In today's era of increasingly fierce business competition, intellectual property (IP) has become an essential component of a company's core competitiveness. However, many companies often fall into common pitfalls regarding IP protection and utilization. These pitfalls can not only lead to the infringement of their own rights but also expose them to the risk of infringement lawsuits. This article aims to help companies identify potential risks and avoid being caught in a passive situation of infringing or being infringed upon by listing common IP misconceptions and analyzing real-life cases.

Misconception One: No Need for Protection if the Idea Isn't Copied Exactly

Many companies believe that as long as their idea is not completely copied, there is no need to worry about infringement. This mindset is extremely dangerous. The scope of IP protection is not limited to exact replication but also includes substantial similarities in ideas, designs, technical solutions, and so on.

(1) Case Analysis: Playing the "Edge" with Ideas

A well-known clothing brand, Brand A, launched a garment with a unique design inspired by ancient mythology. Brand A did not register the design as a trademark or copyright, assuming that its uniqueness would make it difficult to copy. However, shortly afterward, another clothing brand, Brand B, introduced a similar design. Although there were minor differences in details, the overall style and creative source were highly similar. When Brand A attempted to seek legal protection, it failed to obtain strong support due to the lack of clear IP protection measures.

(2) Legal Interpretation: The Importance of Idea Protection

According to the "Copyright Law of the People's Republic of China" and the "Trademark Law," ideas can be protected through copyright, trademarks, patents, and other means. For unique ideas, companies should promptly register copyrights or trademarks to establish their legal status. Even if the idea is not copied exactly, substantial similarity can still constitute infringement.

(3) Recommendation: Plan Ahead to Protect Ideas

Companies should value the protection of their ideas and promptly register copyrights or trademarks for those with commercial value. Additionally, they can protect the core content of their ideas through trade secrets and other means to prevent easy imitation by others.

Misconception Two: Ambiguity in the Scope of Authorization

When using others' intellectual property, companies often focus only on whether they have obtained authorization, neglecting the specific scope of the authorization. Ambiguity in the scope of authorization can lead to companies exceeding the authorized limits, thereby constituting infringement.

(1) Case Analysis: Overstepping the Bounds of Authorization

Company A obtained a software license from Software Company B for use in its internal office system. However, during use, Company A installed the software on multiple unauthorized devices and used some of its functions for external commercial promotion. Upon discovering this, Software Company B believed that Company A had exceeded the authorized scope and filed a lawsuit. Ultimately, Company A was ordered to compensate Software Company B for economic losses and reasonable expenses amounting to hundreds of thousands of dollars.

(2) Legal Interpretation: Clarity in the Scope of Authorization

According to the "Copyright Law of the People's Republic of China" and the "Regulations on the Protection of Computer Software," software licensing contracts should clearly define the scope of authorization, including the number of authorized devices, the purpose of use, and the duration of use. Exceeding the authorized scope in using software can constitute infringement and entails corresponding legal responsibilities.

(3) Recommendation: Strictly Adhere to the Scope of Authorization

When obtaining IP authorization, companies should carefully read the authorization contract, clearly understand the scope of authorization, and strictly follow the contract terms. If there is a need to exceed the authorized scope, they should promptly negotiate with the rights holder and re-sign the authorization contract.

Misconception Three: Ignoring the Risk of Infringement by Internal Employees

Many companies believe that as long as they have strict IP protection measures in place externally, they can rest easy. However, infringement by internal employees should not be overlooked. Employees may inadvertently, mistakenly, or intentionally cause the leakage or infringement of the company's IP.

(1) Case Analysis: "Innocent Mistakes" by Internal Employees

A technology company, Company A, possessed a core patent technology. During an academic exchange event, a member of its R&D team, without company permission, disclosed some details of the technology to a competitor, Company B. Based on this information, Company B improved its own product and quickly launched it to the market. When Company A discovered this and filed a lawsuit, it faced significant difficulties in its legal battle due to insufficient evidence and the difficulty in determining whether the internal employee's actions constituted intentional infringement.

(2) Legal Interpretation: Legal Liability for Employee Infringement

According to the "Tort Liability Law of the People's Republic of China" and the "Patent Law," if an employee causes the leakage or infringement of the company's IP through negligence or intentional actions while performing their duties, the company is liable for the corresponding legal responsibilities. Companies can establish internal management systems to clarify employees' confidentiality obligations and liability for infringement, thereby reducing internal infringement risks.

(3) Recommendation: Strengthen Internal Management to Prevent Infringement Risks

Companies should establish and improve IP management systems, clarifying employees' confidentiality obligations and liability for infringement. Regular IP training for employees should be conducted to enhance their awareness of protection. Additionally, companies can use confidentiality agreements and non-compete agreements to restrain employees' actions and prevent the leakage of the company's IP.

