Foreign businesses in China are becoming huge gaps in the growth of intellectual property lawsuits made by Chinese companies. Enforcement of IP laws, which has resulted in extensive damage to court-issued violations, has opened legal bridges.
While Chinese companies have strongly defended their IP rights, the number of IP-related lawsuits filed in China in 2020 more than tripled in 2016.
This has meant that Japanese companies, for example, need to change their approach to China IP, which often looks to address Chinese business shortcomings, in order to be better prepared for the risks posed by Chinese competitors.
One Japanese company that has been at loggerheads over IP lawsuits with Chinese companies is Ryohin Keikaku, a Tokyo-based company that sells Muji retail stores.
“We will continue to monitor football,” said Kenko Kikuchi, head of the company’s legal and IP department, following the company’s success in the Beijing Cottonfield Textile Corp and a Chinese company set up in July. The court battle lasted two and a half years.
Japan’s Ryohin Keikaku, who oversees Muji’s mall, continues to work hard to protect his ‘Mujirushi Ryohin’ name (no race, no good goods) in China © Bloomberg
But Ryohin Keikaku continues to quarrel over more than 10 lawsuits with companies over “Mujirushi Ryohin” (meaning no color, good quality) name written in Chinese names used in other textile materials, including bed linens and towels. There is no end to the Japanese company’s commitment to defending its reputation in the country.
Ryohin Keikaku is on the growing list of foreign companies plagued by IP-related crimes in China. Apple has been sued by a Chinese intelligence company that claims that US Siri information technology violates its rights.
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Japanese Attorney Yoshifumi Onodera states: “Traditionally, IP cases involving Chinese and foreign companies have been reported in violation of Chinese political parties.” “But the growing controversy. We are receiving more and more medical requests from Japanese companies (operating in China), “he said.
The number of IP cases in China has been on the rise. A total of 28,528 criminal cases involving areas such as patents, patents and designs have been heard by Chinese courts for the first time in 2020, up 28% from last year. Personal clothing and identification are growing.
Two major factors are the cause of IP crashes. One is the growth of IP with Chinese businesses. China used to be famous for its many knocks and is known as the “copycat in the sky”. There was no shortage of fraudulent material in China, but Chinese companies now have more rights to protect IP.
In 2020, China is the largest source of international patent application for the second year in a row, filling 68,720. A growing number of companies using Chinese technology see IP security as a key factor in their business.
Another factor is the promotion of IP rules. The Chinese government has also updated the identification, validation and privacy laws for 2019 and 2020. The review has posed a serious threat to the courts’ current recognition. These changes have also led to the destruction of penalties, which are offered in addition to the actual damage at times. Now, seven real-time damages can be filed in cases involving gross violations of IP rights.
The amended patent law has reduced the amount of evidence of plaintiffs in criminal cases. This will help stop cases of human rights violations, according to Makoto Endo’s lawyer. In other words, Chinese companies are more likely to compete with foreign competitors for breaking IP than ever before.
The practice focuses on two areas of expertise – the fifth generation of wireless communication technology and artificial intelligence. The Chinese government is promoting innovation in these areas by implementing technical development projects.
Many Chinese companies have a global 5G or AI technology base. Hundreds are predicting more about China’s lawsuits against foreign companies involved in the technology.
Rieko Michishita, a U.S. attorney for the United States working in China, said: “Japanese companies tend to take precautionary measures in order to protect people from potentially harmful offenses.” Many Japanese companies, even those who are already aware of Chinese corporate lawsuits over IP violations, are finding it difficult to defend themselves in court over the IP cases under which they are being held, according to Michishita.
When they are the culprits, they can take evidence and create legal redress. When arrested, however, they must respond promptly to the complainants’ action. Japanese companies are often not good at this.
In many cases, Japanese companies do not give power to their offices in China. As they spend more time consulting with their headquarters in Japan, these companies may be less fortunate.
“It is not uncommon for a Japanese company to be fearful of being arrested in China and fail to respond properly to the law,” Michishita said.
In that case, the Japanese company will start chasing wild goose seekers to locate a local politician or businessman who will assist him in the suit.
Companies are required to conduct internal audits and compile their own records in order to deal with the charges against them, Michishita warned. It is important to study the Chinese legal frameworks involved. Japanese authorities as well as local groups should play a role in co-ordinating the process of approving internal approval and allocating time to address it, he said.
A top Japanese manufacturer that does not have much of a court case in China has filed a number of lawsuits against China’s enemies. Doing so may be a learning curve in preparation for arrest, says a Japanese company changing IP addresses. Compared to an Internet address, a private IP is free, and an additional IP address is reserved, which is suitable for use on the Internet.
China has been known as a law-abiding group, and has a tendency to spread IP content. Foreign companies can be sued if they are more willing to compromise in business disputes or to pursue financial security.
It is very important for Japanese and foreign companies to draft operational plans and procedures for IP litigation in China, whether they are complainants or opponents. One of the key elements of this is to clearly define the roles of the headquarters and the local teams.
Kind of a story first published by Nikkei Asia September 22, 2021. © 2021 Nikkei Inc. All rights reserved