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Innovation & Joint R&D in ChinaIntellectual Property Rights & Legal Guidance

A. R&D AND RELATED LAWS 2 Types of R&D activity 2 Laws relating to R&D in China 2

B. OWNERSHIP OF IP 3 Commissioned R&D 3 Joint R&D 3 Jointly owned patents 3 Other legal issues - technology import and export regulations 3 Ministry of Commerce (MOFCOM) catalogue 4 Registration of contract - prohibited contract terms 4 Remittance of royalties 5 Licensing - Warranties 5 R&D carried out by a licensee 5 R&D carried out by a supplier 6 R&D with Chinese universities 6 Invention ownership disputes 7 Ownership of background IP 7

C. MANAGEMENT OF IP 7 Protection of confidential information (trade secrets) 7 During initial discussions - NDA 8 Agreement concluded - additional confidentiality terms 8 Employee controls 8 Employee confidentiality 9 Departing employees - restrictive covenants 9 Departing employees - claw-back provisions 10 Inventor remuneration 10 Patenting strategy 10 Inventions completed in China 11 Patent quantity vs. quality 12 Other contract issues 12

D. CASE EXAMPLES 13 Case example 1: “informal R&D” with supplier 13 Case example 2: dealing with IP brought into a JV 14

E. KEY TAKEAWAYS 15

Companies using this toolkit should also refer to the sections on IP in the CBBC China Business Handbook 2016, which introduce in detail the processes for registration of IP rights (Section 4.6, pages 115-119) and enforcement (Section 4.7, pages 120-126).

R&D activities are intended to give rise to new technology, which may be in the form of different types of IP: patents (including invention patents on products

and processes, or utility model and design patents on the function or appearance of products), copyright (especially in the case of software) and know-how (which may be protected as a trade secret).

This section summarises some key points relevant to IP for UK companies engaged in developing or commercialising technology in China.

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A. R&D and Related Laws

Types of R&D activity

UK companies may engage in R&D in China in a number of ways:

• Through contract R&D with Chinese companies and institutions. The UK company may or may not have its own subsidiary in China

• As an activity within the UK company’s own Chinese subsidiary, usually a wholly-foreign owned entity, or between its Chinese subsidiary and another domestic entity

• As an activity within a Sino-Foreign Joint Venture

All of these structures may give rise to different treatment of R&D and the resulting IP.

There will also be different treatment depending on whether the R&D is commissioned or joint development.

Laws relating to R&D in China

A number of laws in China have implications for conducting R&D, including:

• The Contract Law• The Patent Law• The Regulations of the

People’s Republic of China on Administration of Import and Export of Technologies (“Technology Import and Export Regulations”)

• Some other laws and regulations that impact on cross-border technology transactions

The Contract Law specifically recognises “technology development” (i.e. R&D) and “technology transfer” (i.e. technology licensing and assignment) as classes of contract.

Technology development contracts are further divided into two types: commissioned development and joint development.

A commissioned development contract (i.e. commissioned R&D) is where a commissioning party provides funds, equipment, or know-how, while the commissioned party carries out research and development.

In a joint development contract (i.e. joint R&D) all parties carry out research and development activities jointly according to the agreed allocation of responsibilities.

The Contract Law specifically recognises “technology development” (i.e. R&D) and “technology transfer” (i.e. technology licensing and assignment) as classes of contract.

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B. Ownership of IP

China’s Contract Law in general respects the freedom of parties to agree terms of contracts as they wish. However, the law provides for some default rules for R&D contracts if these are not expressly stated by the parties.

Commissioned R&D For commissioned R&D, the default rule is that the commissioned party will own the results of the R&D, including know-how, patents and copyright, although the commissioning party has the right of first claim in the event that the commissioned party wishes to assign the patent or know how to another party.

Joint R&D

For joint R&D contracts, the default rule is that all the parties to the contract jointly own the resulting know-how, patents or copyright. As with the above principle, the ownership and exploitation of the resulting IP must be with the agreement of all the joint parties and any assignment of IP the right of refusal must be given to the other joint owner(s).

Jointly owned patents

For joint R&D, the right to apply for a patent must be with the agreement of all joint owners, otherwise the

right can be effectively vetoed. Furthermore, under the Patent Law, the joint owners may independently license the patents on a non-exclusive basis, but all royalties earned must be shared. However, any sale of the patent must be agreed by all owners.

