China Ip Cs Fosters 2007[1]
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Transcript of China Ip Cs Fosters 2007[1]
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INTELLECTUAL INTELLECTUAL PROPERTY CHALLENGES PROPERTY CHALLENGES OF DOING BUSINESS IN OF DOING BUSINESS IN
CHINACHINA
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FosterFoster’’s Groups Group LimitedLimited
•• BeerBeer
•• WineWine
•• SpiritsSpirits
•• NonNon--alcoholalcohol
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40% TangibleAssets
Intangible assets approx 60% of Intangible assets approx 60% of Enterprise Value @ 30/6/2006Enterprise Value @ 30/6/2006
60%IntangibleAssets
Enterprise Value = Market Cap + Total LiabilityEnterprise Value = Market Cap + Total Liability
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IP Portfolio DimensionsIP Portfolio Dimensions
• In excess of 80 major brands
• In excess of 6,000 trade marks
• Coverage in more than 170 countries
• 50 patents and a handful of designs
• 1,000+ domain names
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IPR Business ModelIPR Business Model
Control & Control & defence of IPRdefence of IPR
$$$$$$
Securing IP assetsSecuring IP assets
StrategicStrategicIP DeploymentIP Deployment
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The Role of IP at FosterThe Role of IP at Foster’’ss
• Essential infrastructure for brand equity & its defence
• Primary foundation for growth & value creation
• Strategic mechanism to capture and exploitinnovation and creativity
• Major source of differentiation and competitive advantage
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China as a Prospective MarketChina as a Prospective Market
• An economic giant that offers significant opportunities for commercial growth and investment by Australian companies
• Presents major challenges in terms of:
- culture, language and knowledge of operating environment
- IP protection and enforcement strategies
• Requires long term investment strategy
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The Emergence of ChinaThe Emergence of China’’s Wine s Wine IndustryIndustry
• A fledging wine producer
- some 400-500 wineries- dominated by a handful of players- viticulture & wine making capability still developing
• Faces many challenges
- further development of a strong wine culture- streamlining bureaucratic processes- improving distribution networks
• A market of growing potential
- estimated 50-250 million potential wine consumers- principally domestic consumption of “value” wines
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Market Potential for AustraliaMarket Potential for Australia
• Growing income levels and appreciation of wine
• Reduction in import tariffs has lead to greater potential for export growth
• Australia has some 9% market share for imports- volume: 25 million litres- value: $46 million- sales are estimated to have doubled each year
this decade
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FosterFoster’’s involvement in Chinas involvement in China
• Brewing interests for more than a decade- owned 3 breweries (now sold)- contract brewing operation in Shanghai- continues to be an export market
• Fledging wine market but with enormous growth potential.
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ChinaChina’’s IPR Systems IPR System
• Workable but unnecessarily complex and potentially costly
• Major issues:
- lack of effective appeal re administrative decisions- adequate levels of protection can be problematic - gap between the law and its application in practice
• Positives:
- China’s accession to international treaties- action plans to address shortcomings- greater receptiveness to further harmonisation- prospect of improved processes and system access
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Improved IPR Enforcement: A Improved IPR Enforcement: A Pressing ImperativePressing Imperative
• Risks of mis-appropriation are high
• Efficacy of enforcement mechanisms can be questionable
• While the law needs improvement, the greater problem lies in its application.
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Major IPR IssuesMajor IPR Issues
• Effective enforcement of IP rights- use of administrative agencies- civil action via courts- criminal enforcement
• Combating counterfeiting and piracy
• Managing dispute resolution
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Counterfeit ProductCounterfeit Product
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Borrowing Brand ElementsBorrowing Brand Elements
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Borrowing Look and FeelBorrowing Look and Feel
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Allusory DesignAllusory Design
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Possible Approaches to Maximise IP Possible Approaches to Maximise IP SecuritySecurity
• Be prepared to commit considerable resources to prudential searching and clearances
• Maximise prosecution lead times to reduce uncertainty on market entry
• Emphasis on strong as opposed to problematic IP – be prepared to defer use of specific IP
• Understand and anticipate “differences” in nature and operation of Chinese laws
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Some Practical Issues for Some Practical Issues for ConsiderationConsideration
• Do we source production locally?
• When partnering, what IP is committed to the venture and on what terms?
• Assessing the commitment to and costs of rigorous IP enforcement
• Reconciling regional market approaches (Asia-Pacific) with the operating environment in China
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DisputesDisputes
• Success is directly related to early detection and action
• Critical to understand the practices and cultural disposition to conflict resolution
• The approach to resolution can be at least as important as the objective merits of your position
• Experience counts - post-facto analysis is a powerful learning tool
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The Role of Geographical Indications The Role of Geographical Indications (GIs)(GIs)
•• GIGI – an indicator of origin where a given quality, reputation or other characteristic is essentially attributed to that origin
• Principles- all products encompassed by a standard level
of protection- wine & spirits received enhanced protection
• Notable for tensions with trade mark rights
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Appellation systems Appellation systems –– France and ItalyFrance and Italy
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China & GIsChina & GIs
• Reasonable awareness of GI issues
• Two tiered system- protection under the trade mark system as a
“species” of trade mark (certification/collective marks)- administrative system (AQSIQ) for GIs separately
recognised by China
• Experience indicates the current system can be confusing and consistency is an issue
• Subject to ongoing refinement – desirable that it be included within in scope of Australia-China FTA negotiations
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SHANGHAISHANGHAI BeerBeer
• Disclaimer of “Shanghai unacceptable”
• Condition on local production in Shanghai insufficient
• No foreign TM ownership
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Intellectual Property and Proposed Free Intellectual Property and Proposed Free Trade Agreement (FTA)Trade Agreement (FTA)
• FTA should include strong IP enforcement provisions to aid administrative & criminal enforcement.
• FTAs should also:
- include provisions dealing with GI-Trade Mark resolution issues
- deal with GIs in a manner consistent withestablished internationally principles (TRIPS)
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Conclusion Conclusion –– Some ObservationsSome Observations
• The Chinese market will be increasingly an area of great promise and potential benefits
• Further improving IP infrastructure, service delivery processes and access will be critical for development
• The great leap forward will be improved IPR enforcement
• Strong onus will still remain with companies to develop innovative IP strategies to reflect the operating environment
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THE ENDTHE END
Panel