September 23, 2013
Practice Group(s):
Corporate/M&A
Intellectual Property
Labor and
Employment
What Chinese Businesses Need to Know
About Establishing an R&D Center in the
United States
By Britt L. Anderson, Fred M. Greguras, Charles D. Holland, Linda L. Usoz, Yuki S. Ku
There is increasing interest from Chinese businesses in establishing an R&D center in the Silicon
Valley and other technology centers in the United States. For example, the world’s largest mobile
phone operator, China Mobile, has a research center in Milpitas, California; Lenovo, the Chinese
computer manufacturer, operates a research center in North Carolina; and Changan Automobile Co.
opened a research center in Plymouth, Michigan. The R&D center strategy is complemented by the
general trend of increasing acquisition of and investment in U.S. technology companies by Chinese
businesses, especially in the energy and software sectors, and by the desire in China to design and
produce innovative, leading edge products rather than just manufacture them for others. The Chinese
business can both improve technology and intellectual property (IP) it already owns as well as develop
completely new technology and IP at a U.S. R&D center (Center).
The U.S. has cutting edge technology, skilled engineers, creative entrepreneurs and is the home of
leading universities where innovation is fostered. The U.S. is also a major market for the computer,
software, telecommunications, biotech, renewable energy and other technology sectors. The U.S. has
a well known legal system for employment, tax and IP matters and is a member of most international
treaties and trade organizations in which China is a member. A Center in the U.S. can tap into all of
these resources and improve the likelihood of successful development of innovation and
commercialization.
Action Steps
A Chinese business setting up a Center in the United States should follow these steps:
1. As an initial step, determine the U.S. export control restrictions on the types of technology that will
be developed. The basic viability of the Center may be limited if the research area is too restricted
under the export controls.
2. Determine the best structure for the Center for tax and limitation of liability purposes. Generally,
this will result in forming a U.S. entity with limited liability, either a corporation or limited
liability company (LLC). This entity will be a wholly-owned subsidiary of the Chinese business or
a wholly-owned subsidiary of an intermediate subsidiary of the Chinese parent. An intermediate
subsidiary is sometimes used for tax planning purposes. Generally a corporation is used to
minimize the risk of the foreign parent being taxed in the U.S.
3. Obtain a Federal Employer Identification Number (FEIN) for the Center from the Internal Revenue
Service. A FEIN will be required to open a U.S. bank account. It is generally more practical to
work with a bank that has operations in both the U.S. and China in order to facilitate financial
transactions.
What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
4. Determine the initial staffing for the Center. It will generally be faster to hire talent locally than to
bring staff in from China. Apply for immigration visas for any key persons from China who will
be managing or otherwise working in the Center. Consult with legal counsel on applicable
employment laws and implement the operational and compliance process for employee payments,
federal and state tax withholding, FICA and related items before hiring employees. Arrange for
employee health insurance and other benefits which are competitive with other businesses in the
area. Offering low salaries and minimal benefits will reduce the quality of the talent you are able
to recruit. Employment matters are discussed in more detail below.
5. Obtain office and/or laboratory space for the Center. The office space needs to be zoned by local
government for research purposes particularly if a laboratory is involved. Sign a written lease for
office space only after review by legal counsel.
6. Have employees execute Employee Invention Assignment and Confidentiality Agreements that
comply with local law as part of the hiring process. Have consultants and other independent
contractors sign corresponding agreements. The purpose of these agreements is to assure that the
Center owns the IP and other results produced by the employee or consultant. Generally a written
assignment of ownership is required from consultants and other independent contractors or the
Center will not own the results of their research.
7. Develop an IP strategy and implement IP protection for the results of the R&D. The purpose of the
IP strategy is to protect and support the Chinese business. The R&D results should usually be
owned by the company at the top of the group of companies since that is where value is
concentrated for financing and exit purposes. IP Strategy is discussed in more detail below.
U.S. Export Controls as a Threshold Factor
The U.S. export control laws restrict the disclosure and transfer of sensitive technology and technical
information to other countries. These laws need to be carefully reviewed prior to establishing a Center
to determine compliance obligations. There is still sensitivity applicable to exports to China under
these laws in a number of sectors such as telecommunications and information security, biotechnology
materials and nuclear materials, facilities and equipment.
