Chinese governments, central and local, may have little respect for foreign IP regimes or for their own, but as Chinese companies expand abroad, they are discovering that foreign intellectual property laws can serve their interests at home.
Many commentators have already noted that listing assets in foreign markets has the effect of discouraging IP theft by Chinese firms. Derek Sulger, partner at private equity firm Lunar Capital, referred to the case of Greatview, a Chinese milk carton maker, which is being sued by Swiss firm Tetra Pak for pirating its carton design as it prepares to IPO. “The dispute over IP issues results in Greatview being penalized, impeded, and its valuation is going to be lower until these issues are resolved. Whatever your opinion on the validity of certain milk packing technologies, it is clear that IPO candidates and public companies are held to account when IP challenges arise,” Sulger said.
However, for Chinese that have successfully registered patents overseas, foreign IP law is an advantage: It blocks domestic copycats from foreign markets and provides domestic benefits as well. “Even if your IP is not protected in China, you can earn a very decent return abroad,” pointed out Wang Jiaomao, professor of economics at the China Europe International Business School. “And you can also launch a price war domestically, backed by overseas profits.”