Second, the main points of foreign-funded enterprises intellectual property layout strategy

(a) Different types of enterprises have different focuses of intellectual property layout, and the layout should be emphasized at different levels.

Intellectual property layout does not have a fixed and uniform pattern, enterprises need to carry out intellectual property layout configuration work according to the competitive characteristics of the industry in which they are located, the competitive position in the market, the resources they own, the operating environment and other perspectives. Therefore, it is necessary to distinguish between the characteristics of different enterprises to develop targeted intellectual property layout strategy:

   For production-oriented enterprises, the protection of market-leading technological advantage is the focus of the enterprise's intellectual property work, should be the first to consider the adoption of technical secrets and patents, software copyrights and other comprehensive protection measures, which, within the enterprise to establish a complete protection system for trade secrets is the most important work of the foreign-funded enterprises, including the duty of confidentiality of the education and training of employees, and technology research and development personnel to sign confidentiality agreements or non-competition agreements, the establishment of trade secrets level, the establishment of the most important work of the foreign-funded enterprises. The most important work of foreign-funded enterprises is to establish a complete trade secret protection system within the enterprise, including education and training of employees on confidentiality obligations, signing confidentiality agreements or non-competition agreements with technical research and development personnel, setting up the level of trade secrets and the scope and authority of the confidential personnel, marking confidentiality symbols, setting up physical confidentiality measures, e-mail management norms, and technical information storage, browsing and copying management measures, etc. The foreign-funded enterprises and their overseas parent companies also need to sign confidentiality agreements in order to establish a confidentiality chain of links and to provide the same level of protection for trade secrets.

   In terms of patent layout, enterprises can consider timely filing patents around the core products. If the invention point involves the product structure and connection relationship, they can apply for invention patents and utility model patents at the same time, and utilize the utility model patents to obtain authorized protection early, while the invention patents are finally authorized after the substantive examination to obtain a longer statute of limitations on the protection by selecting the invention patents; for the separable technologies in the core patents or for the purpose of For the separable technology in the core patent, or for the new innovation points generated to cooperate with the implementation of the core patent, it is also necessary to apply for patent protection in time.

When applying for patents, the protection function of utility model and design should not be neglected. Many companies are willing to apply for patents for inventions with high inventiveness, while neglecting utility model and design patents, which have encountered a lot of problems and protection loopholes in practice. For example, when Jaguar Land Rover launched its Range Rover Evoque model to the Chinese market, it did not apply for a design patent for the model in a timely manner, and applied for a design patent eleven months after it was displayed at the Guangzhou International Automobile Exhibition, which was declared invalid due to the lack of novelty. Later on, Jaguar Land Rover encountered difficulties in the process of defending its rights.

  For sales-oriented foreign enterprises, they need to focus on the protection of commercial marks, especially the establishment and maintenance of the trademark system, not only registering trademarks on business goods, but also applying for registration of trademarks on relevant goods categories including service categories, including defensive trademarks. It should be noted that sales-oriented enterprises from the marketing point of view, often launch new brands, which requires the layout of trademark applications in advance before launching the market promotion program. Although the State Intellectual Property Office is currently committed to compressing the period of preliminary examination of trademark applications to within four months, but due to the huge volume of existing trademarks, the chances of rejection of new applications for trademarks are very high, and it is difficult to cooperate with the application and market promotion. Once the trademark application on the core goods or services is rejected, it may put the marketing activities in a difficult situation. Therefore, it is better to entrust a professional commercial agency to conduct a trademark search before the application of a new trademark, to understand the situation of the prior applied trademarks, to analyze and judge the possibility of rejection of the trademark application, and to make a good follow-up remedial plan.

