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Intellectual Property Magazine recently published an article by our lead intellectual property lawyer, Greg Buhyoff. The article is entitled, Action Plan for Asia, and it is described as follows: “Harris Moure’s Gregory F Buhyoff provides pointers on how to implement anti-counterfeiting and misappropriation investigations in China and Vietnam.” Greg practiced law in Vietnam for around ten years.

The article is behind a firewall, but we were given permission to publish it and we are doing so below.

Companies that sell or outsource their products to Asia should anticipate infringement of their trademarks, copyrights, patents, or trade secrets and have an anti-counterfeiting/misappropriation plan in place to investigate and take appropriate legal action against the infringers. The following are key points to consider in formulating such a plan.

The first step for any company doing business in Asia is to make sure that its intellectual property (“IP”) rights are protected. In China and Vietnam, for example, trademarks, patents and industrial designs must be registered to be protected.  Under international treaties, copyrights do not need to be registered to be protected, but registration makes it easier to prove ownership of a copyright in the event of a dispute. Trade secrets cannot be registered, but a trade secret is protectable if its owner has taken reasonable measures to protect its secrecy.

Before disclosing a trade secret or other proprietary confidential information to a prospective business partner, we recommend using a Non-Disclosure, Non-Use and Non-Circumvention (“NNN”) agreement that accounts for the legal and practical realities of the relevant country. Country- appropriate NNN agreements can be quite effective at deterring Chinese and Vietnamese manufacturers from copying the products of the foreign companies for whom they are manufacturing.

Companies having their products manufactured in Asia should be certain to register their IP in the countries in which their products are being sold, not just the country (or countries) in which they are being made. To further protect their IP, these companies should also submit their IP registrations to the customs authority in every country in which they either manufacture or sell their products so that customs has a strong evidentiary basis to seize infringing products.

If in spite of the above an IP owner learns that it is a victim of IP infringement, it should immediately seek to identify the nature of the problem, the geographical scope of the infringement (e.g., is it local, regional or global)?), the identities and capabilities of the organizations or individuals involved, and whether the infringing activities are ongoing and systematic. It usually makes sense to retain an experienced  investigator to assist.  The IP owner should exercise caution when engaging an investigator.  In some countries (China for one), it is not uncommon for local investigators to accept payoffs to falsify the findings of their investigations or “stage” a raid to mislead the IP owner into believing an effective investigation or raid was carried out.

It is also important that foreign company IP owners and their agents know and follow any local laws regarding what constitutes illegally obtaining information. Recently, two foreign investigators were convicted of violating Chinese privacy and state secret laws arising from investigations they conducted for the pharmaceutical company GSK. Just like in the West, “ignorance of the law is no excuse.”

In both China and Vietnam, it is important to establish good relations with government, law enforcement and political organizations at the national, provincial and local levels before you actually need their assistance to deal with stolen IP.  In managing such relationships, IP owners and their agents must be certain that they are not violating the anti-bribery laws of either their home country or the country in which they are conducting business.  The fact that your local staff told you what you were doing was “fine”, or that “local culture” condones such conduct will not serve as a defense should you or your company get caught.

The combination of foreign laws, foreign cultures and foreign languages means that it virtually always makes sense to use an attorney (either in-house or outside counsel) with relevant on-the-ground experience and knowledge of local law to coordinate oversee the external investigator.  This lawyer also can usually help ensure that the local investigator does not violate applicable laws and help formulate an effective enforcement strategy based on the evidence the investigator finds.

The investigation results should be used to determine whether to pursue administrative, civil or criminal enforcement proceedings either locally or internationally (or both), and aid in effectuating seizures of infringing goods by customs authorities.