China Joins Hague System – Here’s Why You Should Care

March 10th, 2022 / John M. White

An IP announcement that may have slipped past you in the last few weeks is that China will now become a part of the Hague System for the International Registration of Industrial Designs. The Act will officially enter into force on May 5, 2022. Does this make a difference to you and your clients? Yes, in a very, very big way.

Time for a Story

Back in the mid-1990s, I had a key client operating out of Hong Kong, prior to the transfer of sovereignty from the UK back to China. He had, by then, become the world’s largest “maker” and seller of vacuum cleaners. Yet, he had only a small staff, mostly engaged in shipping and monetary transactions, i.e., paying for and getting paid for goods he bought and sold to vendors across the globe located in developing world economies. He did not know much about vacuums per se, but he knew that a growing middle class around the world wanted them, and he met that need. He toured Chinese factories that made all of the developed world “name” brands we know, knew, and loved, and had them private-labelled under his brands and sold them in all the countries where the “name brands” had no patent rights. Trademark rights did not matter, as he re-printed the box and label. He could sell the literally identical name brand product for less because he had no costs to amortize for engineering and tooling and development, etc. All of it had already been paid for by those for whom the factories were contracted to do the work. The single and only factor for sales was “price point” and this could either be met or not for a given product. If a more costly “branded” product was too expensive, he simply chose a less costly branded product and sold that. His brands were often “store” labels anyway. So, he became the world’s largest vacuum vendor (by numbers) and, by the beginning of the 2000s was buying the “actual” brands that he had been selling all along, but now with the trademark, and now for sale in developed countries. They were slowly being bankrupted by their IP incompetence. I am sure everyone got “bonuses” for good performance right up till the end.

The foregoing story can be told again and again across myriad products and markets. Recently, I bought an auto part at the local outlet of a national car parts chain, opened the box on the “no-name” ignition coil when I got home, and the original branding of the “name brand” was scratched off. In this particular case, the coil-on-plug design (quite common these days) requires a specific shape and sized coil to fit into and connect with the OEM ignition wires and bolting brackets on the valve covers for the coils. Thus, I got a good German brand for about 1/3 of the cost as the identical part available from the dealer or other sellers of OEM parts due to a lack of design protection. Sad.

The Hague Advantage

So, what about China and Hague? Well, patent protection is expensive. And, often, the “broad protection” of a utility product runs out as products get updated, and novelty and inventive step on the “update” are insufficient to warrant a new filing. Okay, fine. But, what about an industrial design style protection. Cheap and ubiquitous through Hague, it covers what is being made using the “tooling” you paid for, and usually requires only small and less frequent annuities. They can also be used to stop exports of infringing goods.

Over the years, I have represented many first tier auto part suppliers. One aspect of focus is on “crash replacement” parts, such as headlights, taillights, bumpers, mirrors, valences, etc. All the focus is on the appearance of what is seen outwardly. Well, truth be told, if the unseen portion of that part doesn’t fit where the hole or mounts are, the part won’t fit either. Gone are the days of cars with big spaces behind panels; it is all a much tighter package now. If the back and sides and bottom are not the same, even if it looks the same outwardly, it won’t fit. Hence, inexpensive widespread design protection for all six sides is needed. The Hague system makes that possible, and it is now available in the “world’s factory.”

Start Now

Is this a big event? You tell me. Start filing Hague cases now, across the board, for anything you paid for tooling on. Anything. Hague adds new countries as members each year, not as momentous as China, but inexpensive enough to obtain registrations across the globe. Police your IP; it is a global economy, and you should maintain your access and exclusivity and preserve markets. Heck, license it if you have no interest yourself. But don’t just give it away. If you change nothing, you’ll become like all those old brands we used to know and love and buy and still remember. Gone. You choose.

Need Help?

Every multinational entity, and anyone providing IP advice to them, needs to understand the Hague process and where the advantages are for an enterprise. If your staff needs training on Hague, we can help: Our Hague Boot Camp course is tailored to create basic knowledge and fundamental ability for a Hague paralegal or staff member. The course covers outbound (i.e. Hague filing requirements for heading outside of the United States) and inbound filing requirements. You can get up to speed & stay current with Hague!

Photo by Magda Ehlers from Pexels

Article originally posted on IPWatchdog here.