The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce regulates the export
and re-export of “dual use” items and technologies on the Commerce Control List in accordance with
the Export Administration Regulations. Depending on the circumstances, the export of controlled
items may require an export license from BIS. In addition, under the International Traffic in Arms
Regulations, the Department of State’s Directorate of Defense Trade Control restricts the exports of
military items, services and technology listed on the U.S. Munitions List.
The definition of “export” is broad. Foreign access to technology and technical information may be
deemed an export requiring U.S. government approval. Improvements or products made by a foreign
company that incorporate U.S. technology are subject to export control laws as well. Digital
information that is controlled by export laws must be strictly monitored. The ability to access
controlled digital information overseas can be a violation even if the information was not actually
accessed.
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
Forming the U.S. Entity for the Center
The first step is filing articles of incorporation but there is more to forming a legal entity for the
Center than simply filing articles. The formation needs to be completed in order to have the benefit of
being a separate entity. The Center entity needs to be separate from the parent company for tax and
liability reasons. The following documents are usually adopted at the formation stage of the entity in
order to establish a separate entity.
1. Resignation of the Incorporator. Once the articles of incorporation are filed, the incorporator’s job
is completed. He or she will then resign and appoint the initial board of directors (Board) who will
have the responsibility for the affairs of the Center. In a wholly-owned subsidiary, the initial size
of the Board may be one person who does not need to be present in the U.S. or an employee of the
corporation. A Board member who is not also an employee of the Center is not required to have a
U.S. work visa.
2. Organizational Board Consent. The Board makes decisions by taking corporate actions at a
meeting or by a written consent signed by all directors. Certain corporate actions must be
authorized by the Board such as the appointment of the president, secretary and treasurer of the
corporation, office leases and the sale of equity or borrowing for the capitalization of the entity.
The officers of the corporation are delegated the responsibility of day-to-day management of the
Center.
3. Bylaws/Operating Agreement. A corporation’s bylaws and an LLC’s operating agreement provide
the guiding rules for the Center’s decision making and internal affairs.
4. Stock Purchase Agreement. While there is usually no statutory minimum capital as in China, the
Center needs to be capitalized with equity and/or debt adequate for operations. A stock purchase
agreement or investment representation letter is used for the purchase of equity and a promissory
note in the event the Center is partially capitalized with debt.
5. Qualification to do Business. If the Center is incorporated under the laws of one state and has
offices in a second state, it must file qualification documents in the second state. For example, if
the Center is incorporated in Delaware but has an office in the Silicon Valley and Austin, it would
have to qualify to do business in California and Texas.
6. Intercompany Agreement. The basic purpose of an intercompany agreement is to assure that
ownership of the technology and IP developed at the Center is owned in the right place in the
company group to maximize value for the Chinese business. As indicated, the R&D results should
usually be owned by the company at the top of the group of companies since that is where value is
concentrated for financing and exit purposes. Other intercompany agreements such as a license
agreement for base technology and agreements for services of various types such as market
research should also be considered.
Employment Matters
Recruiting, training and employing individuals are not simple tasks in the U.S. There are numerous
federal and state laws which must be followed in recruiting and hiring, in employing, in paying and in
disciplining and terminating employees. Legal counsel needs to be involved in all aspects of the
planning and implementation of U.S. employment. Following is a summary of the most important
issues in connection with employing individuals in the U.S.:
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
1. Using Independent Contractors instead of Employees: This is risky and very scrutinized under
federal and state law. While the practice may still be common to use independent contractors to
try to avoid employment-related overhead (such as payroll taxes, workers compensation insurance
and similar expenses), the federal government and numerous state governments have implemented
audit programs for employers who engage individuals or sole proprietorships as “independent
contractors.” Under such audits, the Center would have the burden of demonstrating the individual
meets complex multi-factor tests in order to be an independent contractor and not a misclassified
employee. The tests are very difficult to meet and failure to meet all tests can result in substantial
penalties, taxes, interest, and legal expenses, as well as conversion of the contractors to employees.
2. Hiring non-U.S. Citizens without Work Status: The right to hire and employ persons who are not
U.S. citizens, do not have a green card or who do not have certain types of visas is restricted. The
Center needs to be advised by immigration counsel before making any commitments to a foreign
worker without the proper status.