   
   (ii) New products focus on creation of rights, while old products focus on popularity
 

Patent protection has the requirement of novelty, if the invention or design has been made public and is not within the statutory novelty grace period, or cannot claim priority, it will not be able to obtain patent protection, so it is very important to apply for patent protection in time after the creation of a new product. For star products have been in the market for many years, the patent protection period has expired, we should consider the use of the product for many years to form the market awareness of the appearance of a unique logo to seek anti-unfair competition law has a certain impact on the protection of trade names, packaging, decoration, or with the help of the “Copyright Law” on the protection of utility works of art, to continue the life cycle of the product, the practice has been a relevant case! In practice, there have been relevant cases, such as the dispute between Ningbo Weiyada Pen Co. Ltd. and Shanghai Zhonghan Chenguang Stationery Manufacturing Co. Ltd. over the unauthorized use of the unique name, packaging, and decoration of well-known commodities ((2008) Shanghai High People's Court No. 100), which involved the question of whether the pen's external structure constituted a shape-constructing type of decoration, as well as the case of the dispute between Ernesti and Caral over infringement of reproduction, distribution, and information network dissemination rights ((2008) Guangdong Higher People's Court (2019)), which involved a dispute over the protection of the copyright law for works of utility art. Guangdong Provincial High People's Court (2019) Guangdong Civil Final No. 1665) involved whether the shape of a wine bottle's body was a work of utility art.
 

   (iii) Division of labor in intellectual property rights defense
 

    Overseas IP rights holders obviously do not have an advantage in discovering infringement clues due to location and market differences, and therefore must rely on foreign enterprises operating in the territory. IPR infringement directly encroaches on the market share of domestic enterprises, and domestic enterprises are very active in combating infringement. In the early stage, the dominant power of IPR defense is controlled by the overseas parent company, and accordingly, many problems have arisen:

   1. Slow response. Timely action after discovering infringement clues is the key to success. However, since the overseas parent company is located outside the country, it usually takes a long time to obtain infringement information, understand the legal background, contact local lawyers, make decisions and then take action. Due to the limited time of the exhibition, the exhibition may have already ended and the infringing products have been withdrawn from the exhibition.

   2. Cumbersome legal procedures. China's law requires notarization and authentication for the entrustment procedure of domestic lawyers authorized to take legal action by extraterritorial right holders, not only the court requires notarization and authentication of documents, but also some administrative and law enforcement agencies require the provision of notarization and authentication of documents, which makes the cost of defending the rights very high.

   3. High communication costs. Overseas parent company's legal personnel do not understand Chinese law, communication with Chinese lawyers not only need to understand the case, but also need to understand Chinese law, and can only communicate with lawyers who are able to handle foreign business, communication costs are very high, which will inevitably lead to the high cost of defending rights.

   4. The strongest relevance to the interests of intellectual property rights infringement, the strongest willingness to defend the rights of the domestic foreign-funded enterprises, if all the rights action is led by the overseas parent company, it will produce the phenomenon of the benefits and costs of the phenomenon of deviation, regardless of the size of the infringing acts, the domestic enterprises are asked to deal with the overseas companies, can not grasp the focus, can not use the most cost-effective measures to defend the rights.

   In order to solve this problem, if there are more cases of intellectual property infringement, the local rights defense action can generally authorize the domestic foreign enterprises to be responsible for, the cost of rights defense is counted as the cost of the foreign enterprises, and the overseas company will give the corresponding cost incentives to mobilize the foreign enterprises to defend their rights actively through the linkage of responsibility and benefits. However, in order to realize the unity of intellectual property operation and protection, many legal affairs or intellectual property persons in charge of foreign-funded enterprises are controlled and managed by their overseas parent companies, and are subordinate to and serve the global interests of the parent companies, which is a key step for the parent companies to strengthen their control in terms of organization and personnel.

(iv) Attachment of Intellectual Property Layout

   In the process of localization of foreign-funded enterprises, it is inevitable that intellectual property rights with localized characteristics will be generated, for example, Chinese trademarks corresponding to foreign trademarks, unique packaging and decoration of commodities, etc. In order to adapt to the identification of local consumers and marketing purposes, many foreign trademarks are subject to a localization process, and usually foreign-funded enterprises select and design Chinese trademarks corresponding to foreign trademarks and use them in the course of their business activities. In this process, communication and handling are very important. If the dominant right to apply for trademark registration is controlled by the overseas parent company, it is necessary to communicate with the legal department of the overseas parent company in time to request for timely application for registration of the Chinese trademark, so as to avoid communication errors leading to the loss of rights. Once the Chinese trademark is put into the market without timely application for registration, it will be taken advantage of by trademark snatchers to register in the categories related to the goods, resulting in the loss of the trademark publicity and promotion expenses already invested by the enterprise.