Misconception Four: Believing that Infringement Compensation is Low and the Cost of Infringement is Minimal

Many companies believe that even if they are found to have infringed, the compensation amount will not be high. Therefore, they do not take infringement seriously. However, in recent years, with the continuous strengthening of IP protection, compensation amounts for infringement have also been gradually increasing. Once a company is found to have infringed, it may face substantial compensation, which could even affect its normal operations.

(1) Case Analysis: The Heavy Price of Infringement Compensation

An internet company, Company A, developed a short-video application and used a large number of music works from a music company, Company B, without authorization. Upon discovering this, Company B sued Company A. After the court's review, Company A was found to have infringed and was ordered to compensate Company B for economic losses and reasonable expenses amounting to tens of millions of dollars. This compensation amount had a significant impact on Company A's operations, plunging it into financial difficulties.

(2) Legal Interpretation: Calculation of Infringement Compensation

According to the "Copyright Law of the People's Republic of China" and the "Patent Law," infringement compensation can be determined based on the actual losses of the rights holder, the illegal gains of the infringer, or a reasonable licensing fee. For serious infringement cases, punitive damages may also be applied. In recent years, courts have increasingly supported higher compensation amounts in IP infringement cases to reflect the strength of IP protection.

(3) Recommendation: Take Infringement Risks Seriously to Avoid Major Losses

Companies should value IP protection to avoid substantial compensation due to infringement. When using others' IP, they should ensure they have obtained legal authorization and strictly adhere to the authorized scope. Additionally, companies should strengthen internal management to prevent infringement risks caused by employees' negligence or intentional actions.

Misconception Five: Ignoring International Protection of Intellectual Property

In the context of globalization, companies' business scopes often extend beyond domestic markets to international ones. However, many companies neglect the international protection of their IP when expanding overseas, exposing themselves to infringement risks abroad.

(1) Case Analysis: The "Infringement Trap" in International Markets

A domestic company, Company A, owned a patent technology in its home country but did not apply for patent protection overseas. When Company A discovered that its product was being imitated by a foreign company, Company B, in the overseas market, it realized that it had no patent protection abroad and could not seek legal protection. Company B took advantage of this loophole and sold the infringing products extensively in the overseas market, causing significant economic losses to Company A.

(2) Legal Interpretation: Territoriality of Intellectual Property

According to the international IP legal system, IP has territoriality, meaning that the protection of an IP right in one country or region does not automatically extend to other countries or regions. When companies expand into international markets, they should apply for IP protection in the target markets in advance to ensure their rights.

(3) Recommendation: Plan Ahead to Expand into International Markets

When expanding into international markets, companies should plan their IP strategies in advance, including trademark registration and patent applications. Additionally, companies should keep track of international IP legal developments and adjust their IP protection strategies in a timely manner to avoid infringement risks abroad.

Misconception Six: Only Large Companies Face Infringement Litigation

Many small and medium-sized enterprises (SMEs) believe that only large companies face infringement litigation and that their small size makes them less likely to attract the attention of rights holders. However, this mindset is extremely mistaken. With the increasing awareness of IP protection, more and more rights holders are paying attention to infringement by SMEs, which can also face litigation risks.

(1) Case Analysis: The "Infringement Crisis" for SMEs

A small e-commerce company, Company A, used the trademark of a well-known brand, Brand B, without permission to sell its products. Upon discovering this, Brand B filed a lawsuit against

 

Misconception Eight: Viewing Intellectual Property Protection as "Optional"

Many companies believe that intellectual property (IP) protection is optional and that as long as their products are competitive, they can succeed in the market. However, this mindset is extremely dangerous. IP protection is not only a crucial part of a company's core competitiveness but also a safeguard for sustainable development.

(1) Case Analysis: The Necessity of Protection

Company A developed a new product without protecting it through IP measures. After launching the product, it found that numerous similar products had emerged in the market. Since Company A had not protected its product through IP, it could not seek legal protection and thus saw its market share severely squeezed. Eventually, due to the lack of competitiveness of its product, Company A faced operational difficulties.

(2) Legal Interpretation: The Importance of IP Protection

According to the "Intellectual Property Law of the People's Republic of China," IP protection is an essential part of a company's core competitiveness. Through IP protection, companies can prevent others from imitation and copying, ensuring the uniqueness and competitiveness of their products. Additionally, IP protection can generate economic benefits for companies, such as patent licensing and trademark authorization.

(3) Recommendation: Value IP Protection

Companies should value IP protection and establish a comprehensive IP management system. When developing new products or technologies, they should promptly protect their IP through measures such as trademark registration, patent application, and copyright registration. Additionally, companies should strengthen internal management to prevent infringement risks caused by employees' negligence or intentional actions.

