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Sourcing From China & Elsewhere: IP Issues

Discussion in 'Legal, Insurance & Issues' started by VeryMark, Apr 19, 2011.

  1. VeryMark

    VeryMark

    Joined:
    Dec 15, 2009
    Messages:
    64
    This article is written primarily from the perspective of intellectual property (IP) rights, i.e. trade marks and passing off, unregistered and registered design rights, copyright and patents – see the VeryMark website here for more information.

    Trade marks and passing off apply to brand rights, design rights to the shape and/or configuration of manufactured articles other then their surface decoration (unregistered rights only – registered design can be obtained), copyright to music, films, software, printed textiles, greetings cards, photographs, etc, and patents to methods, processes, systems and how things are made in general, but not ways of doing business.

    The first question always when sourcing overseas is whether it’s a unique product or not.

    That may be easier said than done as you may think it’s your product alone but you need to make sure that the agent and/or factory you are dealing with recognises that – you don’t want the product suddenly starting to turn up in the UK via some other route. Conversely, it may be that your source has contacts you can exploit – it’s better to find out up front and decide how to deal with it in advance.

    If you are proffered a design and assured it’s legal, don’t simply accept your source’s word for it – it may be okay to sell that design out of their market but it might not be safe to import and sell it in the UK – there’s quite a bit to consider with unregistered and registered design rights, trade marks, passing off, patents and copyright, plus perhaps product safety standards.

    So if possible get a reliable agreement with the people who matter, so that you have some protection hopefully if anything goes wrong – it’s quite possible in China/Hong Kong/Taiwan that you could be dealing with an agent but with the goods being ordered on somebody else as manufacturer.

    A Non-Disclosure Agreement may also be helpful in advance – but getting protection for your IP in train first can be even better.

    Being able to see what is going on locally can be good too, as knowledge can be worth a lot – if the agreement you have doesn’t reflect the true facts and it’s not with the right people, it may be worthless.

    The agreement should most preferably determinable under UK law and with jurisdiction in the UK courts, if it’s not then you are going to need to involve a local lawyer – and mainland China and Hong Kong still have legal differences for various purposes including intellectual property for example.

    An exclusive marketing arrangement can be good too if you can be sure that the goods are first marketed by you, since that may ensure that you own the unregistered design rights for the product in the UK, even if you didn’t create the design in the first place.

    To claim unregistered design right in the UK, the normal qualification is that the designer or one of the joint designers (providing their contribution cannot be divided) must be a citizen, subject or habitual resident of the UK or the other members of the EU or a number of other countries which are British or ex-British colonies or the like including such places as Hong Kong, Cayman Islands and New Zealand.

    (Registered design is the only method of gaining design rights in other places, such as the USA.)

    If this is not feasible, it is possible alternatively to rely on first marketing in one of the above territories by somebody who is either a citizen, subject or habitual resident of, or a company formed under the law of and with a substantial place of business in, one of these territories, providing they have exclusive marketing rights.

    However, if you commissioned the design from a third party or employed the designer, you will be deemed to be the first owner of the design rights under UK law.

    In any event, if it’s supposed to be your product then it’s much better if you can to register the trade mark and design as yours rather than merely trying to rely on unregistered rights, as the former give much more effective protection than the latter and potentially for longer too.

    For example, if you commission production from an overseas factory, if you do nothing to document or protect your rights, you might find later that difficulties arise if the product appears in the UK or elsewhere by another means, especially if you have difficulty then showing that you were the designer or commissioned the design, or the foreign manufacturer tried to claim that they were designer or co-designer.

    It could be even worse if say the product had leaked out and been marketed locally in Hong Kong before it had even reached the market in the UK.

    On the other hand, if you have obtained a registered design, for which you have a year to apply for from any public disclosure you have made (although it is not too wise to rely on this completely in case there is public disclosure by somebody else), then you have prima facie evidence of your right – and registered designs can be renewed for up to 25 years and be used to stop something even if it’s not a deliberate copy, unlike unregistered rights which last for a maximum of 15 years and often less and can only be used against deliberate copying.

    Registered designs are fairly cheap too!

    To be registrable, a design must be new, that is different from anything already made publicly available, with individual character, i.e. the overall impression it produces on an informed user must differ from any already publicly available.

    Copyright, if it applies, may be relatively easy as you get automatic international protection, providing you have evidence of origination and ownership – it’s important to keep a document trail.

    Making sure that the name is yours is valuable too, and trade mark registration is the only effective means of doing that.

    Finally, if, conversely, you simply want to import and sell somebody else’s well-known brand, there may well be substantial difficulties if you are seeking to source from outside the European Economic Area (EEA).

    To buy and sell third-party branded product, the main requirement is that the goods must have been placed on the open market in the EEA in the first place by the brand owner or with their consent - the EEA being the EU plus the old EFTA countries, Norway, Iceland and Liechtenstein, plus in practice Switzerland. If the goods don't meet this condition, you can face action for trade mark infringement.

    That means in practice that for example you can't legitimately sell Tommy Hilfiger clothing imported directly from the USA, even if it's perfectly genuine, unless Tommy Hilfiger themselves sold it to you knowing you were going to resell in the UK ...... and anything bought from China or India is almost certainly a no-no unfortunately even if it comes out of the factory that the brand owner uses. You also can't sell perfume testers on the open market as they are only distributed on the condition that they cannot be sold on.

    There is a possibility too that a luxury brand can take action for trade mark infringement if their goods are sold in a way that they can claim affects the luxury aura of the brand and hence the quality of the goods - L'Oreal for example have been undertaking a big cease-and-desist letter writing campaign against anybody selling their perfume via e.g. eBay, though with quite what legal force remains to be seen.
    [​IMG]

    The above does not constitute legal advice but rather general information, and specific advice should be sought in any particular case – our website at www.verymark.info has more information. © 2011 VeryMark
  2. zutou

    zutou

    Joined:
    Jul 25, 2011
    Messages:
    54
    good post here ,and it is wothty of keeping ! thanks !:)[​IMG][​IMG][​IMG]
  3. nolie

    nolie Banned Member

    Joined:
    Oct 6, 2011
    Messages:
    2
    zutou
    i agree with you..............
  4. afei

    afei

    Joined:
    Mar 5, 2012
    Messages:
    14
    good post! :)
  5. 1711

    1711

    Joined:
    Nov 14, 2012
    Messages:
    9
    Thanks for sharing!
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