Tuesday, October 07, 2008

Messrs. Reid and MacKinnon's Checklist on Protection of IPR in China

Messrs. David McHardy Reid (Thomas F. Gleed chair of business administration at Seattle University's Albers School of Business and Economics) and Simon J. MacKinnon (president, Greater China, for Corning Ltd. in Shanghai), wrote a checklist about protecting intellectual property in China:
  • Educate your employees;
  • Don't tell your employees everything;
  • Be quick with patent and trademark registration;
  • Research and keep up with best practices
  • Put a top executive in charge of IP security, and think globally.
IP Dragon agrees with all of these points, which are a good starting point to protect and enforce IPR in China. Under the second point the authors write: "To tighten security, the most basic step is to insist on nondisclosure and noncompete agreements with all employees." However, to insist on noncompete agreements with all employees is not possible anymore since the new Labour Contract Law. As I wrote the November 2007 article 'What Has Labour Contract Law in China to Do With IP?':
The most important restriction is that non-compete agreements cannot be imposed on all employees. Only senior management and other employees with access to critical trade secrets can be required to enter into a non-competition agreement. The agreement must be limited in duration to two years, must be limited in geographic scope to a reasonable area and the employer must pay compensation to the employee during the period that the non-competition restriction is in effect. Read IP Dragon's article on Labour Contract Law in China here.
Read Messrs. Reid and MacKinnon's article for MIT Sloan Management Review here.

1 comment:

Gilman Grundy said...

The inability of many American commentators to understand that it might be desirable to prevent contracts which needlessly limit employee's freedom of action is somewhat depressing. Freedom to work where you like is important, and should not be limited without good cause. The Chinese have made the judgement that preventing low-level staff from working for other companies is not sufficient reason for doing so, and we should respect this.