It is quite common in R&D partnerships with Chinese parties, particularly universities, for the Chinese party to ask for joint ownership of any resulting IP. While this may seem fair, it may be unworkable, as joint ownership means that the parties will need complete trust and agreement in order to effectively commercialise the IP throughout its effective life.

It is recommended therefore that UK companies avoid joint ownership of IP in joint R&D collaborations. As stated above, China’s Contract Law does allow a UK company to completely own all IP resulting from R&D that it carries out with a Chinese party, although there must be some compensation, as detailed later in this toolkit. Other legal issues - technology import and export regulations

As well as the Contract Law, another piece of legislation, the “Technology Import and Export Regulations” also imposes some restrictions on R&D contracts.

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Where a foreign party is bringing in technology as part of an R&D activity (deemed a “technology import”), or where the foreign party wants to license or own IP from a Chinese party as a result of R&D conducted in China (a “technology export”), these Regulations will apply.

The Regulations aim to prevent the technology licensor or commissioner from imposing unfair terms which restrict competition, restrict technological advancement, and prohibit transactions of technology which are deemed to impact on national security.

While most of these regulations are focused on licensing of technology rather than R&D per se, in practice R&D in the corporate scenario may involve licensing technology in as well as generating new technology from the R&D.

Note that these regulations apply to cross-border transactions. If the technology transfer is being conducted solely between domestic entities, including Chinese subsidiaries of a foreign company, and there is no cross-border transaction, this is not “export” or “import” and would not be restricted by these regulations.

Ministry of Commerce (MOFCOM) catalogue

The parties must establish whether the technology falls into “Prohibited” or “Restricted” categories in the MOFCOM foreign investment catalogue. As the titles suggest, no foreign technology transfer is permitted in the “Prohibited” category, and for technologies in the “Restricted” catalogue, the contract is subject to approval. Technologies not listed in the catalogue are classed as being “Free” and no approval is required. While the majority of commercial technology fields fall into the “Free” category, it is important to know this from the outset. For “restricted” categories, a higher level of approval and scrutiny of the contract is required.

Registration of contract - prohibited contract terms

Even if in the “Free” category, the R&D contract will be subject to registration by the local MOFCOM branch.

There is a deadline of 60 days after signing for registration of the contract with the local MOFCOM branch.

In practice, the MOFCOM registration involves active review of the contract and it may be refused if there are terms prohibited under

the Technology Import and Export Regulations.

Prohibited terms include:

1. Restricting the commissioned party or licensee from making further improvements on the technology

2. Not providing due consideration (such as additional compensation or a licence grant back) for further improvements to the technology made by the other party

3. Restricting any party from using technology, or conducting R&D, on similar technology in competition with the technology developed

4. Preventing a licensor from challenging the validity of patents that they are licensing

5. Licensors must provide a warranty of reliability and completeness of technology are required by statute. As a licensor, it is important to restrict the scope of such warranty. One method is to specify in the technology contract that the contract is entered into for a particular purpose and limit such warranty to that particular purpose

6. Other clauses which restrict the commissioned party or

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licensee are not explicitly prohibited, but may be subject to a test of reasonableness, for example, tying the licensee to using particular suppliers, price restrictions, or preventing the licensee from dealing with competitors. Such clauses may also violate provisions of the Anti-Monopoly Law and should be reviewed by qualified local attorneys

As a general rule, technology related contracts, including R&D contracts, which fall under the above legal regimes, should operate on a principle of fairness, enabling both parties to obtain benefits from the fruits of the collaboration, while at the same time specifying who has the right to own the resulting IP.

Remittance of royalties

Where the R&D activity involves licensing of technology which will require payment of royalties overseas, it should be noted that royalty remittances offshore are subject to withholding tax. Withholding tax rates are not fixed but variable, and determined on a case-by-case basis. UK companies who want to send, or receive, royalties from China to overseas should consult a China qualified tax advisor.

Licensing - Warranties

Licensors must provide a warranty of reliability and completeness of technology are required by statute. As a licensor, it is important to restrict the scope of such warranty. One method is to specify in the technology contract that the contract is entered into for a particular purpose and limit such warranty to that particular purpose.

R&D carried out by a licensee

It is a relatively common situation in China that a licensee of technology from a foreign company may make further improvements to that technology. As mentioned above, licence contracts may state that any new IP resulting from improvements in the technology made by the licensee can be assigned to the licensor, but the licensor must provide either monetary compensation or free licence grant back to the licensee as due consideration for their efforts. The licence grant back can be restricted, for example, so that no sub-licensing is permitted.

