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Intellectual Property Issues for the Produce Industry in China

June 05, 2017
Andrew

At the recent 2nd Fresh Produce Forum China, held in Hangzhou on May 23–25, a panel discussion was held where one of the topics was intellectual property (IP) issues in China and their relevance to the produce industry. This is a topic of increasing importance for both domestic and foreign companies seeking to ensure the security of their proprietary plant varieties, especially as more and more foreign companies have started to invest and grow their produce in China.

One of the panelists was Matthew Murphy, Managing Partner of MMLC Group. Founded in 2002, MMLC Group is a Beijing-based legal and consulting firm that specializes in IP law and international trade. After the panel discussion, Produce Report had the opportunity to interview Mr. Murphy for further insight into this important topic.

The main focus of the discussion was on plant variety rights and their importance for protecting the IP rights of growers developing new varieties for domestic and international markets. Mr. Murphy explained how the number of companies seeking this protection for their products in China has grown rapidly over recent years: “For a long time a lot of foreign companies and Chinese companies didn’t bother, they didn’t know, or they thought it wasn’t worth it. Now they are registering, and that’s leading to more licensing arrangements.”

Nowadays, Chinese and international companies are filing hundreds of plant variety rights applications each year in China. Depending on the type of produce in question, two government bodies are responsible for receiving and examining these applications in China, the Ministry of Agriculture and the State Forestry Administration.

Mr. Murphy explained that this increase is the result of two key factors. Firstly, Chinese growers are becoming more skilled at developing new and improved varieties. Secondly, there is an increasing awareness of IP issues in this sector and more confidence in China’s IP system. In particular, he explained that, from a legal standpoint, the plant variety registration system in China has now become very solid since the introduction of the legislation in 1999. Another recent piece of good news is that annuity fees to the plant variety rights offices have been scrapped and, after previous hurdles, the registration process is now very smooth and efficient.

As to the question of when to register, for both Chinese companies and international companies seeking to sell their produce in China, timing is crucial. Ideally, the application should be filed as soon as the product is developed and before it is sold in China. However, since it can take as long as five years from filing to registration, for many companies this can be too long to wait. In this case, it is important to establish contracts with reliable local growers with good security measures in place. In any case, plant variety registration must be obtained within six years to ensure protection by this route; after this time, this protection is no longer available.

Plant variety registration allows action to be taken against suspected IP infringements. The IP owners are able to lodge their complaint with the relevant authorities, who have the power to seize infringing crops and levy fines, and serious cases can lead to criminal prosecution and suing for damages.

Another possibility for protection in certain cases is trademarks. Whereas plant variety rights expire in 20 years, trademarks can be renewed every 10 years indefinitely. For example, if a grower is able to market a variety with a new and unique three-dimensional shape, it may be possible to trademark this shape. According to Mr. Murphy, “you can register the shape of a product, and that is a hot area, and it’s something that people haven’t got onto yet.”

Finally, Mr. Murphy pointed out that while plant variety registration and trademarks are two valuable tools for companies to protect their investments, they should also be supported by best practices for trade secrecy and working with reliable partners. These issues apply around the world as well as in China, and potential IP infringements need to be dealt with swiftly to enable companies to protect their assets to the highest degree possible.

Image source: MZMC

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