Intellectual property protection for medical device companies in China

China offers significant opportunities to Canadian medical device companies. However, companies must consider how to protect their intellectual property (IP) when doing business in China. The following information will help Canadian firms develop an effective strategy by understanding different forms of IP protection in the medical device sector. 

Businesses should always seek professional legal advice on IP strategy development and contractual issues in the People’s Republic of China. The Canadian Trade Commissioner Service can provide a list of IP and law firms.

IP protection strategies for medical device companies

Medical devices are a cross-sectoral industry that relies heavily on IP. The main types of IP rights used by medical device companies are:

• patents
• trade secrets
• trademarks

In recent years, IP disputes about medical devices have been increasing in China. Among Chinese companies, most of the cases concern product imitation. However, for international companies, which generally have more advanced technologies or products, the main disputes are due to:

• a lack of patent protection
• shortcomings in trade secret protection

For these companies, an effective IP protection strategy, especially on patents, is critical to gaining a competitive advantage in the Chinese market. 

IP strategies can be divided into three categories, depending on the company’s technology level and business development model:

Defensive

A defensive strategy focuses on the protection of one's own technology, in order to build a ‘patent wall’ to prevent competitors from offering comparable products or technologies.

Offensive

An offensive strategy focuses on the products or technologies marketed by other firms in order to reduce their competitiveness.

Preventive

A preventive strategy first involves collecting and analyzing information about existing patents in an area to create a visual “map” to identify key differences between the firm’s technology and that of its rivals.

A company should choose its strategy based on in-depth research on currently available technologies and the patents held by of competitors. To develop the most effective approach you should get advice from an experienced patent lawyer. 

What medical device companies can do to protect intellectual property

Develop an IP protection strategy

Patent rights are the most useful tool to protect the IP of medical device companies. It is important to develop an IP protection strategy at the product development stage.

Apply for a Chinese patent

Patents are a jurisdictional right, which means they are only legally protected in the territory where they are granted. Therefore, to protect your patent in China, you need to apply for a Chinese patent through the Patent Cooperation Treaty channel in Canada, or by filing a separate application in China.

Canada and China have a Patent Prosecution Highway pilot program. This allows the China National Intellectual Property Administration to make use of work already done by Canadian Intellectual Property Office. This may greatly shorten the time for application review and decision-making in China.

For start-up companies with a limited budget, it is critical to apply for a patent on core technologies focusing on advantageous techniques. Other elements can be protected as trade secrets.

Be cautious when making information public

Be careful when publishing academic papers or making company pitches with information which shows the novelty of the technology or products. Publishing this information can eliminate the patentability of the new invention.   

Limit access to secret information

Although trade secret protection legislation in China has improved significantly in recent years, this mostly offers a remedy only after theft or infringement has taken place. Companies should protect trade secrets by:

• developing an internal information management system to limit access to secret information
• including confidentiality clauses in contracts with employees or partners to prevent them from disclosing trade secrets
• signing non-disclosure agreements with partners or potential partners whenever secret information is shared
• implementing secure procedures for transferring secret information

Use multiple types of intellectual property protection

Companies should protect products or technologies with more than one type of IP if possible. Each of the rights protects different aspects of innovation. For example:

• design patents protect the design of the medical device
• utility model patents protect the function of the device
• trade secrets protect the production techniques or recipe
• copyright protects the software embedded in the device

Protect trademarks early

Trademarks protect brand names. Since China is a “first to file” jurisdiction for trademarks, it is important to register in China as soon as possible, even before approaching the market.

Develop strong contracts

A well-drafted contract is the most important form of protection for companies seeking:

• investment in China,
• partners in joint research and development
• distribution

Contracts should clearly state the ownership of IP rights and their improvements, as well as responsibility for confidentiality. If data transfer is involved, companies also need to look at cybersecurity laws and regulations to make sure they comply with legal requirements.