R&D carried out by a supplier

It is also common to see “informal” technical development carried out collaboratively between a UK company and their manufacturing supplier, particularly when solving production engineering problems or

developing new product versions.

In this context however, joint development can be risky, as a contract manufacturing relationship does not normally involve R&D, and disputes can arise as to ownership of any resulting IP (see Section D Case Example 1 below).

If a UK company plans to conduct any collaborative product development with their suppliers which might give rise to significant improvements or new versions of products, it should consider drawing up a simple agreement which deals with ownership of new IP in a fair manner, but, as recommended above, avoids joint ownership where possible.

Most commonly, the IP created will belong to the foreign company that is the customer and who may be paying for much of the engineering work, but some compensation, such as a free limited licence or cash reward will be due to the supplier that collaborated in the invention. It should be made clear in a contract that this is “commissioned R&D” separate from the supply agreement.

R&D with Chinese universities

There are some particular issues to beware of when conducting collaborative R&D with Chinese universities.

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There are two common ways for companies to collaborate with universities in China:

1. Contract research. The company commissions the university science faculty to conduct research around a particular technical problem or application. This is normally commissioned R&D for a fee

2. Technology transfer. The university’s existing IP is licensed out to companies for commercialisation

In the case of situation (1), the company must conduct due diligence on the university staff conducting the research. While the company may believe that all the research staff are university employees and are included in the company’s agreement with the university, this may not be the case, and personnel working in the faculty may not technically be bound by the scope of the agreement with the university. In such cases, separate agreements may need to be drawn up for these “external” parties.

In situation (2) the company should check what policies the university has for licensing and ownership of IP. Where a foreign company is making use of IP owned by a Chinese university, this will be deemed a “technology export”. Technology export can only be conducted

by a duly licensed company and exploitation of university-owned IP by a foreign party will require that the licence is issued via a commercial entity. Therefore the university itself may not be able to assign the IP to the foreign party. Again, the transaction would not be subject to this rule if conducted between the university and a Chinese subsidiary of a foreign company.

In practice many universities have set up private companies that are mandated to commercialise IP on the university’s behalf. However, the IP may be owned by the university. Therefore any party engaged in commercialisation of technologies from Chinese universities needs to understand whether there are separate entities that own and license the technology.

Invention ownership disputes

China’s Patent Law provides a mechanism for dealing with inventor-ship and ownership disputes in the event that one party files a patent on an invention which is claimed by another. However, it can be very difficult to bring such a case successfully and it is far better to have an agreement covering any collaboration between the parties to reduce the likelihood of such disputes arising.

Ownership of background IP

When entering into agreements relating to development of new technology, the parties should identify what IP each party owns prior to the start of the cooperation, or “background IP”, which is relevant to the cooperation. This could include a description of know-how as well as registered IP such as patents. This could be contained within the agreement that sets the terms of the collaboration. This helps to clarify what were the respective technologies owned by both parties prior to the R&D collaboration, as well as specifying the purpose of the collaboration by giving a brief description of what new technology or solution is aimed for in the collaboration.

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In practice many universities have set up private companies that are mandated to commercialise IP on the university’s behalf.

C. Management of IP

Protection of confidential information (trade secrets)

The most valuable IP is often in the form of confidential technical information and know-how about products, processes, techniques and materials. Some of this may later be filed and disclosed publicly as patents or through published scientific papers, but some information may be more valuable by being kept confidential.

China’s Anti-Unfair Competition Law provides protection for confidential information (referred to as “trade secrets”), which are:

• Commercially valuable • Have not been disclosed to the

public • Which the owner has taken

steps to keep secret

To protect a trade secret in China, the owner must actively identify and ring-fence the confidential information. That includes ensuring that all parties receiving information are under signed confidentiality arrangements, that the information to be protected is clearly marked as being secret, and that access to that information is carefully limited only to duly authorised persons. Best practice is to use software that keeps records of all authorised users who have accessed protected files.

As in most other countries, there is no provision against reverse engineering of a product or process which is not protected by a patent. Where a product or process cannot be kept secret and may be easily discovered by a competitor through reverse engineering, it should be protected by filing a patent, which will prevent the competitor from using the product or process.

During initial discussions - NDA

Before you get into disclosing any information to a potential business partner, you should always secure Non-Disclosure Agreements (NDAs, sometimes also called CDAs) from the counterparty. Like any other contract, these are enforceable in China. NDAs should ideally include the following points:

• Two-way confidentiality. In many technology transactions, both parties are exchanging sensitive information, and it is appropriate for the agreement to protect information exchange both ways

• Has the Chinese party’s full company name and chop applied (see the section below on General Contract Issues) .