3. Hiring Local People: Employment laws vary from state to state and impose requirements on the
recruitment and hiring process, calculation and payment of wages, discipline and termination and
many other aspects of employment. The Center should have a basic understanding of what it can
ask or consider in making hiring decisions before hiring its first employee. Federal and most state
laws (including California) impose restrictions on the scope of background and credit checks of
applicants for employment and employees, as well as how the information obtained may be used in
making hiring and other employment decisions. Upon hiring employees, there are many notices
and brochures and other information which must be posted in the workplace and/or provided to
each newly hired employee. In addition, many employers find it useful to have employees sign an
offer letter accompanied by a short employee handbook outlining the terms of their employment
(such as pay rate, list of any benefits provided, policies on discipline and termination and other
terms). Many benefits are optional (meaning the Center is not obligated to provide them), while
some are not. Further, different states and often different cities impose obligations to provide
certain kinds of benefits. For example, San Francisco imposes an obligation on employers to
provide a certain amount of paid sick time to all employees who work in the city.
4. Compliance with Non-discrimination Laws: Both federal and state non-discrimination laws impose
duties on employers to make all employment-related decisions without regard to certain
characteristics (such as, by way of example only, race, color, national origin, ancestry, age, gender,
sexual orientation, gender identity or expression, marital condition, veteran status, and certain
other characteristics). Training management in various aspects of these laws is needed to reduce
the risk the Center will face lawsuits.
5. Employee Compensation: Both federal and state wage and hour laws apply to all employees. The
Center may not simply decide to pay all employees on a salary basis (as opposed to an hourly
basis) and assume it has complied with its obligations. The manner in which, amounts and
frequency with which companies pay employees is subject to complex federal and state regulation.
Certain employees are entitled to “overtime” pay when they work in excess of certain hours during
a work day or work week. Further, the laws impose numerous record-keeping requirements as
well as reporting requirements concerning the compensation earned and paid to employees.
6. Employment Lawsuits and Claims: The U.S. is generally a litigious society and lawsuits and
claims over alleged violations of employment laws are very common. Employees are permitted to
sue their employers or former employers even where it appears that the business fulfilled its
obligations, complied with law, or at least tried very hard to do everything correctly. In addition,
certain claims may be made to a government agency and need not be filed in court. For example,
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
employees or former employees in California who claim they have not been paid all of their wages
may file a complaint with the California Labor Commissioner’s office. The process is generally
fast and inexpensive for the employee because the employee need not hire a lawyer.
Generally, it will take at least 2-4 months to recruit and hire employees, set up payroll, obtain all the
necessary insurance, ensure all employee postings and notices are in place, ensure all offer letters and
other agreements with employees are drafted in compliance with applicable federal, state and local
laws and other necessary tasks are completed. Below is a checklist of the basic steps that should be
completed before the Center’s first employee starts work. This is a guideline only and the Chinese
business should consult legal counsel to confirm its employment plans and to assist with the steps
below:
• Register with the state tax authorities (in California, the agency is the Employment Development
Department) after receiving its FEIN.
• Obtain all required workers compensation insurance.
• Ensure the Center posts all required federal and state employment postings.
• Engage a qualified vendor (such as ADP, Administaff, Paychex, TriNet) or accounting person with
significant payroll experience to prepare and process payroll.
• Prepare forms of offer letters, employee handbooks, confidential information and invention
assignment agreements and other agreements.
• Obtain guidance and assistance on proper interview questions, background checks, required
consent and notification forms and reference checks.
• Engage immigration counsel before making any offers or promises of employment to individuals
without work status in the U.S.
• Prepare job descriptions which will be useful in determining whether the position is exempt or
non-exempt from overtime and certain other legal requirements.
• Ensure that compensation rates, methods and related record-keeping comply with applicable wage
and hour law and that management is trained on requirements for overtime pay, meal and rest
breaks and other wage and hour issues.
• Comply with federal, state and local law requirements to provide any paid sick time, health
insurance or health benefits, any minimum wage which might be higher than the federal minimum
wage along with any local posting requirements.
Intellectual Property Strategy
The purpose of an IP strategy is to protect and support the Chinese company’s business. The strategy
should help maximize the value derived from research and development at the Center. Most of the
Center’s results may be protected under one or more types of IP law such as patent, trade secret,
copyright or trademark law. Both federal and state laws will typically apply to each type of IP
protection. IP developed at the Center will be subject to U.S. law initially, since the Center resides in
the U.S. The IP strategy includes an evaluation of R&D results, case-by-case, to determine what type
of IP protection is more appropriate, given the company’s goals. Maximizing IP value requires an
understanding of these various laws as well as the international treaties affecting IP rights.
