Timing is everything when implementing IP strategy

By Frank Liu, Shanghai Pacific Legal
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The importance of timing in an adversarial intellectual property (IP) strategy cannot be overstated. The author analysed how to make the best use of timing in the implementation of trademark strategies (China Business Law Journal: Timing in the Implementation of Trademark Strategies). However, in practice, there are rights holders who put themselves at a disadvantage due to a poor grasp of when to take action. Therefore, it is necessary to look at the issue of timing when implementing various IP strategies to ensure better protection of rights holders.

THE ISSUE OF TIMING

Timing does not simply mean being quick to act. In some cases, rights holders have been desperate to eliminate infringements once they discover them. However, you may have two issues to address if you act hastily without first analysing the circumstances.

(1) Rushing into action. Taking hasty action with insufficient evidence is likely to be futile and may even disrupt previous IP strategies. In practice, clues about an infringement do not equate to evidence for an administrative complaint or court action. If a complaint or other action is taken immediately, based on preliminary clues alone, it may not achieve the ideal result. If the clues are false, they may even cause law enforcement authorities to doubt the complainant’s credibility and lead to the creation of obstacles that might hinder subsequent actions.

Frank Liu, Shanghai Pacific Legal
Frank Liu
Partner
Shanghai Pacific Legal

(2) Seeking a perfect result. The case is unlikely to proceed if a perfect outcome is pursued before action is undertaken. The outcome is bound to have some uncertainty whenever a case is adversarial. The strategy and action plan are designed to push the outcome in a favourable direction. However, if a perfect result has to be guaranteed before proceeding, the action is likely to fail.

Sometimes it is wise to be quick when necessary. In some cases, initial investigations yielded some findings after the rights holder discovered an infringement. However, due to commercial and cost considerations, the collection of evidence and enforcement actions were delayed by up to six months, or even several years. Some infringers used this time to consolidate their gains and even allowed their previous infringements, such as trademark piracy or free-riding, to form the basis for their claims. As a result, it became more difficult for the rights holder to successfully take action, and some have even had to abandon their cases.

When rights are being established, some rights holders have also neglected to register their IP in China because they were only involved in original equipment manufacturer (OEM) production with no sales in China, or because the technology was invented overseas. Registrations of some IP were even applied for after being used in China for many years. In addition, during the registration application process, some rights holders were unaware of their IP protection rights and passively expected protection rather than actively defending their rights, ultimately damaging their reputation and economic interests.

Timing is particularly important in complex cases where the strategy against infringers may involve multiple actions. Launching different actions, according to the other side’s movements, is crucial to advancing the overall strategy. For example, arguments, evidence and statements that are favourable to you in case A may well be unfavourable in case B. In such instances, it is necessary to consider the connection between cases A and B, adjust your strategy, and act when the right opportunity arises.

In some cases, the timing of the action makes no difference in principle, but in practice, it may be more advantageous to act at a certain point. For example, in criminal IP cases, it is more favourable for the rights holder to participate in the criminal proceedings and accept the infringer’s voluntary and active compensation, rather than filing a civil lawsuit at the end of the criminal procedure, as winning the case does not guarantee the expected compensation. (China Business Law Journal: Pursuing criminal liability in intellectual property).

THE SOLUTIONS

First, when infringements or relevant clues are discovered you should not act on emotion, but investigate and obtain evidence to formulate your strategy. Once the evidence has been obtained, rights holders should consider subsequent action based on completeness, credibility and other factors. If the evidence is not strong enough, it may be necessary to wait for another opportunity to move forward.

Second, it is crucial to avoid seeking a perfect outcome. Even in cases where the ideal result is achieved there is a great deal of preliminary work and a step-by-step process. Even when these are combined with some luck, there is no guarantee of reaching the perfect result. The only way to approach and achieve the desired outcome is to keep adjusting the plan as the case advances. Seeking a guarantee of an ideal outcome before taking action will, in most cases, mean opportunities are missed and the goal has slipped further away.

Efficient communication and decision-making (China Business Law Journal: Good communication – the secret sauce in IP protection) can also help an agent entrusted by a rights holder to identify and correctly time the taking of action to advance a strategy.

In summary, taking action is essential when advancing an IPR strategy, but taking advantage of the right time to act in a case is also important.

Frank Liu is a partner at Shanghai Pacific Legal

Room 2709, 27/F, Plaza 66 II
1266 Nanjing Road West
Shanghai 200040, China
Tel: +86 21 6086 0199
Fax: +86 21 6086 0111
Email:
frank.liu@shanghaipacificlegal.com

www.shanghaipacificlegal.com