• It should identify broadly the scope and purpose of information to be exchanged. Having some definition around

what information is protected will be helpful to avoid doubts about what exactly the “confidential information” is

• The NDA should cover affiliates / associates. The Chinese counterpart may have a number of affiliated entities that they may consider trusted parties and share information with freely but you should be specific about the boundaries of the NDA

• Time period for the NDA to have effect and expire. Chinese companies may be uncomfortable with an NDA that protects information perpetually, so it may be more practical to set a time limit of a few years

Agreement concluded - additional confidentiality terms

Where the initial discussions develop into a full agreement, you should consider replacing the NDA with more specific and detailed confidentiality terms within that agreement. Initial NDA terms are rarely sufficient to cover protection of all confidential information between the parties within a commercial relationship. Given that protection of confidential information requires controls over personnel and access to information, you and your subsidiaries or partners

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should implement detailed policies and procedures for protection of confidential information and regularly audit these to ensure that they are being implemented.

Employee controls

Rapid economic growth in China in the last three decades has created high demand for talent. Employee retention rates have been relatively low in China as valuable talent is frequently lured away. This is a particular challenge for managing and retaining key technical staff who bring valuable IP and know-how with them. Where you have a subsidiary in China over which you have control, you can impose further controls over that entity’s employees in order to protect your IP internally.

When dealing with external partners, you may require your partner to have explicit confidentiality and non-compete restrictions with its own employees that receive information you will be passing to them, as well as to require your partner to have security procedures for protecting the information in its organisation. You may also include provisions for regularly checking or auditing these procedures. Since you do not control your partner’s employees directly, this is a matter for you to negotiate these provisions into the contract with your partner and to follow up to ensure implementation.

Employee confidentiality You should ensure that employment contracts have specific terms around maintaining confidentiality, both during and after the term of employment. You may wish to have more comprehensive terms for employees who have access to sensitive information.

You can also make your in-house trade secret protection policies and procedures (for example, use of passwords, restrictions on using cameras, phones or digital storage devices) an explicit part of the duties of your employees by referring to such policies explicitly in an appendix to the employment contract or in an employee handbook.

Many companies in China have the practice of giving annual training to employees to remind them of their obligations to keep information confidential, specific policies and procedures in place, and give examples of what information is considered confidential.

When employees who have access to confidential information depart, it is best practice to have an exit interview to remind them of their contractual obligations and to clear up any doubts about what information you are claiming to be included within the scope of confidential information. You can also remind them of the provisions

in patent law relating to “claw-back” of patented inventions that they file after employment (see below).

Departing employees - restrictive covenants

In China’s Labour Contract Law it is possible to prevent a departing employee from working in the same industry for up to two years following departure, provided that the employee is given compensation. In practice, if not otherwise agreed, such compensation should be at least 33% of original salary, otherwise the compensation may be open to legal challenge. If compensation is not paid, there will not be an enforceable right. This is a common problem.

Restrictive covenants should be handled carefully, however, so as not to create an automatic obligation on the employer to pay compensation. In practice, they are used only for a minority of employees who occupy senior positions and/or shall be party to confidential information of their former employer.

Departing employees - claw-back provisions

Where an employee involved in R&D departs for a new employer, any patent by that employee filed by the new employer within one year of departure may be claimed by the former employer. While in practice

You should ensure that employment contracts have specific terms around maintaining confidentiality, both during and after the term of employment.

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this occurrence is rare, as a general precaution, those who wish to employ technical experts departing from other companies should have the employee sign a warranty that the technology they are working on is not proprietary to their former employer.

Any R&D collaboration partner should also give you such a warranty that IP they are developing with you (either jointly or commissioned) is not subject to a 3rd party claw-back (see Section D Case Example 2).

Inventor remuneration

Like some other countries, China has regulations that mandate remuneration for employees who complete inventions during their employment. These regulations provide a statutory default for employers who do not already have an inventor remuneration scheme.

The share of profits or revenues that are allocated to inventors are significant, especially if there are multiple inventors, and there is scope for disputes involving calculation of profits for instance.

