction that is so close to their main target market. Leaving their IP unprotected in Mainland China would expose the company to copycats in that jurisdiction. Furthermore, potential bad faith trade mark registrations could complicate market entry to Mainland China in the future.
The Dutch company eventually decided to register their IP in both Hong Kong and Mainland China. Even though, the SME did not have any clients in Mainland China, the great potential of the market led them to invest in IP protection as a preventive way of avoiding future competitors and problems.
This decision was also taken because the SME was certain that eventually they would be attending a trade fair in Mainland China or meeting with businesspeople from Mainland China and thus estimated that the risk of their company name or brand name being copied was relatively high.
To increase protection, the Dutch SME designed independent and distinct strategies for Hong Kong and Mainland China paying special attention to the particularities of each jurisdiction. Both strategies were meant to be applied at the same time, but they would be well adapted to each jurisdiction.
- SMEs should register their IPRs in destination markets before actually entering these markets.
- IP is territorial, meaning that IP registrations completed in one jurisdiction do not grant any protection in other jurisdictions.
- Even if you’re not selling or producing, just interacting with a market (through meetings, trade fairs, and advertising) could increase the risk of your IP being copied in that market. Furthermore, the risk of your IP being copied is relatively high in the markets that are close to your destination market. Thus, also consider registering your IP in key related markets where you’re not yet planning to sell or produce your products, because you can only enforce your IP in the jurisdictions you have registered it.
- Investing in IP protection in markets you might consider entering in the future is a reasonable choice when those markets have relatively good potential.
- Prevention is the key – timely registration of your IP in all key jurisdictions is paramount.
 Protecting creativity: keeping the copycats paws off your company's assets, 8 January 2021, Euronews [https://www.euronews.com/2021/01/08/protecting-creativity-keeping-the-copycats-paws-off-your-company-s-assets]