   The formation of the Chinese name of a trademark is sometimes not due to the enterprise's own reasons, but due to media reports or market circulation of the commonly known, for example, Pfizer Ltd.'s most famous treatment of erectile dysfunction in men's drugs “VIAGRA”, the Chinese media in the publicity and reporting of the English name commonly translated as “However, Pfizer did not apply for a Chinese trademark for “Viagra” in China in a timely manner, and the trademark was seized by a third party. Although Pfizer later claimed that “Viagra” was the trademark of “VIAGRA” in the case of Dispute over Unfair Competition and Infringement of Unregistered Well-Known Trademark Rights between Pfizer Limited, Pfizer Pharmaceuticals Limited and Jiangsu Suhuan Pharmaceuticals Co. However, the Court held that since Pfizer clearly stated that “Viagra” was its official trade name and admitted that it had not used the “Viagra” trademark in Mainland China, although the media had not used the “Viagra” trademark in the past, the Court found that the “Viagra” trademark had not been used in Mainland China, and the “Viagra” trademark had not been used in Mainland China. However, the court held that since Pfizer clearly stated that “Viagra” was its official trade name and admitted that it had not used the trademark “Viagra” in Mainland China, although the media publicized “VIAGRA” as “Viagra”, Pfizer had no intention or act of using it as a trademark, and therefore could not claim the right of an unregistered trademark.

   Another right that may arise from the use of trademarks is the right of packaging and decoration of goods, through the long-term use of packaging and decoration for the public to be familiar with can play a role in identifying the origin of the goods, the formation of a unique right to differentiate from the trademark, due to the design of packaging and decoration and the use of the main body is often the territory of the enterprise, if the contract does not agree on the use of packaging and decoration rights with trademarks, it is likely to produce disputes. In the case of Dispute over Unauthorized Use of Unique Packaging and Decoration of Well-known Commodities between Guangdong Gadobao Beverage and Food Company Limited (referred to as Gadobao Company) and the Appellees, Guangzhou Wanglaoji Great Health Industry Company Limited (referred to as Great Health) and Guangzhou Pharmaceutical Group Company Limited (referred to as Guangzhou Pharmaceutical Group) (Supreme People's Court (2015) No. 2 of the Third Final Word of the People's Republic of China), the licensing and use of the trademark of Wanglaoji by the Guangzhou Pharmaceutical Group and the Gadobao Company in the In the case of Wanglaoji Trademark License Use (Supreme People's Court, Civil Third Final Word No. 2, 2015), Guangzhou Pharmaceutical Group and Gadobao Company did not make a clear agreement on the attribution of the packaging and decoration of the Wanglaoji Red Can Herbal Tea in the case, and both parties claimed that they had the right to the unique packaging and decoration of the Wanglaoji Red Can Herbal Tea. The Supreme People's Court held that, taking into account the historical development process of Wanglaoji Red Can Herbal Tea, the background of cooperation between the two parties, the consumer's perception and the principle of fairness, as GPHL and its predecessors, Gadobao and its affiliates had played a positive role in the formation, development and goodwill building of the packaging and decorative rights and interests of the case in question, it would be unfair to award the rights and interests of the case in question to one of the parties in question. It is also likely to jeopardize the interests of the public. Therefore, on the premise of following the principle of good faith and respecting the consumer's knowledge, and without prejudice to the legitimate rights and interests of others, the rights and interests of the packaging and decoration of the well-known goods in question can be jointly enjoyed by GPHL and Gadobao.

   Therefore, when allocating intellectual property rights, the right holders need to pay extra attention to the agreement on other rights that may arise as a result of the use of the intellectual property rights, so as to avoid unnecessary disputes.

