Evonik’s Chen contends that enforcement of IP rights is improving in China. He points to the establishment of three IP courts and moves to improve judicial transparency. However, Chen adds, “the situation in small cities and remote areas is still behind that in the big cities.”
In a sign of better IP protection for Solvay, in December 2013 the company won an IP lawsuit in a Chinese court against the Chinese firm HySci Specialty Materials. Solvay had sued HySci for infringement of patents for rare-earth mixed oxides used in automobile catalytic converters.
The court victory aside, Solvay’s Metivier says IP protection is still a problem in China. The greatest risk, he explains, is “know-how leakage,” when staff leave the company or succumb to outside offers to divulge trade secrets.
Prosecuting trade-secret theft is made difficult by “lack of discovery to extract key evidence from opponents coupled with high evidentiary standards in China,” says Jeffrey D. Lindsay, head of intellectual property at Asia Pulp & Paper, an Indonesian paper manufacturer with operations in China. Western companies that sue to protect their IP “tend to have success,” Lindsay adds, “although the lower level of damages in China leads some infringers to not fear the law all that much.”
To enhance IP security, “we don’t develop products that can be easily copied,” Xenidou says. “Our materials and processes are quite complicated, sophisticated, and integrated with customer processes. Even if they are published, they are difficult to duplicate.”
Metivier explains that Solvay institutes processes to segregate know-how, so that people do not have all the data on a product or process. “We also follow up with the people leaving the company, identifying where they go and for whom they work,” he says.
Meanwhile, other factors may be dimming China’s innovation sparkle. Metivier notes a growing nationalism that manifests in a belief that the country will succeed on its own. A consequence, he says, is greater difficulty in bringing in foreign scientists, and that worries him. “If you want to be an innovative country, science and development needs to be open,” he says. “China needs to promote exchange to achieve diversity.”It sure seems like a lot of work to protect one's IP in China. Better to protect than not, I suppose.