How will the trade tariffs on China affect you and your business? If you provide goods or services to others, the proposed tariffs very likely will affect you. So what should you do?

Before we discuss remedies, let us consider the problem. The United States has estimated that it loses between $225 billion and $600 billion ANNUALLY due to China’s Intellectual Property Infringement. For decades, China has ignored the United Nations’ requirements and admonitions to implement and enforce proper laws to fix the problem. There is no dispute that China does not play by the rules when it comes to trade and business dealings. For instance, China disregards the World Trade Organization’s rules and denies foreign patent holders basic rights to stop Chinese entities from breaching license contracts and infringing patents, trademarks, and copyrights. Additionally, China imposes various restrictions, requirements, and limitations in its contracts with foreign entities, and uses its administrative review and licensing procedures, to transfer and undermine U.S. technologies and intellectual property. The concern is how to punish and deter China without hurting American business.

In an effort to do just that, and to even the U.S. trade deficit with China, President Trump has proposed various tariffs on products shipped to China. As expected, China has responded with proposed tariffs on products shipped to the United States. Since the beginning of the year, tariffs have been proposed and/or imposed on goods imported from China, such as solar panels, residential washing machines, steel, aluminum, and various goods from the aerospace, machinery, medical, technology, and communications industries. China has imposed tariffs on U.S. products, including fruit, nuts, wine, steel pipes, recycled aluminum, pork, aircraft, automobiles, soybeans, and various chemicals. It is also likely that more tariffs will come from both sides.

So how can you protect yourself and your business from the potential negative impacts of these tariffs while availing yourself of the positive effects? First, evaluate your business, and if you embark on trade with China, and/or if you buy or sell products with materials or components purchased from China, consider the following. Review your online terms and conditions, quotes, bids and proposals, written and on-line terms and conditions, and contracts for services. Be sure you have adequate confidentiality, indemnification, and infringement damage provisions. Review your insurance policies to determine if you have coverage for intellectual property misappropriation and infringement. Additionally, add language in your documents to protect yourself by allowing price adjustments based on increased costs resulting from tariffs.

Besides modifying your terms and conditions and other documents, you can take steps to enhance protection of your intellectual property, including trademarks, copyrights, and trade secrets, against theft by China and other countries. Consider registering your trademarks and business name in the United States and the countries in which you do business. Register your domains in those foreign countries, as well. Bolster your trade secret protection by implementing and improving on-line security measures, and ensuring your confidentiality and license agreements are up to date. Consider registering your copyrights and improving electronic security where appropriate to curb infringement. Then, review your monitoring and enforcement policies so you can proactively and quickly stop any infringement and minimize damages.

If you would like assistance with implementing any of these recommendations, please contact the Business Team at the Law Firm of Conway, Olejniczak & Jerry.

Photo of map[image:/uploads/tori-l-kluess.jpg name:Attorney Tori L. Kluess]

Written By:
Attorney Tori L. Kluess

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