Misconception Nine: Believing Infringement is Hard to Detect

Many companies believe that infringement is hard to detect and thus take a chance when using others' IP. However, with the continuous advancement of technology and the increasing awareness of IP protection, infringement is becoming easier to detect.

(1) Case Analysis: Infringement Nowhere to Hide

Company A used a well-known artist B's work for commercial promotion without authorization. The artist detected the infringement through online monitoring tools and immediately took legal action. Eventually, Company A was ordered to compensate Artist B for economic losses and reasonable expenses amounting to hundreds of thousands of dollars. This compensation had a significant impact on Company A's operations and severely damaged its brand image.

(2) Legal Interpretation: Detection and Monitoring of Infringement

With the rapid development of the internet and big data technologies, IP monitoring methods have become increasingly advanced. Rights holders can use various means such as web crawler technology, image recognition technology, and blockchain technology to monitor infringement in real time. Additionally, many IP protection agencies offer professional infringement monitoring services to help rights holders detect infringement clues promptly. Once infringement is detected, companies face legal sanctions and reputational damage.

(3) Recommendation: Eliminate Luck-Based Mindset and Respect IP

Companies should abandon their luck-based mindset and respect others' IP. When using others' IP, they must ensure they have obtained legal authorization and strictly adhere to the scope of authorization. Additionally, companies should proactively establish IP monitoring mechanisms to regularly self-inspect and promptly detect and correct any potential infringement. Companies can also consider purchasing IP insurance to mitigate losses from infringement risks.

Misconception Ten: Viewing IP Protection as Solely the Legal Department's Responsibility

Many companies believe that IP protection is the responsibility of the legal department and has nothing to do with other departments. This mindset leads to a lack of collaboration between departments in actual operations, making it difficult to effectively implement IP protection measures.

(1) Case Analysis: The Importance of Departmental Collaboration

A tech company, Company A, used part of an open-source software's code in its product development without consulting the legal department. After the product was launched, the open-source software's copyright holder, B, discovered the infringement and filed a lawsuit. Since the R&D department had not verified the scope and authorization of the open-source software, Company A was at a disadvantage in the lawsuit and was eventually ordered to pay substantial economic compensation.

(2) Legal Interpretation: The Involvement of All Employees in IP Protection

IP protection is not only the responsibility of the legal department but also a shared responsibility of all employees in a company. From R&D and production to sales and marketing, every link may involve IP issues. Companies need to establish a comprehensive IP protection system involving all employees to ensure strict compliance with IP laws and regulations in daily operations.

(3) Recommendation: Strengthen Departmental Collaboration and Build an IP Protection System

Companies should establish a cross-departmental IP protection mechanism, clarifying the responsibilities and processes of each department in IP protection. The R&D department should work with the legal department to assess IP risks when developing new products, ensuring that the technologies and design solutions used are legal and compliant. The marketing department should avoid using unauthorized trademarks, images, and text in brand promotion and advertising. The sales department should clarify IP ownership and scope of use in contracts with customers to prevent infringement disputes due to ambiguous contract terms.

Misconception Eleven: Viewing IP Protection as "High-Cost"

Many companies believe that IP protection requires a significant investment of time and money, making it too costly to be worthwhile. However, this mindset overlooks the long-term benefits that IP protection brings. IP protection not only prevents infringement but also generates considerable economic benefits for companies through licensing and transfer.

(1) Case Analysis: Balancing Costs and Benefits of Protection

Company A invested a substantial amount of money in patent application and maintenance when developing a new technology. Although this increased costs in the short term, the patent protection successfully prevented competitors from imitation and copying, ensuring the product's market competitiveness. Additionally, Company A earned additional revenue through patent licensing. In contrast, another company, B, did not protect its technology through IP, resulting in imitation by competitors, a significant drop in market share, and eventual operational difficulties.

(2) Legal Interpretation: The Long-Term Value of IP Protection

While IP protection requires certain costs, the long-term benefits far outweigh the costs. Through IP protection, companies can solidify their core competitiveness and prevent imitation and copying by competitors. Additionally, IP can generate additional economic benefits for companies through licensing and transfer, enhancing their market value.

(3) Recommendation: Plan Reasonably and Balance Costs and Benefits

When engaging in IP protection, companies should plan reasonably and balance costs and benefits. For technologies and products that are core to their competitiveness, companies should prioritize investing resources in IP protection to ensure their market position. At the same time, companies can reduce protection costs by optimizing IP management processes and choosing appropriate protection methods. For example, companies can choose to apply for patent protection in key markets rather than a global layout; for some non-core technologies, they can protect them through trade secrets to avoid unnecessary patent application costs.

Conclusion