Reputation Building to Reduce Risk of IP Litigation and Infringement Allegation

Abstract

This paper explores why Chinese firms are easily subject to litigation and accusation of IP infringement, and how they can reduce these associated risks. The finding suggests that the negative reputation of IP abuses, penetration in high value-added area in terms of branding and R&D, entry in developed countries with sophisticated products, and passive response to litigation and allegation, are important reasons. Accordingly, a framework is proposed to stress well-intended reputation building for avoidance of litigation and allegation. Three strategies are recommended to build reputation: getting technology and IP with joint venture and acquisition, getting technology and IP with R&D and patent application, and toughness against litigation. Five Chinese case firms are used to illustrate these strategies. It seems to be the first study to incorporate reputation into IP defensive strategies, and therefore has great implications for firms from emerging economies which attempt to upgrade from labour-intensive to R&D and brand intensive enterprises.