Foreign Oil and Gas Investors Work to Protect Their IP in China

Foreign oil and gas enterprises must protect their intellectual property rights in China in order to maintain an active role in Chinese market, says Brad Chin, partner and the IP practice group head at Bracewell & Giuliani in Houston.


According to the United Nations Environment Programme, the use of fossil fuels by China’s rapidly-growing population has increased by more than sevenfold, growing annually at a rate of 5.3%. With the rapid growth rate in China’s economy, population, and consumption of energy resources, China is shifting its focus to develop a National IPR Strategy Action Plan to enhance its capacity to leverage its IPR in global competition.


Chin says foreign companies that enter the Chinese market should understand the landscape of technology development by companies in their technology area, as well as the IP landscape generally, to determine how they should protect their IP assets as they enter Chinese markets, and whether strategic technology development or commercial relationships should be established. “The protection and enforcement of IP assets in China is improving and with the growth of the commercial base in China, non-Chinese enterprises need to consider the protection of their IP assets along with other business considerations when developing their entry plan into Chinese markets,” Chin says.


The number of domestic and foreign patent application filings in China is growing at a rapid pace. “We’re seeing more patent filings by domestic parties as they seek to protect their IP rights from domestic and foreign competitors. Many Chinese IP firms are focusing more of their resources on domestic filings than foreign filings,” Chin says, adding that trend may not slow anytime soon. “Generally, the quality of patent applications being filed is good. The State Intellectual Property Office has developed quality initiatives to train patent examiners and is working with the US Patent and Trademark Office (USPTO) and various US law associations, including the American Intellectual Property Law Association (AIPLA), SIPO/US Bar Liaison Council, Intellectual Property Owners Association (IPO), as well as other foreign legal entities, to enhance the quality and timeliness of patent examination in China. One such effort is SIPO’s collaboration with the USPTO, the European Patent Office, the Japanese Patent Office and the Korean Intellectual Property Office to form the IP5 for improving the efficiency of the examination process for patent worldwide.”


The number of patent litigation cases filed by Chinese and foreign patent holders is also on the rise. Chin believes that the increase appears to be a result of the improved patent litigation system in China, the growing interest of both parties to protect their IP rights in China as the market for their products (based on consumer growth and demand) increases, and as competition for market share in China grows.


“The current trend is that the number of patent infringement cases will increase in the future, but it is difficult to predict with such certainty,” he says. “Many factors, such as the ability of administrative agencies and civil courts to enforce the courts’ decisions against infringers, will likely affect the long-term growth in patent infringement filings.”