Having obtained a Chinese trademark right, the rights holder will need to be vigilant in protecting that registered right. In China, any of the following acts will constitute infringement of trademark rights.
What are the main channels for trademark enforcement in China? How effective is administrative action in enforcing trademarks in China? What role do Chinese courts play in trademark enforcement? Can customs authorities help protect my trademark in China? And, what is the role of the China National Intellectual Property Administration (CNIPA) in trademark disputes?
Types of trademark infringement activity in China
- 1. Using a trademark that is identical to a registered trademark on the same goods without a license from the trademark registrant;
- 2. Using a trademark that is similar to a registered trademark on the same goods, or using a trademark that is identical with or similar to a registered trademark on similar goods, which may be confusing, without a license from the trademark registrant;
- 3. Selling goods that violate another’s exclusive right to use a registered trademark;
- 4. Counterfeiting or arbitrarily forging another’s registered trademark, or selling the counterfeited or arbitrarily forged trademarks;
- 5. Altering the trademark registrant’s registered trademark without authorisation and selling goods bearing this altered trademark;
- 6. Facilitating or helping others to infringe an exclusive right to use a registered trademark on purpose; or
- 7. Other conduct causing prejudice to another’s exclusive right to use its registered trademark.
Four major enforcement channels for trademarks in China
There are four major enforcement routes available in China for trademark rights.
A complaint can be lodged with the Administration for Industry and Commerce (AIC), which can take direct action against the infringer. The complainant needs to set out the complainant’s trademark rights and provide evidence that infringement is occurring (such as providing a sample of the infringing product) and evidence that the infringing product will cause damage to the claimant’s interests.
The AIC will then conduct a raid on the alleged infringer’s property, confiscating any alleged infringing products. If the AIC is satisfied that there has been an infringement, it can then fine the infringer, seize/destroy the infringing goods, or even revoke its business licence. The advantage of this route is that it is relatively cost-effective, quicker than civil proceedings and efficient, and the evidence collated can then be used in a civil action. The disadvantage to this course of action is that the claimant will not receive damages.
As well as examining goods entering China, the General Administration of Customs (GAC) examines goods leaving the country. This is useful as the GAC has the authority to protect IP rights (including trademark rights) and so can seize infringing products before they leave the country. The GAC will take the initiative to seize goods they consider to be infringements, but to do this, they require information from the trademark owner.
It is recommended that a trademark owner registers their trademark centrally with the GAC in Beijing, so that the GAC can monitor shipments and inform the rights holder if they discover potentially infringing goods. Educating GAC officials is equally important, so the trademark owner will need to notify Customs with as much information as possible, such as the names of the infringers, their logistics, characteristics of the infringing products, etc. The GAC has the power to seize and destroy the infringing goods once infringement has been established.
The rights holder can bring a court action seeking an injunction and damages. To pursue a civil action a complaint must be lodged with the civil division of the People’s Courts. The Court will set a date for a pre-trial hearing at which the parties will discuss evidence before the court. The Court will provide the parties with an opportunity to settle the dispute themselves. If the dispute does not settle a trial will take place. In all likelihood, a dispute will take between six and 12 months to reach trial, depending upon the complexity of the case. The trial is much shorter and is usually concluded within half a day or one day.
In terms of remedies, the claimant may be awarded an injunction to cease the infringement, an order to confiscate the infringing goods and/or damages (or account of profits). Damages will be estimated in relation to the trademark owner’s losses and the profits gained by the infringement. Where calculation of damages is impossible an award up to a maximum of RMB 3,000,000 (approx. €400,000) may be imposed.
An interim injunction, although still rare, is available in China. It is possible for the rights holder, upon providing a guarantee to the court, to apply for an order for an interim injunction. The Chinese courts are cautious to grant an interim injunction, so great effort is needed regarding evidence presentation and arguments to satisfy the burden of proof.
Due to the lack of disclosure in Chinese court procedure, there is a high burden upon the rights holder to collect the evidence themselves. As a practical measure, it is possible for the rights holder, upon providing preliminary evidence of infringement, to apply for an evidence preservation order so the court can conduct a raid on the alleged infringer’s property to seize evidence on site. An asset preservation can also be requested upon provision of a guarantee, so the court can seize assets of the alleged infringer to satisfy damages awarded in the judgment. Both measures are highly recommended pre-suit actions that the rights holder may apply for if possible.
A criminal action is available through the Public Security Bureau, which may bring a criminal action against the infringing party if the alleged infringer is producing or knowingly selling counterfeit products and/or is producing forged or unauthorised representations of trademarks. A criminal action is an alternative to an administrative action or a civil action and has the biggest deterrent value. However, it is usually reserved for high-profile counterfeit cases. If the crime is serious, a penalty of up to seven years imprisonment can be imposed.
To find out more about trademark enforcement in China, speak to your attorney or contact our specialist team.
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