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Protecting Mitel’s technology in China

For some, intellectual property protection goes beyond patents. Mitel's Australia-based Asia Pacific manager, Gwilym Funnell said he is not worried that Mitel's technology will be copied in Hong Kong since they already have their bases covered.

The telecom operator has worldwide patents that cover it in the jurisdictions where it wants to put its unified communications technology. Also, Mitel emphasizes to its resellers that it's doing business with them because the Ottawa company trusts their reputation.

"They wouldn't want to lose the right to represent Mitel, as it would also hurt their chances of representing other companies," said Funnell.

In all, he said protecting Mitel from patent fraud in Hong Kong and its associated manufacturing base, China, is no more difficult than doing it in any jurisdiction - a contradiction to a common perception local lawyers hear from companies interested in the region.

Once considered the new Wild West of patent pirating, China is now cracking down. Intellectual property challenges in China rose to around 24,000 in 2008, compared with approximately 7,000 in 2002, according to Rouse, a company specializing in intellectual property investigations.

Patent filings in China, which stood at 828,328 applications, are expected to surpass that of the United States by 2012.

But to save the estimated US$30,000 cost of filing in each jurisdiction, some startups elect to avoid patent protection altogether, which can be a costly venture in the long run as there is no legal option should the technology be left unprotected, said Mike McLean, vice-president of intellectual property rights at UBM TechInsights.

He adds some firms see no point to filing as "nothing would happen" if their technology was copied. "Others would think ... even if they get a positive outcome from litigation, the financial compensation would be so low it wouldn't be worth it," he said.

The average remuneration in China was US$16,600 across 471 published settlements between 2006 and 2009, according to Rouse. "In China, litigation has been going up substantially because it's a huge market," said Katie Wang, a lawyer and patent agent with Shapiro Cohen, a trademark and patent law firm.

"A lot of times, to be honest, the litigations in China are between foreign multinationals. Both of them want to have that market share, because of the size of the population - you can imagine the kind of financial payback you receive."

For startups, litigation is a costly route to protecting technology even once it is patented. The Ottawa chapter of the Hong Kong Canada Business Association suggests firms take additional steps beyond filing patents to reduce the chance of copying occurring.

Common measures include maintaining on-location personnel, only marketing prior-generation products, and keeping as much of the proprietary knowledge as possible in offshore services, said Flavia Leung, president of the local chapter.

"DuPont is one example. They are in the Hong Kong Science and Technology Park and they do research into thin-film solar cells. But they have their manufacturing in China," she said.

These measures are all strategies that Borden Ladner Gervais advocates startups take at the beginning of developing a product, rather than as afterthoughts.

This is especially important when it comes to publicizing technology, said Shin Hung, a patent agent and partner in the Ottawa office.

"As soon as you publicly disclose your invention in whatever means - it could be media, you could be talking to people, in some venue not intended to be private - as soon as you do that, you start a one-year clock to file a formal patent application to protect that idea," he said. "If you don't, when that one-year period is gone, you've lost the right to file that anywhere in the world."