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	The Real CCC Mark: Chinese Copyright Confusion Do these statements sound familiar? "At a minimum, it is advisable to register copyrights in China, even though you may theoretically receive protection under the Berne Convention." "You must file with the State Administration of Industry and Commerce to receive protection for a trademark in China." "If you register your product properly in China you should still worry about intellectual property protection." Chances are at one time or another you've been curious about doing business in the enormous, hot market of China. However, it can be confusing to figure out the best way to protect your Intellectual Property (IP) there. The above statements illustrate that the subject of Intellectual Property or IP Protection in China is complex and changes quickly. If you do some research on IP Protection in China, you'll find a plethora of resources on how to protect your products/services, and how to pursue legal action if/when your copyright is infringed upon. Some people believe you should enter the Chinese market despite a risky Intellectual Property environment, and others will tell you not to go near it for fear of legal headaches and huge losses. So should you head for the hills or jump on the bandwagon to huge profits? Before you begin selling in China, weigh the positives (potential profits) against the negatives (pressing charges for copyright infringement and getting customs to freeze fake product shipments). Let's look at a few facts that may help you make your decision: Negative: U.S. companies experienced $2.3 billion in trade losses worldwide due to copyright infringement in 2004. In China, the most commonly copied commodities are DVDs, CDs, apparel, and software. It has been said that if a product or service can profitably be stolen or copied it will be. Lately this is particularly true in China. The U.S. Customs Office's most recent survey states that 69% of its seized counterfeits came from China. Does that mean all products are in danger of bringing huge losses to American companies? No. Part of determining risk is identifying the real intellectual property within your product, if any. For some products, technology IP is critical to sales in the U.S. because customers purchase the product for its high-end functionality and quality. However, in China where customer service can be more essential to sales, the technology IP is less important. On the other hand, if your company could expose its entire product line to copying by exporting one product, your risk extends beyond the potential copyright infringement of the exported product. Positive: The number of copyright infringement cases in China increased to 4,767 in 2005. In that same period copyright applications in China increased by 34.6%. More international credibility has been given to China's intellectual property protection and enforcement in 2005. This will continue to improve as China makes enforcement a reality. In past years it was rare for cases of IP violation to come before court; however, the number of cases has been on the rise, including 49,412 violation cases and 9,644 piracy cases in 2005. Although relatively young, the Chinese enforcement of intellectual property violations is improving as foreign countries and companies crack down on piracy. These improvements begin to make you feel more protected, but depending on your product/service not quite safe enough. Should you let this legal transitional period keep you from reaping the benefits of China's 9.9% GDP growth? Positive: China imported $600 billion in industrial machinery, plastics, chemicals, and medical equipment from the U.S. in 2005. It is currently the world's sixth largest economy and fourth largest trading country. It is difficult to ignore the newspaper headlines proclaiming China's growth and success. By managing your risk exposure you too can benefit from a booming Chinese economy - with a little luck a lot of legal counsel, and diligent monitoring of the market and in-country partners. Companies should manage risk exposure in all stages of a product's lifecycle, from product design and sourcing through manufacturing and distribution. For example, at the design stage, it's critical to closely guard blueprints from potentially unscrupulous component suppliers. Keep an eye out for joint-venture partners who may be replicating a process in an unauthorized facility under a different brand name. Finally, look for unauthorized distributors simultaneously dealing in counterfeit products. In conclusion, you have three options when considering IP protection in China: 1) Play it safe Follow Chinese protocols, take the advice of the state and federal government, and protect your IP. If necessary, you can take legal action in China (with help) if problems occur since you've cautiously protected yourself. 2) Play the cynic Enter the Chinese market and expect copies to be made of your product within 1-2 years. Take advantage of early profits. 3) Don't play Despite the scary statistics, copyright infringement legal enforcement has been improving in China, and will continue to do so under international pressure. Diligently monitor the market, and take the advice of experts, apply this information to your company's unique products and situation, acting proactively and thoroughly. Using this approach the mixed messages you receive every day about doing business in China will hopefully become clearer.