IP protection requires direct and indirect approaches

By Frank Liu, Tiantai Law Firm

Like other strategies, when formulating an IP protection strategy one should consider different scenarios that may call for direct approaches or may need indirect approaches. One recent case involved putting a relevant operation process, articulated in accordance with national regulatory requirements, into practice. Companies are required to thoroughly implement the national standards in the Enterprise IP Right Management Rules, effective from 1 March 2013, which aim to guide the companies to plan, implement, check and improve their IP right management systems.

However, in reality, many companies take this requirement, called “standards implementation”, as a mere tool to being certified as a “high-tech company” and an “IP right management exemplary company”, with the ultimate goal of obtaining a government grant and support, instead of an initiative to boost IP competitiveness, which is of course the original intention of the standards.

Some companies still have not established an effective and actionable IP protection management system, even though they have passed the test
of “standards implementation”, so this initiative ends up being an empty framework.

Frank Liu Partner Tiantai Law Firm
Frank Liu
Tiantai Law Firm

A framework is seldom effective to protect IP rights, while government funds and policy support are concrete gains for companies, and this is why the “standards implementation” initiative is a hot business. Companies with long-term vision should fill the empty framework with substantive measures to lay down a solid foundation for future IP development.

There should be a mix and match of direct and indirect approaches during the IP rights confirmation phase. For example, when registering trademarks, many well-known brands seek to register defensive trademarks. Defensive trademarks refer to marks that contain words or patterns or pronunciation similar to the core trademarks, or to which people would easily associate the core trademarks, and which are registered under the category of the same or similar goods/services as the core trademarks.

Defensive trademarks are usually not used in real business. The registration of the defensive trademarks, which are non-core trademarks, is an indirect approach, since they do not serve the goal of trademark registration, i.e., to be put into use in real business. However, these non-core trademarks are indispensable tools for the protection of the core trademarks.

In the case of patents, to position against others’ tricks of filing for patents circumventing core technologies, and to put oneself in an advantageous stance in a potential patent war, a commonly seen approach is to file for peripheral patents, apart from core patents. Peripheral patents are improved technologies based on and centred around the basic or core patents, which keep the core technologies protected from attack. Filing for peripheral patents is an indirect but indispensable (in certain cases) approach. Without such an indirect approach, there is less ability to intensify the protection of the core patents, or to obtain competitive advantages effectively.

A combination of indirect and direct approaches is also essential when defending IP rights, both of which play important roles in different aspects. For example, when the rights owners are taking actions against sophisticated infringements, such a combination yields the most optimal result.

In a patent infringement case the authors recently handled, the rights owner had taken an action against the infringing manufacturers, however the case was pending judgment for a long time because the defendant engineered a drag on the process.

In this situation, we sued a number of distributors for infringement. Pressured by the distributors, the infringing manufacturer was forced to the negotiation table with the rights owner. The rights owner secured high and timely compensation, and quickly expanded market share by cracking down on the infringement. In this case, the substantive goal was to combat the infringing manufacturer, which is a direct approach, while also making timely adjustments to the strategy and taking an indirect approach, i.e., to sue the distributors.

Such a combination is also effective in rights defending. In another trademark infringement and unfair competition case, the rights owner had been implementing a single counterfeits crackdown measure for years, but in vein, since the infringer had employed an evasion scheme.

After the authors were entrusted by the client, we identified that the substantive goal was to restore the market share by administrative complaint, and crackdown on the counterfeits; however, this direct approach was to no avail. We then implemented some indirect tactics, confirming infringement through legal action, and attacking the infringing underlying trademark rights through invalidation and opposition actions. We managed to secure the substantive goal, i.e., the infringers were penalized and market share returned.

To sum up, whether in IP rights confirmation or rights defence phases, only through a mix and match of direct and indirect approaches to formulate an optimal strategy for tackling sophisticated infringement can the rights owner be effectively helped and safeguarded, with expansion of market share and improvement of the popularity of the goods and/or services as a result.

Frank Liu is a partner at Tiantai Law Firm


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