China: Practical benefits on License Agreement Recordal

If you are a foreign brand (or intellectual property owner) wanting to establish a license with a Chinese domiciled partner, it makes a lot of sense to file an application to record the license agreement rights.

The application needs to be filed with the State Intelectual Property Office (SIPO) within 3 months of the execution of the license agreement. The licensee shall submit another copy of the contract to the Administrative Authority for Industry and Commerce (AIC) at the county level of his location for reference.

Do you have to do this? No, but there are benefits:

1.                  The Chinese licensee can legitimately represent the brand on the ground with manufacturers and local and federal authorities. For example, if the license right is also registered with the Chinese Customs Office, it can have standing to deal with the authorities and potentially enforce against unlicensed or counterfeit goods.

2.                  A local licensee can communicate quickly and effectively with the relevant authorities.

3.                  If the license relates to a patent technology, then there may be tax reduction and support benefits locally for the Chinese licensee.

The benefit of recording the license rights with Chinese Customs should not be understated. For the Customs Office to be proactive in taking protective measures against infringing or unauthorised goods, it needs to have the rights registered with it. It is a simple process internally and lets the Customs Office know what to look out for with respect to the look of the goods and marks. The proactive benefit of registration can also have a deterrent effect on infringers where there is a perceived risk from administrative penalties due to an active Customs Office control.

September 2023

Note: The information in this article is provided for general informational purposes only. No information contained in this post should be construed as legal advice from Pachmann AG or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this article should act or refrain from acting on the basis of any information included in, or accessible through, this article without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s jurisdiction.