[Direct answer]SMEs should establish a three-tier system for protecting intellectual property: timely applying for patents for core technologies, registering trademarks for brand names and logos, and registering copyrights for works such as software, designs, and copywriting; managing trade secrets through confidentiality agreements, permission hierarchies, and access records management. In external cooperation and sales contracts, include provisions on intellectual property ownership and confidentiality clauses, and require employees to sign confidentiality and non-compete agreements. When detecting infringements, first secure evidence through notarization, then choose to send cease-and-desist letters, file administrative complaints, or initiate litigation to stop infringements and claim compensation. For serious infringements of trademark rights, SMEs can claim punitive damages of one to five times the actual damages according to Article 63 of the Trademark Law of the People's Republic of China, and for infringements of trade secrets, they can claim liability according to Article 9 of the Anti-Unfair Competition Law of the People's Republic of China. For more information, please refer to the following link:Intellectual property protection and corporate legal servicesAndBeijing Henglu Law Firm.

I. Problem background and typical scenarios

The intellectual property of SMEs is often an invisible asset and an explicit risk: a technical solution developed over several years of R&D may be rendered useless due to a departing employee taking away the code and drawings; a brand name used for many years may be registered as a trademark by competitors, only to be sued for infringement; and the copying of official website copy and product images may lead to legal disputes when protection is sought, only to find that copyright registration has not been done. Compared with large enterprises, SMEs have limited budgets and weak legal departments, often saving money on rights protection and spending a lot on disputes. Common misconceptions include: thinking that technical confidentiality does not require patent applications; equating a company's brand name with trademark rights; and believing that oral confidentiality agreements are effective. While a comprehensive protection system is not necessary, it must be established as early as possible.

II. Key points of contention

  • The path and timing of rights protection: Whether to choose patent disclosure for exclusive rights or maintain confidentiality for trade secrets depends on the difficulty of reverse engineering and the ability to keep secrets. Public disclosure before application or demonstration at exhibitions may lead to the loss of novelty, so timing management is the first risk to be considered.
  • The ownership chain is unclear: If the ownership of employee inventions, outsourced development results, and commissioned design works is not specified in writing in the contract, it is very likely to lead to disputes between the enterprise and individuals or cooperation partners. Only when seeking legal protection will they realize that the rights certificates are not in their own hands.
  • The cost of protecting rights and providing evidence: Infringements are covert, and evidence is easily lost, making it difficult to prove the amount of compensation; administrative complaints are faster but the relief is limited, while litigation takes a longer time but offers more comprehensive relief. The choice of legal path needs to be assessed on a case-by-case basis.

III. Professional analysis by Henglue Lawyers

When Henglu Law Firm conducts intellectual property health checks for SMEs, it typically proceeds along four main lines. First, the ownership line: In agreements with employees, outsourcing partners, and cooperation partners, the ownership of the results is explicitly specified item by item; in commissioned development projects, according to Article 19 of the Copyright Law of the People's Republic of China, if the contract does not contain clear provisions or no contract is signed, the copyright belongs to the trustee, so the commissioned development must be subject to a written agreement on ownership. Second, the rights confirmation line: Before trademark registration, a search is conducted and the trademark is arranged according to core and related categories; software and important works are registered in a timely manner; and the technical solutions are kept strictly confidential before the date of patent application. Third, the contract line: Trade secrets are protected in accordance with Article 9 of the Anti-Unfair Competition Law of the People's Republic of China, provided that corresponding confidentiality measures are taken, and a confidentiality list, hierarchical authorization, and confidentiality agreements are indispensable; the intellectual property clauses in transaction contracts can be included in the contract.Legal services for corporate commercial and contract disputes1. Collaborative review. 2. Protection of rights: Notarized purchases, webpage evidence collection to fix infringement evidence, and claims for compensation based on actual losses, infringement profits, multiples of licensing fees, or statutory compensation. 3. Employee confidentiality and non-compete agreements can be combined.Labor arbitration and legal services for work-related injury compensationHandle it.

IV. Practical suggestions and legal basis

At the legal basis level: Article 32 of the Trademark Law of the People's Republic of China (amended in 2019) prohibits infringing on others' existing prior rights and preemptively registering trademarks that others have already used and have a certain influence by improper means; Article 57 lists acts of infringing on the exclusive right to use a registered trademark; Article 63 stipulates punitive damages of one to five times the amount of the infringement in cases of serious malicious infringement. Article 2 of the Patent Law of the People's Republic of China (amended in 2020 and implemented on June 1, 2021) stipulates the types of inventions and creations, Article 14 stipulates that the right to apply for a patent for inventions or creations completed through cooperation or entrustment belongs to the unit or individual that completed or jointly completed them unless otherwise agreed, and Article 64 defines the scope of patent protection. Article 3 of the Copyright Law of the People's Republic of China (amended in 2020 and implemented on June 1, 2021) defines the scope of works, and Article 19 stipulates the ownership of commissioned works. Article 9 of the Anti-Unfair Competition Law of the People's Republic of China lists acts of infringing on trade secrets. Articles 23 and 24 of the Labor Contract Law of the People's Republic of China stipulate confidentiality and non-compete arrangements, and the duration of the non-compete period shall not exceed two years, and economic compensation shall be paid monthly. At the practical operation level: establish an intellectual property ledger; protect core achievements by prioritizing applications and supplementing with confidentiality; embed intellectual property review into the onboarding and exit processes; regularly monitor trademark announcements and infringement clues on e-commerce platforms. For foreign-related trademark layout and cross-border protection, please refer to the relevant information.Special services and legal services for other cases.