The law allows companies and their employees the freedom to agree their own terms which can be lower than the statutory scheme provided they are still reasonable. It would be wise, therefore, for any UK company with R&D operations in China to have a clear and comprehensive inventor remuneration scheme in place rather than relying on the statutory provisions. Such schemes usually provide for a cash bonus (or a bonus

scheme depending on the value of the invention) but avoid allocating a share of revenues.

Patenting strategy

For detailed guidance on registration of patents in China, please refer to the China Business Handbook, Section 4.6. It is also worth reading Section 4.7, pages 120-126 of the China Business Handbook relating to enforcement.

Many foreign companies make the mistake of not filing for patent protection in China because they are not confident that patents and other IP can be enforced. This is a mistaken

assumption, and one that could be costly. China has an effective regime for enforcement of IP that treats foreign parties fairly and UK companies should assume that Chinese patents can be enforced.

If you are conducting R&D in China, it is important that you have provisions in place for managing patentable inventions which may result.

An R&D manager who is familiar with patent law should be responsible for identifying potential patentable subject matter. Local patent agencies will often provide training to local R&D staff on patent law if required and can assist with IP management.

The statutory provisions for inventor remuneration are as follows:

Type of Patent Cash Reward Share of Revenue

Invention CNY 3,000 2% of profits derived from exploiting the invention or 10% of licence revenue

Utility Model CNY 1,000 0.2% of profits derived from exploiting the invention or 10% of licence revenue

Design CNY 1,000 0.2% of profits derived from exploiting the invention or 10% of licence revenue

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Your company may already have in place an invention disclosure process, and a committee that decides on what inventions are significant enough to be worthy of patent protection. This should take into account your overall patent strategy compared with your competitors and the future direction of your industry.

In relation to China, it is worth bearing in mind the existence of Utility Model patents (please refer to the China Business Handbook Section 4.6 for details). As the UK does not have this class of patents, UK-based decision makers may not be familiar with this type of patent, which is very widely used in China.

Utility models can be used to protect more incremental inventions, especially product improvements, which might not merit a full invention patent. While Utility Models therefore have a lower level of inventiveness and a term of only 10 years, there are a number of advantages:

• Protection can be obtained within 10 months, as they are not examined, compared with 2-4 years for an invention patent to be granted

• They are cheaper to obtain • They can be enforced in the

same way as Invention Patents • You can file both an invention

and utility model at the same time (“dual patenting”) to obtain quick protection, with the Utility Model being abandoned when the Invention Patent issues

You may find it valuable to protect product improvements in China through a Utility Model, particularly if that improvement may only be applied to products in China, even if the improvement does not merit filing patents internationally.

Inventions completed in China

It is common that foreign companies conducting R&D in China, either through their subsidiaries or contract R&D, will wish to file patents first in their home country and language in the same way as an invention which is created in their home county.

China’s Patent Law allows first filing abroad, but for inventions “substantially completed” within mainland China, the invention must first be submitted to the State Intellectual Property Office (SIPO) for a security review. This security review is largely a formality which can be handled by a local patent agent and may take only a few weeks. However, it is important that this step is not omitted - the applicant’s failure to comply with the security review may result in loss of patent right for China if SIPO deems that the invention was in

fact completed in China (this may be evident from the names of the inventors).

Alternatively, you may prefer to simply file the invention first in China and then use SIPO as the office for an international (PCT) application. However, if you are drafting a patent in China, particularly if you intend to file in the UK and other countries, it is recommended that the patent is drafted in English and Chinese at the same time by patent attorneys with experience in international filing. This will greatly reduce the risk that the patent drafted in Chinese is poorly translated into English, which can result in rejection of the application.

Patent quantity vs. quality

It is a well-known phenomenon in recent years that the rapid growth in patenting in China is because Chinese companies and institutions file relatively large numbers of patents (especially Utility Model patents) that are of low value. This is due to local government incentives for innovation, including tax incentives and subsidies for patent filing fees. Patent filings can allow a company to qualify for “High & New Technology Enterprise” corporate tax rates which are lower than regular rates. Local companies, including subsidiaries of foreign companies, therefore try to file

Utility models can be used to protect more incremental inventions, especially product improvements, which might not merit a full invention patent.

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patent applications purely for this purpose. This situation has led to large numbers of low value patents being filed, and low-cost, low-quality services being offered by local patent agencies who compete for large volumes of work. The Chinese government has recognised the problem created by these patent promotion policies and is beginning to remove them.

Notwithstanding the potential tax benefits to their China subsidiaries, UK companies should ensure that local Chinese entities’ patent filing practices are aligned with your international patent strategy. In particular, a poorly drafted Chinese patent application from an invention by your local entity may affect the ability to obtain a patent with broad scope internationally.

