News

IP Protection in China

August 27, 2013
Categories: Intellectual Property Protection

CREATe.org’s President and CEO, Pamela Passman, is joining leaders from Intel, IBM and Qualcomm to speak at the China IP Summit in San Francisco in October. As part of the event, the IQPC team interviewed experts to discuss IP in China. Following is a Q&A with Pamela Passman.

What role does Create.org play in trying to promote IP Protection in China?

Passman: CREATe.org is working on several levels to promote IP protection in China and around the world. First, we are currently exploring partnerships with Chinese academic institutions, think tanks and organizations such as the Ministry of Science and Technology, to promote world-class principles of IP protection. Second, we have launched a pilot of the CREATe Leading Practices for IP Protection program in Chinese and currently have a broad range of Chinese multinationals and supply chain companies taking our three-step program which is designed to help companies implement systems to protect IP and to measure and improve them over time. We are also in the process of looking for additional local partners to help implement our program more broadly.

What mistakes do you find companies make when it comes to protecting IP with supply chain partners?

Passman: Generally companies do a good job at including language in contracts in regard to the protection of IP. However, the primary challenge with supply chain partners is in ensuring that these companies have systems in place to be able to meet the requirements of the contracts. Companies typically do not know how to gain transparency into a company’s ability to appropriately use and manage IP until it is too late. The Conference Board conducted a survey of IP and Compliance attorneys working with global brands and in the case of trade secret theft, more than two-thirds surveyed felt theft of trade secrets presents extensive risk in emerging markets, yet only 36 percent rated their companies’ compliance program as very effective in managing these risks. As such, we recommend that companies take steps to gain an understanding of the maturity of practices in place to protect IP; and then help to improve those practices.

What are some of the latest innovative approaches or strategies that you find companies are using?

Passman: At CREATe.org, we’ve compiled best practices from leading companies, organizations, academic institutions and thought leaders around the world. We also looked at ways that companies are working with supply chain partners on other difficult issues, such as health and safety, labor and the environment. Using these insights, we have launched what we believe to be an innovative approach for the protection of IP: CREATe Leading Practices for IP Protection. This three-step program moves away from the typical due diligence and audit approach and instead takes a collaborative ‘measure and improve’ approach which helps supply chain partners build management systems to effectively protect the IP of clients.

What are some ways to reduce the cost of protecting IP in China?

Passman: As much as 75% of most organizations’ value and revenue source are in intangible assets, IP and proprietary competitive advantages. As such, the greatest cost can actually take place after IP theft occurs. For example, after a former Ford Motor Co. engineer copied 4,000 Ford documents onto an external hard drive and went to work for a competitor, Ford estimated that it suffered more than $50 million in losses. I would argue that the best way to reduce costs for IP protection is to take proactive measures to ensure that your supply chain partners have a clear understanding of a company’s expectations for IP protection. They should have practices in place, such as training, security measures, a team addressing IP protection and protocols to address issues that do arise.

What would be the biggest tip you’d suggest to a company thinking about expanding their business into China?

Passman: Do a great job ensuring that your own operations and employees are implementing the leading practices in managing and protecting IP, and conduct the appropriate due diligence and ongoing engagement with your supply chain and other business partners. By collaborating with your business partners on an ongoing basis to help them develop best practices to protect your IP, you are not only sending a clear message about the importance of this aspect of your business relationship, you are providing the tools and guidance to enable your business partners to be world class. This is a win-win.