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
U.S. Patent Law
Patents are the strongest form of protection, since patentees obtain the right to stop others from
utilizing the patented invention in exchange for disclosing certain information about the invention.
While various treaties such as the Patent Cooperation Treaty (PCT) and the Paris Convention for the
Protection of Industrial Property (Paris Convention) affect various rights for technology developed in
the U.S., technology developed at the Center will be subject to U.S. law in the first instance.
Therefore, it is important to understand certain U.S. patent law requirements in order to obtain valid IP
rights. It is also important to understand how patent laws differ between countries in order to have an
IP strategy that can maximize IP value in all important markets.
Contracts related to Patent Ownership
U.S. state law governs contracts related to assignments of inventions made by Center employees and
contractors.1 Because of differences in state law, an invention that is owned by a Center in one state
under that state’s law might be owned by the inventor if the Center resides in another state. The
assignment provisions in the Center’s employment and consulting agreements must comply with the
law of the state in which the Center is located and should assign invention rights to the Center to the
fullest extent possible under that state’s law.
Foreign Filing License
China requires the inventors or owner of technology developed in China to file a patent application in
China or obtain the State Intellectual Property Office’s review for state secrets prior to filing a patent
application outside of China. U.S. patent law similarly requires the inventors or owner of technology
developed in the U.S. to file a patent application in the U.S. or obtain a foreign filing license before
filing for patent protection outside the U.S. A U.S. patent may be invalid if the applicant files an
initial application outside the U.S. without obtaining a foreign filing license and later files for and
obtains a U.S. patent.2 This is also true for a PCT application that contains significant new
information about the invention. A foreign filing license is advisable if the PCT application is to be
submitted to a receiving office other than the U.S. Patent and Trademark Office (USPTO).
Filing PCT Application in the Correct Receiving Office
The PCT requires the patent applicant (in most cases, the company to which the invention has been
assigned) to file its international application with the receiving office designated for the applicant’s
residence or nationality.3 If the application is filed with the wrong receiving office, that office will
advise the applicant to correct the application or may forward the application to the International
Bureau in Switzerland4 to process. The application’s filing date in this instance is the date that the
applicant files corrected papers or the date that the International Bureau processes the application.
This process can delay application filing to a date later than the date that the application was submitted
to the wrong receiving office. If the application has been filed with the wrong receiving office on the
1
A number of cases in California have considered whether an invention was owned by an inventor or a company where
there was no agreement between them. California Labor Code § 2870 specifies the broadest scope of inventions that an
employer may require an employee to assign to the employer.
2
A patent is invalid under 35 U.S.C. § 185 unless the failure to obtain a foreign filing license was through “error.” 35
U.S.C. § 184 provides a way to obtain a foreign filing license if a patent application has erroneously not obtained a foreign
filing license before filing a first foreign patent application.
3
See Patent Cooperation Treaty Articles 10 and 11 and Implementing Regulations Rules 18, 19 (2011).
4
The International Bureau is part of the World Intellectual Property Organization, which is responsible for administering
PCT applications.
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
last day before priority applications are abandoned, the applicant may lose the benefit of priority to
earlier patent applications. Consequently, PCT applications need to be filed with the correct receiving
office.
1. U.S. Company Applicant. The designated receiving office for a U.S. applicant is the USPTO or the
International Bureau. If the applicant will be the Center, a PCT application may be filed with the
PCT branch of the USPTO. The USPTO will process the application and also review whether to
grant a foreign filing license.
2. Chinese Company Applicant.
a) U.S. Inventors Not Named as Applicants
If the sole applicant named in the PCT application is the Chinese company, the receiving
office for the PCT application is the Chinese patent office. The Center should obtain a foreign
filing license for the application before the Chinese company files the PCT application.
Therefore, the PCT application needs to be prepared with adequate time to have the foreign
filing license granted before filing.
b) U.S. Inventors Named as Applicants
The USPTO may be an authorized receiving office if one or more inventors who are U.S.
residents or U.S. nationals are designated as co-applicants. The recent changes to U.S. patent
law under the America Invents Act (AIA)5 provide the option to designate inventors in the
U.S. as inventors only or as applicants. The PCT application has the option of naming
inventors as applicants for the U.S. only. Consequently, the PCT application may be filed
with the USPTO if one or more of the U.S. inventors is named as an applicant.
