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Enforcement of IPRs in China


Enforcement of IPRs
The causes of counterfeiting piracy in China include global outreach, industrial and technical development, inconsistent penalties on traffickers, special rules governing FTZ.
Footwear, clothing, leather goods, electrical equipment, watches, medical equipment, perfumes, toys, jewellery, and pharmaceuticals are the goods that most often face counterfeiting and piracy.
They are as follows:-
  • The Criminal Law of the People's Republic of China, 1997
  • The General Provisions of the Civil Law of the People’s Republic of China (the Civil Law General Provisions);
  • The Contract Law of the People’s Republic of China (the Contract Law)
  • The PRC Patent Law, 1984; amended in 1992, 2000, and 2008
  • The PRC Trademark Law, 1982; amended in 1993, 2001, 2014, and 2019
  • The PRC Copyright Law, 1990; amended in 2001 and 2010 and PRC Tort Liability Law, 2009
  • The Anti-Unfair Competition Law, 1993; amended in 2017 and 2019 and Administrative Licensing Law, 2003; amended in 2019.
The registered rights available are invention patents, utility patents, design patents, and trademarks. Copyright can also be recorded. There are unregistered rights derived from the law on trade secrets and unfair competition; however, these are difficult to rely upon, and it is therefore, advised that the rights owners register their IP assets with the relevant authorities.
Registration is a must for patents and trademarks. Copyright comes into being automatically.
The essential to-dos before an IP rights holder initiates the enforcement proceedings are as follows:
a) Research about the potential infringement
B) Send a cease and desist notice before starting a litigation process or strategizing on it; and
C) Consider negotiation before going to court.
Yes (02 years)
A) Government Authorities - Yes
B) Police Officials - Yes
C) Judiciary - Yes
D) Customs - Yes
A) Injunctions - Yes
B) Monetary Compensation - Yes
C) Raids - Yes
D) Seizures - Yes
E) Destruction - Yes
The Chinese courts can award damages and may order interlocutory asset and evidence preservation orders. If infringement is found, the courts have the jurisdiction to order infringers to publicize their apology in the media, which is effective in deterring other infringers in the market.
Also, other administrative actions may be taken by making a case at the Intellectual Property Offices (IPOs) for patent cases, the Administrations for Industry and Commerce (AICs) for trademark cases, the Copyright Office for copyright cases, and the Quality and Technical Supervision Bureaus (QTSBs) (local divisions of the Administration for Quality Supervision Inspection and Quarantine) for goods breaching quality or safety standards.
The most straightforward cases require only 06 months to 01 year, and hence, could be less expensive than litigation in the US or Europe.
The disadvantages of civil litigation include forum-shopping and pretty low damages.
A) Responsible Authority - Investigated by the Public Security Bureaus ("PSB"); case can be transferred to the Procuratorate
B) Imprisonment Term - usually not more than 03 years, but in grave cases may extend to 07 years
C) Monetary Fine - Depending on each case. A table attached below gives estimation of damages
A) Although the frequency of damage awards in IPR cases in China has increased, the average amount awarded has not increase. It also appears that while damage awards tend to be low, IPR owners typically make low damages claims.
B) In the Chinese courts, damages are frequently computed based upon the infringer’s unjust enrichment. Since infringers usually sell their illegal copies at a small fraction of the price charged by the IPR owner, damage awards based on unjust enrichment are often modest compared to damage awards based on the IP owner’s lost profits from lost sales. Moreover, some infringers do not maintain complete transaction records and the full extent of their gain can be very difficult to determine.
Arbitration and non-governmental mediation has been developed a lot in China in recent years, which provided additional options to resolve IP disputes. However, there are many deficiencies of the current Arbitration Law. It has long been criticized by lawyers and scholars for not fully respecting the autonomy of the parties and limiting the freedom of the parties’ choice, which go against the general rules and tendency of international business arbitration.
The infringing goods are destroyed, or de-branded and donated to charity, or purchased by the rights holder, or de-branded and auctioned. The importer/exporter will be fined an amount of approximately 30 % of the declared value of the infringing goods.
The IP rights holder must bear the costs of customs intervention during enforcement.
There are many options to choose from depending on the needs of the enforcer. These include negotiations, administrative actions, customs, civil litigation, take down procedure for online infringements, and criminal sanctions.
The remedy may not always be proportional.