China is at the forefront of the AI development race. While many see China’s AI policies as a cover to curb freedoms and control society, the reality is that China is an active AI developer in a thriving market for AI applications in both the trade and industrial sectors. 

There are, however, several challenges related to obtaining IP protection for algorithms in China. Lack of IP protection may expose the development to theft, infringement and misuse by Chinese competitors and it may result in huge economic losses for the developers. Navigating these challenges in the proper way will be key to the selection of the appropriate business model for the exploitation and commercialization of the algorithms (e.g. licensing, assignment, JVs, cooperation and co-development etc.) in China. 

Before entering into cooperation agreements with businesses, developers and government institutions, including R&D centers or universities in China, foreign rights holders should conduct proper due diligence of their future partners and the related projects should be secured by registration of any relevant IP (patents and trademarks in primis) and written agreements to ensure that joint ownership, licensees, pledges or transfer of IP rights derived from the cooperation are properly regulated. This will help avoid surprises from the application of unfamiliar Chinese laws and regulations.