5. Henglue Law Firm's Advice

Most intellectual property disputes fail because of a lack of preparation beforehand: no registration, no filing, no agreements, and no confidentiality measures. SMEs don't need to establish a complete system all at once, but they should complete the following four actions as soon as possible: trademark registration, registration of core works, full coverage of confidentiality agreements, and inclusion of ownership clauses in cooperation contracts. If infringement is detected, don't rush to confront the other party head-on. First, secure evidence and then negotiate, which often leads to more favorable licensing or compensation solutions. Relevant protection plans can be implemented through the following steps:Beijing Henglu Law FirmEvaluate the design.

Q1: The company name has been in use for a long time, but someone has registered it as a trademark. What should I do?

There are two approaches to dealing with prior use and prohibiting preemptive registration. According to Article 32 of the Trademark Law of the People's Republic of China, an application for trademark registration shall not infringe upon the existing prior rights of others, nor shall it preemptively register a trademark that others have already used and gained certain influence by improper means. If the other party is still in the initial review announcement period, they can raise objections within three months from the date of the announcement; if it has already been registered, they can request its invalidation. The key evidence is the prior use records of the enterprise name and logo, such as contracts, invoices, promotional materials, and media reports, which should be consciously archived and preserved on a regular basis. At the same time, it is necessary to register your core logos as trademarks as soon as possible to prevent being repeatedly put on the defensive.

Q2: If an employee leaves the company and takes away customer information and technical documents, how should this be handled?

First, check whether the confidentiality measures are in place: if the confidentiality agreement, access rights classification, and access logs are complete, you can claim infringement of trade secrets under Article 9 of the Anti-Unfair Competition Law of the People's Republic of China and demand cessation of use and compensation; if you have signed a non-compete clause with the employee and paid economic compensation in accordance with the law, you can claim breach of contract liability under the Labor Contract Law of the People's Republic of China, with the maximum non-compete period being two years. Evidence can include exit handover records, device and system access logs, and employment situations at the new employer. In serious cases where the losses meet the standards for criminal prosecution, you can also report the case to the public security organ to pursue criminal responsibility for infringement of trade secrets. Prevention is far better than remedial action. A confidentiality system should be established at the recruitment stage.

Q3: If the company's software or design drafts are plagiarized, how can we protect our rights?

The first step is to fix the ownership and evidence of infringement: the software copyright registration certificate and the development process documents can be used as the basis for ownership. The infringing software or pages should be notarized and preserved, and the code or interface should be compared. The second step is to calculate the claim path: send a lawyer's letter to the infringer to negotiate the removal of the infringing content and compensation, which is more efficient. If the other party refuses to deal with it, complain to the copyright administrative department or sue the court, claiming to stop the infringement and compensation. The compensation is calculated according to the actual losses and the infringement profits. If it is difficult to determine, the compensation shall be determined according to law. It is recommended to register the core software and works in time on a daily basis, so as to form an evidence base for protecting rights without panic when necessary.

Q4: Approximately how much does it cost and how long does it take to protect intellectual property rights?

The cost is related to the approach: legal letters and negotiations have lower costs and a relatively short cycle; administrative complaints are investigated by law enforcement agencies, with a faster processing pace; the cycle of civil litigation depends on the complexity of the case and the trial procedures, and additional costs such as evidence preservation and appraisal are also required. In terms of compensation, for serious infringements of trademark exclusive rights, punitive damages of one to five times can be claimed according to Article 63 of the Trademark Law of the People's Republic of China. It is recommended that lawyers first evaluate the evidence and the other party's repayment ability, and then choose a path that matches the cost-benefit ratio to avoid investing disproportionate litigation costs on minor infringements.

Q5: When collaborating with external companies on development, how should we determine the ownership of the resulting products?

The written agreement shall take precedence. In the case of commissioned development, according to Article 19 of the Copyright Law of the People's Republic of China, if the contract does not contain clear provisions or if no contract has been concluded, the copyright shall belong to the trustee. If no agreement is made, it is equivalent to giving the results to the other party. For inventions completed through cooperation, according to Article 14 of the Patent Law of the People's Republic of China, unless otherwise agreed, the right to apply for a patent shall belong to the unit or individual that completed or jointly completed the invention. Therefore, the cooperation contract must specify: the ownership of the intellectual property rights of the results, the scope of use by both parties, the ownership of the results of subsequent improvements, and the sharing of the costs of applying for and maintaining patents. Before signing the contract, all existing intellectual property rights of the cooperation parties shall be disclosed and listed to avoid mutual claims of rights in the future.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Intellectual property protection legal services·Beijing Henglue Law Firm