Prior Art Differences
The changes in U.S. patent law under AIA were reported as a step toward harmonizing U.S. patent
law with the laws of other countries, but significant differences remain. One difference is what
qualifies as prior art. An inventor’s public disclosure of the invention is not prior art to the U.S. patent
application if the application is filed one year or less after the inventor’s first public disclosure of the
invention. China’s patent law does not have a similar provision. China’s patent law has a different set
of exceptions for inventor disclosures that qualify as prior art.6 Other countries require absolute
novelty. Therefore, the Center should control public disclosure of inventions to maintain the ability to
pursue valid patents in China and many other countries.
Another difference between U.S. and Chinese law is the standard used to assess obviousness of an
invention where the prior art was filed before but published after the filing date of the Center’s
application (“secret prior art”). In China, the Center’s invention must be “substantially different”
from the invention discussed in the secret prior art. This standard is lower than China’s obviousness
assessment used for published prior art.
In the U.S., the Center’s invention must be new and not obvious in view of the secret prior art. U.S.
law is stricter than Chinese law in these circumstances, and an invention that is patentable under
Chinese law may not be patentable under U.S. law.
Patent applications should generally be filed aggressively since early application submission is
important in these circumstances. Even if an application is later determined not to be patentable in the
5
6
Leahy-Smith America Invents Act, Public Law 112-29, 125 Stat. 284-341 (2011).
See Patent Law of the People’s Republic of China Article 24 (as amended through 2008).
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
U.S., applicants that file early may still use that early filing date as priority for applications around the
world where the patenting standards may be less stringent.
Written Description Differences
China’s law and regulations require almost literal support for subject matter that is claimed in a patent.
The specification must “directly and unambiguously” describe what is claimed.7 U.S. law is less
strict. A patent application must describe subject matter sufficiently that a person of ordinary skill
understands the inventor was “in possession” of what is claimed. Patent applications should be
prepared so that the text provides ways to amend claims during prosecution that do not require adding
unwanted limitations into the claims. Otherwise, amended patent claims in China could be narrower
and therefore easier to design around than amended claims in the U.S., allowing competitors to
develop products in China that are very similar to the Chinese company’s products.
Patentable Subject Matter
Another difference is the type of subject matter that may be patented in the U.S. as opposed to in
China and other countries. The USPTO has historically granted patents to certain software and
methods that may not be patented under China’s law, which requires solution of a technical problem
by a technical measure to provide a technical effect. In addition, plant and animal varieties, methods
of diagnosing disease, and methods of treating disease are patentable under U.S. law but not under
Chinese law.
Trade Secrets
Trade secret law provides the owner the right to stop others who obtained the trade secrets illegally. It
can be used to protect valuable assets such as manufacturing processes, customer lists and other
information that provides a competitive advantage. The owner must take reasonable steps to protect
the confidentiality of the information. Trade secret protection in the U.S. is primarily based on state
law. California law also provides for third party liability for trade secret theft under the California
Uniform Trade Secrets Act (UTSA).
Independent development is a defense to a claim of theft of a trade secret. Patent law grants the right
to exclude others from practicing the patented invention even if others independently develop the
invention, but trade secret law does not. Some types of technologies may not be protected effectively
as a trade secret. For example, a mass marketed product may be reverse engineered by anyone who
buys the product.
Copyright Law
If the Center’s R&D result includes creation of original works, such as software, or other works, or
use of copyrightable material from the Chinese business, a U.S. copyright protection program should
be implemented. Copyright protection is easier to obtain than patent protection in the case of
software, but may provide more limited protection because it encompasses only the actual expression
and not the ideas or inventions covered in a work. In addition to software, copyright may be used for
protection of web site content, advertising communications, audiovisual content, and other works of
authorship. U.S. copyright protection is provided exclusively under federal law based on the U.S.
Copyright Act. Independent development is a defense to a claim of infringement. “Clean room”
7
See State Intellectual Property Office’s Guidelines for Examination, Part II, Chapter 8, 5.2.1.1 (2010).
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
procedures are commonly practiced in software development to preserve the “originality” requirement
of copyright.
