Intellectual Property Protection in China

Changing your business practices.


Intellectual property piracy is a worldwide problem. Changing your business practices in China to address the problem of piracy is a prudent strategy. Intellectual Property Protection (IPR )policies and procedures should be consistent worldwide, formal, measured, and appropriately managed. Leaving the management of IPR protection to sales management is a foolish policy. Sales managers are only concerned with meeting this quarter’s budget and IPR policies can interfere with the achievement of budget goals. The results of lack of IPR protection has long term effects and most sales managers feel they live or die with this quarters sales results.

For proprietary software sales consider offering application software with a “live” web based ASP model in place of licensing object code. (See the postings on the experience of Kingsoft). All licensed object code should have an embedded security system that monitors number of users and enabled modules. Do not distribute source code in China unless absolutely necessary. Source code release, if distributed at all, should be closely monitored, and only the necessary portions of source code should be given to groups who have an absolute need for such code.

Local support services should not only be offered as a normal marketing practice but to increase the attractiveness of purchasing legitimate products versus counterfeit products. The Chinese will pay a premium for legitimate products that are supported locally. As far as we can determine our large software systems (priced in the $100,000 to $300,000 price range) that absolutely required our local services to implement were never pirated (the licensing of the products by distributors were mismanaged). The control of software security license keys should remain with the home office.

The transfer of corporate technology information should be a formal, measured, and well managed practice. If it is your corporate practice to make intellectual property freely available to trusted partners change that practice with regard to China. Only that information essential to the operation of the China operation should be shared with that operation. Your firm should target market segments that are less likely to violate Intellectual Property Rights - markets such as multinational corporations and certain China government agencies.