As the major tech companies strive to protect their intellectual property rights, small business owners in the United States share their seemingly impossible battle against counterfeiters in China, as their trademarks and patents are backed only with limited resources.
Ruth Brons, a violin teacher in New Jersey, now has to divide her free time from managing her business and defending her original ideas from imitations located in China, about a thousand miles away.
The 60-year-old entrepreneur began her business venture 10 years ago when she was able to invent an accessory to the violin, which will make it easier for players to hold the instrument. According to Brons, this product will allow learners to pick up the right way of holding the violin during their first lesson, instead of having to repeatedly correct themselves for years.
To protect her invention, she has applied for a patent for her product, which is trademarked as Bow Hold Buddies. This patent carries protection in the United States, Australia, Canada, Europe, and Mexico. But, as her business grows and gains more customers, she has realized the need to enter the market in China, where both the classical music and business industries are booming.
China is a rising economy, and most people in the middle class are seeking to educate their children with Western classical music, like playing the violin, to show that they are in high society levels.
Brons, seeking to enter the Chinese market, hired an agent to introduce Bow Hold Buddies in China. They were happy to know that there is demand for the product. But, what took them by surprise is that there are companies already selling her invention.
Playing Whack-A-Mole Against Knock-off Brands
Working alongside her agent, Jerrie Zhao, Ruth Brons has traced that her inventions were already being sold on Taobao, an online commerce platform. These imitation products are sold at a significantly smaller price. They have also found out that there is one factory in Hengshui and another in the port city of Ningbo that were manufacturing the knockoffs of Bow Hold Buddies.
But that’s not all. The worst part is that the counterfeiting company has registered its own patent for the product in China. After Brons has invested her time, knowledge, and $100,000 to establish a US patent, the company has copied the entire patent and just translated everything into Mandarin.
This theft of intellectual property is a significant act that is, in fact, rampant in China, and one of the main points of contention in the US vs. China trade war.
According to the US Customs and Border Protection’s Office of Trade, in 2018 alone, 87 percent of all counterfeit goods that were seized in the borders and ports were traced from Hong Kong and Mainland China. But this situation is not isolated in the US alone. Reports from the Organization for Economic Cooperation and Development declares that 80 percent of worldwide counterfeit products came from China.
Though the spotlight on this concern is focused on the intellectual property rights of the leading technological corporations, there is no denying that it is an equal battle, if not a worse one, that small business owners have to face.
Particularly in Ruth Brons’ case, she had to hire a legal team to battle the counterfeiters in court. She had to go twice in the courts of China so that she can have the copied patents be made null and void. This is not an easy task, and in fact, she had to spend thousands of dollars just for the processes and getting the entire roster of imitation products removed from online selling platforms.
But in spite of these actions, the problem never stops. Brons says, “You take down one, and another pops up. It’s like whack-a-mole.”
Additionally, she mentions that the annual revenue of Things 4 Strings, her music accessory business has reached a plateau of $320,00, mainly because its possible largest market, China, is infested with counterfeiters. As she continues her battle, the legal fees pile up beside her, and she has to limit her business spending on other important things like product development and advertising.
She adds, “I’m to the point where I need to write my senator. The legal avenues to get the knockoffs seems to be a coffer raider without a whole lot of results.”
Another added problem is that counterfeit versions of her invention have also reached international e-commerce platforms like eBay and Amazon.
Regarding this matter, the US government has reached out to e-commerce sites in April of this year about this matter. According to the Trump administration, they would do a regulatory crackdown on Alibaba, Amazon, eBay, and other online shopping sites if they did not do anything against the sales of counterfeits on their platforms. These major online trade brands have expressed their commitment to partnering with the federal government to resolve this concern.
The Need for Stricter Law Enforcement
According to Fred Rocafort, who was a former US Diplomat and now a lawyer working in Harris Bricken, the issue in intellectual property does not lie on legislation. The laws on the matter are intact all over the world. Additionally, China has signed many international agreements on IP.
Rocafort adds, “The problem emerges when you start looking at the enforcement, which takes place at the more local levels than at the national level. There is a corresponding loss of enthusiasm for implementation as you move down the chain.”
The other main problem is that China has turned into a powerhouse in the manufacturing industries and for your business to survive, make sure that your business has the power to work within the Chinese system. So, this is a tip for entrepreneurs and investors: register your intellectual property in China to get the chance of your protecting it in the country.
Going back to Ruth Brons, that fact can be seen as the main root of her current struggles. Back when she was starting, she decided not to file for a patent in China. Aside from being a violin teacher with not much means at the time, she had this notion that China was too far away anyway, and that she didn’t think that US intellectual property laws were implemented at all. Though Brons has expressed her sincere regret on the matter, it is a fact that filing for an international patent was too expensive for her during that time.
A warning for other inventors, though, not registering your intellectual property will lead to much higher costs and losses in the long run.
If you want to successfully battle counterfeiters in China, you have to be willing to spend time and talk with Chinese authorities. This involves hundreds of thousands of legal fees and spending a lot of time doing investigative work.
For example, Larry Griffith, president, and CEO of Bohning, Co., took the time to invest, and he did successfully enforced his intellectual property rights in China. His business involved the manufacturing of tools and equipment for archery.
He mentioned that the process of obtaining his trademark protection took him 14 months, and he has spent around $250,000. As feedback on the process, he has this to say, “Anyone who plans to go after counterfeiters in China should expect a time-consuming, bureaucratic, tedious, and expensive process. I think this is like paying taxes – it’s never going to go away. But you can really damage it. I look at counterfeiters like a bully on a playground. If you stand up to them and give them hell, they’re going to find an easier target.”