IPR Infringement in China – Five Ways to Stop It

While there are still challenges regarding intellectual property protection system in China, with the recent law reforms it has markedly improved making it easier to stop IPR infringement in China, particularly in first tier cities and surrounding areas.

Now there are a number of ways you can take for IPR protection. In this article we are going to explain the five most popular methods the IPR owners can use to protect their interest. Let’s use trade mark as an example.

1 . Administrative route:

1) Customs Protection

This way is proved to be a cost-effective way to stop IPR infringement is to stop infringing goods leaving China.

All you have to do is to file the Customs protection of IPRs with the General Administration of Customs (GAC), GAC is a centralised authority which can apply their control at the border to merchandise coming in or going out. Once you register your trademark with GAC, GAC will take the initiative to detain suspicious goods, meaning any goods not exported by you or your authorized factory could not leave China.

Advantage:

1. The biggest benefit of Customs IPR protection is that the IPR owner don’t have to provide any information of the infringer.  Because more than often, they just have no clue where or who the infringer is.

2. It only takes 3 months to finish the procedure.

Disadvantage:

Customs protection of IPRs can only stop counterfeit exported from China, but can do nothing to stop the infringer selling it in China.

Reminder:

The term of Customs protection of IPRs is 10 years. You have to file for renew it within 6 months before expiration of the current term.

However, if the valid term of your trademark is less than 10 years, the valid term of filing shall be the valid term of the IPR.  So it’s very very important to renew your trademark in time too!

 2) AIC raid

If you find anyone is manufacturing, selling or storing infringing goods, you could lodge a complaint with local Administration for Industry and Commerce (AIC) where the infringement is committed, by sending evidence of the infringement (such as samples of the infringing product, photo or video of the shop or factory).

If the AIC decides there is a solid case then they will launch a raid with the goal to investigate and seize infringing goods.  After the conclusion of the raid, AIC will order the infringer to cease infringement, confiscate and destroy all goods and tools specifically used in the production of the infringing articles.

AIC may also impose a fine, where the amount is relative to the size of infringement and will not be more than five times the amount of the illegal business. In cases where no fine can be calculated, a fixed amount will be imposed by the AIC of up to RMB 250,000.

Advantage:

1. Usually it’s fast, compared to judicial route.

2. Any documents AIC produces during this procedure could be used as evidence in judicial route.

Disadvantage:

1. Sometimes, such raid can only stop the infringement temporary and locally.

2. The owner can’t get any compensation from the fine imposed by the AIC. Granting of compensation is exclusively the domain of the Chinese People’s Courts.

2. Judicial Route

1) Civil procedure

IPR owners may file a lawsuit against the infringer once they have enough evidence. Though it is possible that the court may order an inspection, in reality for any IPR infringement in china the evidence has to be collected by yourself (we will discuss about requirement for evidence in separate blogs).

The whole procedure may take more than six months or even couple years, however the specific length depends largely on the complexity of the case.

If finally an award in favor of the owner is made, the following remedies are available:

* An injunction to cease the infringements

* Confiscation of all infringing goods, as well as the machinery and equipment used to produce these

* Damages paid by the infringer

 Usually, damages are determined based on:

* Owner’s losses because of the infringement.

• Illegal profits gained through the IPR infringement in China.

• Time of the royalties of the registered trade mark when both the losses and the infringer illegal profits are hard to determine.

 • Where calculation of the above three points is hard, the court can, based on the circumstances of the infringement, impose damages of up to RMB 3,000,000.

2) Criminal procedure

Producing or knowingly selling counterfeit products, producing forged or unauthorised representations of trade marks constitutes crimes of IPR infringement in China according to Criminal law of PRC.

The trademark owner can report a crime to the public security, which have the power to detain suspects and interrogate them and also search and inspect premises without restraint.  If the public security decide that there is a crime, they will forward all file to the People’s Procurator in order to bring a criminal case before the court.

The penalties for a trademark crime could be fine plus fixed term imprisonment of not less than 3 years where conditions are “ serious” or the sales are “large”; or not more than seven years where the conditions are deemed “extremely serious” or the sales are huge.

Advantage:

Criminal penalty is the severest punish to infringer, and could effectively stop the infringement.

Disadvantage:

1. There is a threshold for procurator to bring a criminal case before the court. 

2. The trademark owner will not get compensation from the fine paid the infringer.  He can only get compensation by filing civil suit collateral to criminal proceedings.

3. IPR Infringement on E-commerce platforms

E-commerce in China has boomed greatly recent years. With it, some big platforms have set up a system to stop IPR infringement in China too, such as Alibaba, JD, etc. IP owner can file complain with the platform, if they found any IPR infringement on their platforms.

Once the IP owner’s identity and intellectual property rights documents have been verified, infringing product will be taken down from product listings.

Advantage:

It’s very fast and convenient to proceed.

Disadvantage:

Infringement could only be stopped in the platform, but can’t be eliminated effectively.

Tip:

1. These enforcement routes can also be combined to achieve a successful outcome.

2. Except in customs route, all the above mentioned route needs necessary evidence.  Especially in civil procedure, evidence is very crucial for win a case with a satisfied outcome.  Hence, be careful not to alert the infringer before you have enough evidence.  However, a lawyer letter can only be sent out to seek for a possible settlement after all necessary evidence is collected.

3. Except for in E-commerce platform, IPR registered in China is the prerequisite for all protection.  So once more our reminder, register your IP in China ASAP.

Also you can get more information on our article https://chinalawhelp.com/how-to-get-my-brand-back-in-china/