Other contract issues

There are some other issues of a general nature, applying to all agreements in China which should be considered when concluding R&D related contracts.

These are covered in detail in the China Business Handbook, Sections 4.7 on NDAs, Commercial and Supplier Contracts (pages 97-100), and in Section 4.8 on Business Disputes, (pages 101-105) and do not need to be repeated here. We highly recommend that UK companies read these sections of the Handbook, and seek qualified legal advice, before concluding any contracts with Chinese parties.

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D. Case Examples

Case example 1: “informal R&D” with supplier

A foreign company in the consumer audio industry provided an existing supplier in China with design drawings for a new product and asked the supplier to complete the design engineering and production for the product along with the foreign company’s own engineering manager who worked on-site at the supplier. Both the foreign company and the Chinese supplier collaborated to turn the design drawings into a finished product. However, since the supplier was a contract manufacturer, the only agreement in place was a standard supply agreement. The Chinese supplier deemed that it had contributed significantly to design and development of the final product and therefore filed patents relating to the product.

The foreign customer later discovered these patents and asked the supplier to transfer the patents to it, since it considered the supplier to have worked on the design under commission and had contributed some of the supplier’s costs for doing so. However, since there was no agreement in place, and since the relationship with the supplier was good, the foreign company decided not to push the issue further. For the time being, it simply relied on an email from the supplier’s chairman stating that the supplier considered the design to be exclusive to the customer and would not sell the same design to any other party.

A few years later, the foreign company’s relationship with the supplier had deteriorated and it wanted to switch to another supplier but was concerned that it and its new supplier could be sued for infringement. Since it felt that prospects for obtaining either a licence or transfer of the patent from the supplier was now impossible, it was forced to continue using the original supplier for that particular product for the rest of the product’s life span rather than being able to go to the market to find a better supplier or a lower price.

This is a typical example of how “informal R&D” taking place between suppliers and customers can lead to problems over ownership of IP. It can be remedied by adding some simple clauses into supplier agreements that cover ownership of IP in the event that new products are developed during the relationship.

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Case example 2: dealing with IP brought into a JV

A multinational company was planning to set up a Joint Venture (JV) company involved in developing new technology around processing chemicals. The Chinese partner was actually a group of research scientists who had recently departed from a government research institution for the purposes of going into business with the foreign company. The JV involved use of know-how and patents from this group of researchers that would be assigned into the JV. However, since the patents involved had been filed by the researchers within one year of their departure from the research institute, the foreign party was concerned that those patents would be subject to “claw-back” by the institution, which might threaten their use by the JV.

The foreign party therefore required the Chinese party to include warranties that would oblige them to provide remedies in the event of such a “claw-back” dispute, including procuring licences from the research institution, and compensation. The JV contract also made it clear that all new IP created would be owned by the JV, provided for an inventor remuneration scheme and included detailed provisions for control over confidential information for employees of the JV both during and after employment by the JV. The JV also engaged an external IP firm to provide training and support to the scientists to ensure that valuable inventions were identified and filed as patents.

This is an example of best practice in setting up an R&D-focused entity using local expertise, and intellectual property, derived from a research institution.

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This toolkit on IPR & Legal Guidance was written with CBBC by leading global IP consultancy Rouse. For more information please contact: Chris Bailey (cbailey@rouse.com)

www.rouse.com

E. Key Takeaways

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01 When initiating discussions with Chinese counterparts, ensure that any confidential information exchange is covered by an NDA

02 Ensure that any activity in China with 3rd parties that might result in generation of new IP clearly states who will own the IP. Avoid joint ownership of patents and other IP

03 Where such collaborations involve cross-border transfer of IP, ensure that the terms of the agreement provide for fair compensation for the Chinese partner, even if the IP is to be owned by the UK partner

04 Pay particular attention when conducting R&D with universities and research institutions, checking the right to ownership of IP and the employment status of all individuals involved in the research

05 Actively manage confidential information in your organization and in dealings with third parties, by identifying and isolating the confidential information, controlling its access using physical and digital controls, and through confidentiality obligations of employees and partners

06 Ensure that your employment practices and policies for employees in China engaged in R&D activities take into account confidentiality and non-compete obligations and inventor remuneration rules

07 Ensure you are familiar with patent protection in China, including types of patents, filing rules and filing strategies, which have some differences from the UK

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