Options for Enforcing Intellectual Property Rights in China

As patent and trade mark attorneys we are often asked about the benefits and pitfalls of seeking registered protection for intellectual property in China, where counterfeiting and piracy is perceived to be a serious problem. This is the second part of a two part series of articles on intellectual property (IP) rights in China. In the previous article we discussed options for protecting your IP in China. In this article we consider options for enforcing IP rights in China, and related developments which may help UK rights holders to enforce their IP Rights in China.

When would you need to enforce?

There are several different ways of enforcing your IP should you need to in China. First it is important to establish whether there has been an infringement of registered IP rights. The previous article sets out the scope of protection provided by registered IP. If someone carries out an act falling within that scope of protection in China, without the consent of the IP rights holder, there may be an infringement. Trade mark counterfeiting is a type of infringement perceived to be common in China. Acts of trade mark counterfeiting include selling goods known to bear a counterfeit registered trade mark, and making or selling counterfeit representations of a registered trade mark.

Options for enforcement

a) Administrative proceedings

Administrative proceedings involve a local administrative office which deals with a complaint filed by an IP right holder. Administrative proceedings are held by administrative government departments for managing IP affairs, such as provincial Administrations of Industry and Commerce (AICs). Administrative proceedings are suitable for straightforward cases of trade mark infringement, as well as counterfeiting cases, where the administrative office can comfortably make a judgement by comparing the trade mark with the allegedly infringing product. They can provide a supporting role in more complex cases by obtaining evidence. Enforcement is limited to injunctions, seizure of infringing goods, and fines. Damages cannot be awarded to the rights holder. Earlier this year a change in trade mark law has increased the maximum fine that can be imposed on infringers, to increase the deterrent effect. Administrative proceedings are intended to be resolved quickly and cheaply. Proceedings are typically resolved in three to six months. However, administrative enforcement has its limitations. As mentioned above, damages are not awarded to IP rights holders, and administrative offices may not have the expertise to resolve all IP proceedings.

b) Court proceedings

IP proceedings can also be initiated through the civil or criminal court system. Courts can award damages to IP right holders, and can grant interim injunctions whilst the case is pending. A recent change in trade mark law has increased the maximum fine that can be imposed on infringers by six-fold. Favourable court rulings provide a much greater deterrent effect against potential infringers. Court proceedings often provide the most suitable enforcement option for patent cases, as the Chinese courts have the relevant expertise to hear patent cases. The courts have their limitations. Court proceedings are typically slower than administrative proceedings. Court cases typically take six to twelve months to resolve. Court proceedings are typically more expensive than other enforcement routes. Plans have been announced to set up a dedicated IP Court having the necessary expertise to deal with the specialised nature of IP disputes. We believe that this would be welcomed particularly by holders of complex patented inventions. Similar courts exist in the UK at the High Court level for higher value claims and the Intellectual Property Enterprise Court for small claims.

c) Customs Enforcement

In China, IP right holders can use customs authorities in China to prevent export of infringing goods. A registered IP owner may record their IP in a database to be used by Chinese customs authorities for identifying and seizing infringing goods. Seizure by customs helps to provide strong evidence of extensive infringement, and may help to claim higher damages in court proceedings. The drawback is that whilst customs authorities often enforce registered trade marks, they are unlikely to enforce complex patents.

Conclusion

As recent changes in the law have shown, the Chinese authorities take IP rights very seriously. Several enforcement routes are open to registered IP owners. We expect the deterrent effect to improve with time, and for UK businesses to continue to use cheaper yet effective alternatives to the Chinese Court system.

Our intellectual property services extend to China and the rest of the world. Therefore, if you have any questions concerning this article, please get in touch with your usual contact at Swindell & Pearson Ltd or Tim Gilbert at [email protected]. Tim is based in the East Midlands, at our head office in Derby.