Both the U.S. and China are parties to the Berne Convention, which is the most important
international treaty affecting the rights of copyright owners. In some instances, the Center’s R&D
activities may benefit from the Berne Convention if software, for example, as used by the Center is
considered to be a Chinese work, and the Chinese business that owns the work has complied with any
applicable copyright formalities in China. Even in the case of a registered foreign work, however,
compliance with U.S. copyright registration formalities brings critical statutory benefits. Specifically,
the U.S. Copyright Act makes statutory damages, which can range up to $150,000 per work infringed,
and attorneys’ fees available only to parties – including foreign copyright owners – who have
complied with U.S. registration formalities. Registration prior to initiation of the infringement is also
essential to claim these remedies. These statutory damages and attorneys’ fees available under U.S.
copyright law are often the most important enforcement tools for a copyright owner given the
difficulty of proving actual damages, such as lost sales or a defendant’s profits. Accordingly, a
formalized U.S. copyright registration program for protecting software and other works is essential for
maximizing protection. For software owners concerned about public disclosure of proprietary
information, the U.S. Copyright Office provides procedures permitting redaction of trade secret
material from software deposit copies in the registration process so that confidential material does not
appear in the public record due to the registration process.
Trademark Law
Trademarks can be of great value to the commercialization of the results of the Center’s R&D.
Registration of trademarks provides important evidentiary presumptions in court proceedings, entitles
the owner to affix the ® symbol, and enhances the ability to police confusingly similar marks adopted
by third parties. Registration also is mandatory for U.S. anti-counterfeiting efforts. Enforcement
efforts and proper licensing are critical in preventing erosion of rights. Accordingly, a Center should
develop a U.S. trademark program that maximizes registered protection, enforces against infringing
uses and controls use by licensees.
Trademark law in the U.S. is governed by the Lanham Act at the federal level as well as by various
state laws. Under the Lanham Act, infringement may be found in the case of use of an identical or
similar mark based upon a likelihood of confusion as to affiliation, sponsorship or source. Trademark
protection in the U.S. may extend to “related goods,” not just the exact goods under a registration.
Unlike in China, superior rights in the U.S. are determined based upon the party that is first to use a
trademark at common law, rather than the first to file or register. As a result, before initiating use of a
trademark, the Center should have trademark searches conducted that investigate prior users of the
same or similar marks as well as potentially conflicting trademark applicants and registrants with the
USPTO.
Also differently than under Chinese law, full enforceability of a registered trademark under U.S. law
requires that a trademark owner prove actual use of a trademark in the U.S. prior to the grant of
registration. However, under the provisions of international treaties to which the U.S. is a party, a
trademark previously registered in another country such as China may be able to obtain a more limited
defensive protection in the U.S. without proof of use. The Center should consult with a U.S.
trademark attorney to determine the best strategy for utilizing foreign trademark registrations as bases
for initiation of U.S. trademark rights. For Chinese businesses planning a future U.S. market launch,
the Lanham Act also has provisions for “intent-to-use” applications that permit a trademark owner to
obtain nationwide priority as of the original filing date once registration has issued. These intent-to9
What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
use applications can be used to clear and select trademarks up to several years in advance with
reasonable certainty that the preferred name will be available for product launch.
Both the U.S. and China are parties to the Paris Convention, which allows a trademark owner making
a filing in either the U.S. or China to make a subsequent filing in the other country within six months
and claim the priority of the original filing. Thus a subsequent U.S. trademark filing may “relate
back” to the date of Chinese trademark filing for purposes of priority during the first six months
following the Chinese filing date, and vice versa. This ability to claim priority based on a foreign
filing can assist in rapidly orchestrating a brand launch or a defense to infringement covering both the
U.S. and Chinese markets.
*******************************************************
An R&D center in the U.S. provides access to cutting edge technology, skilled engineers and
universities where innovation is fostered. The U.S. is also a major market for commercialization of
the results of R&D. A Center in the U.S. can help accelerate the pace as well as the likelihood of
successful development of innovation and commercialization. Forming and operating the legal entity
properly, planning for and implementing the right employment practices and having an IP strategy that
maximizes the value of the results for the Chinese business are all important to a successful Center.
Authors:
Britt L. Anderson
britt.anderson@klgates.com
+1.650.798.6746
Fred M. Greguras
fred.greguras@klgates.com
+1.650.798.6708
Charles D. Holland
chuck.holland@klgates.com
+1.650.798.6710
Linda L. Usoz
linda.usoz@klgates.com
+1.650.798.6702
Yuki S. Ku
yuki.ku@klgates.com
+1.650.798.6731
Contact:
Linda Zhou
linda.zhou @klgates.com
+1.650.798.6751
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What Chinese Businesses Need to Know About
Establishing an R&D Center in the United States
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