Legal Myth Busters in China.

Dan Harris, on the always-excellent China Law Blog, has listed out listed 6 common myths that he hears regularly from foreigners coming to work in China.I then wrote to him with a list of myths that I encounter time and time again from my clients—and he commented on each of “my” myths.The complete legal myths post is here.His response to me is below—I’ve separated the questions and responses so they are a bit easier to follow.__________________________________David Dayton,Heard them all many times and all have at least a grain of truth to them. Here goes:1. Courts are not independent. Whether you win or lose in court could be up to the people that the court is connected to. Many govt. officials are involved in "private industry." It may not matter if all your legal ducks are in a row if the other side has better guanxi. True or not?True, but the farther away one gets from the local officials (i.e., appeals), the less likely this is to be true.2. The legal system is getting better all the time but enforcement is still so poor that it may not matter. Even if you win, so what? Maybe you can stop one offense, but if there is money in it another will pop up (or may already have). True or not?True, but part of this is that Chinese courts are just learning about things like fraudulent transfers and piercing the corporate veil. I have had many discussions on these issues with Chinese lawyers (because this is an issue in which I have a lot of experience and interest) and they tell me that we lawyers need to keep working on the judges on this and things will continue improving. I believe this. I argued and lost (through my Korean lawyers) the piercing the corporate veil doctrine in Korea so many times that I actually think it was my arguments that finally led Korea to institute a piercing the corporate veil law. China already has one, but it is going to take a while before it becomes truly effective.3. IPR protection/enforcement is really the domain of politics rather than courts. Case in point: The Olympics. The fact that they can enforce IP on issues that are of ($) value to the State shows that IPR is still a political rather than legal issue, at least some of the time. Economic development of China is still a more important issue than international IPR. True or not?Mostly False. You are combining two things here. I agree that enforcement of IPR outside the courts is mostly political, but if you bring your own civil suit to enforce IPR in China, your chances are not half bad.4. Because China is process rather than precedent based system if someone else files paperwork for your trademark/patent/etc. you are basically out of luck. China is not the only country that works like this, I know, but as "the world's factory" and the largest source of black market goods it's a huge issue here. True or not?Half true, half false. This is a huge, huge issue and it is usually the very first issue I raise with every new client. It is mostly a huge issue for North Americans (which is where most of our client base comes from) because things are the exact opposite here. There is absolutely nothing wrong with China's IP laws as they are (I am told) very similar to many EU countries. They are very different from US laws and so US companies tend to get burned. The US, for instance, says the first to use a trademark gets it while China (and most other countries) say the first to file for it gets it. I do not think one system is necessarily better than the other, but in the first to file system you should as hell better know about it or you run massive risks. We get calls all the time from US companies complaining about how someone in China stole "their" trademark and we have to tell them it was not theirs to begin with. Of course, had they hired a lawyer with China experience and simply paid the minimal fee upfront to register the trademark, they would not be having any problem. So it is nothing we lawyers cannot easily remedy.What’s the take away from all of this is this? DO ALL YOUR LEGAL WORK IN CHINA NOW!!!!!The question is not “does the legal system work or not?” The question should be “have I done all the legal work I can to protect myself yet?”I’m constantly amazed that US companies are willing to just say “China is an IPR hole so I’m just not going to do anything.” OK, they don’t actually say that, but that is what their actions say. You wouldn’t do that anywhere else so why is OK in the one place where you need protection more than anywhere else?!Just do it!