III. Strategies for the Protection of Intellectual Property Rights of Foreign Enterprises in China
 

   For the protection of intellectual property rights, we suggest that the domestic foreign-funded enterprises play a leading role, because the domestic enterprises are the closest to the market, the understanding of the industry dynamics and the ability to obtain information, reaction speed and coordination are slightly better, the effect of the protection of intellectual property rights will be better, the important thing is to do a good job coordinating and communicating with the overseas parent company:

   1. The legal department of the foreign-funded enterprise should establish a complete database of intellectual property rights in China, keep the relevant right documents, pay attention to the expiration date of the rights, and remind the renewal of the rights in time if they need to be renewed;

   2. the overseas parent company can give the domestic enterprise a notarized and certified authorization letter for IPR protection, which should allow the domestic enterprise to appoint lawyers to carry out IPR protection actions;

   3. the intellectual property rights licensing contracts signed with domestic enterprises shall be reported to the State Intellectual Property Office for record and publicity;

   4. for cases involving litigation, timely communication and coordination with the overseas parent company.

   In terms of intellectual property rights defense means, in addition to the traditional court litigation, foreign-funded enterprises can also consider the following alternative means:

   1. Private autonomous rights defense mechanism

   Due to international pressure, China's online sales platforms have established complete infringement complaint handling mechanisms, such as Alibaba, which has set up a special IPR protection platform to receive and handle IPR infringement complaints, especially the anti-counterfeiting alliance therein, which provides proactive preventive and control services for foreign brands, and foreign-funded enterprises can make use of such platforms to deal with online IPR infringement promptly and quickly.

   Another self-governing system of IPR protection is the IPR protection in exhibitions, where the right holders can force the infringers to withdraw the display of infringing goods at exhibitions by negotiating with the infringers and complaining to the exhibition organizers and the IPR office of the exhibitions, which is also very effective.

   2. Utilizing China's unique administrative enforcement system

   Administrative enforcement is a unique IPR enforcement system in China. At present, all IPR infringements can be dealt with administratively through the administrative organs: the Market Supervision Administration is responsible for administrative enforcement involving trademark infringement, trade secret infringement, unfair competition, and patent infringement; the Copyright Administration is responsible for administrative enforcement involving copyright infringement. Administrative law enforcement has realized seamless connection with criminal law enforcement. For cases that meet the criteria for criminal filing, the administrative authorities will transfer them to the public security authorities for handling, thus greatly reducing the cost of rights protection for the right holders.

   If the infringing products are found to be exported and seize the overseas market of the enterprise, the infringing products can be seized by means of customs recordation of intellectual property rights, and the loophole of infringing products exportation can be blocked by means of customs inspection. However, the effect of trademark customs filing is more obvious, the effect of patent filing is not so obvious.

   3. Use of criminal law to protect intellectual property rights

Criminal sanction is the most severe sanction for intellectual property infringement, as China continues to increase the penalties for intellectual property infringement, reduce the threshold of criminal filing, increase the intensity of criminal penalties, intellectual property infringement has played a huge deterrent effect. 2020 December 2020 Amendments to the Criminal Law (XI) of the intellectual property rights crime provisions have been revised, the abolition of detention, control, equivalent to the crime of The minimum point of penalty for suspects was raised to more than six months of imprisonment, together with the penalty of fines, which is an increasing deterrent to infringers in terms of personal and property.

   4.Establishment of IPR infringement monitoring, evidence collection and action system

   The power of foreign-funded enterprises to protect their own intellectual property rights is limited after all. For the serious areas of counterfeiting and infringement, they can make use of the power of external professional investigation agencies, law firms, etc., to establish a network from the discovery of infringing clues to the forensics until the action. Some serious areas of counterfeiting commodities, such as seeds, fertilizers, and pesticides, have already been specialized in anti-counterfeiting teams, and these are the external power that can be made use of.

   Foreign-funded enterprises are easy targets for infringement due to their relatively leading technology and appealing brands. Therefore, IPR protection should start from the layout, and better serve the long-term development of enterprises in the Chinese market through the establishment of a relatively complete protection and operation system.