How can right holders enforce their IP in China?

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Vivian Zhang, Wenwen Wang and Chong He of ACIP examine the different routes available to right holders who want to enforce their IP in China, analysing the administrative protection and civil and criminal litigation processes

With economic globalisation, strategic planning in relation to IP rights in China has increasingly appeared on the "must-do" lists of more and more foreign IP owners who wish to extend their product markets to China.

To protect the IP of their product, foreign companies often choose to register their trademarks, patents and other IP rights in China and actively enforce their IP rights, e.g. against IP infringers, for brand reputation and social responsibility.

How to strike IP infringements quickly and effectively has become one of the most concerning issues for many foreign companies in China.

We aim to provide a concise introduction to the unique system of IP protection in China, in which IP enforcement can be carried out through local administrative protection, court litigation, or both.

Administrative petition, or administrative enforcement, is a unique and important way of enforcing IP in China. IP right holders can stop infringement quickly by filling a petition with local administrative authorities with materials showing their legal right and preliminary infringement evidence.

Upon receiving the petition, the administrative authorities should investigate the alleged infringement. They may also take initiative to investigate any suspected infringers ex officio. Either way, the administrative authorities are entitled to take legal enforcement measures to stop infringements, such as on-site inspection, on-spot record, seizure and imposing penalties on the infringers. Such measures ensure an end to infringement efficiently and effectively to protect the legitimate interests of right holders.

As a practical matter, compared with civil litigation, administrative protection can be achieved by providing just preliminary evidence of suspected infringement and with a lower cost and shorter case cycle. That is why it is an enforcement measure widely adopted by right holders in China, especially for trademarks.

This procedure is also important because, since court discovery is not available in China, administrative enforcement can provide official records and other evidence acceptable to the court. It is therefore a powerful aid to IP infringement litigation intended to be filed later. Early evidence collection through private investigation and notarisation may be necessary to provide a foundation for administrative enforcement or legal action.

It is worth noting that, when the administrative authorities confirm an act of infringement of intellectual property rights, they have the right to impose a certain amount of administrative fine (the maximum fine is five times the value of the infringing products) on the infringer for disturbing social order with an illegal act. This kind of administrative penalty, however, is different from court compensation for infringement in civil litigation and will be turned over to the State Treasury, not the right holder. If the right holder needs to claim compensation for infringement from the infringer, it is necessary to negotiate a settlement or file a civil litigation.

Since 2018, China has taken a series of historical reformation measures to unify the administration of patents and trademarks and enhance enforcement efficiency.

Before 2018, the administrative management and enforcement of patents and trademarks were under two different departments and their respective local offices. Those were the State Office of Intellectual Property (SIPO), which was actually only in charge of patents, and the China Trademark Office (CTMO) which was under the Administration for Industry and Commerce (AIC) instead of SIPO.

As a result, cases involving both patents and trademarks suffered from redundant proceedings of enforcement as they needed to be attended to by two different departments. Moreover, separate departments sometimes held different or even conflicting views of IP infringement criteria, while internal communications between two departments also wasted time and therefore caused unnecessary delay in administrative actions. In 2018, at the national level, SIPO and CTMO were incorporated into the State Administration of Market Regulation (SAMR). SIPO is now called the China National Intellectual Property Administration (CNIPA) and handles registration and examination of patents and trademarks, patent invalidation, trademark opposition, and trademark invalidation. On the enforcement side, the CNIPA issues guidance for local administrative enforcement, such as criteria for determining infringement of patents and trademarks, while the AMR is in charge of organising enforcement work. At the local level, the previous local offices of SIPO and the AIC were also merged to form offices of the Administration of Market Regulation (AMR) and one single enforcement team for both patent and trademark disputes.

Hence, when filing administrative petitions, patent and trademark right holders can now refer to one instead of two local authorities to handle disputes involving both patents and trademarks, which will save time and costs.

Furthermore, in some trademark infringement cases, the infringers may have registered design patents for their product packages, containers and the like that look like those of the authentic products. This has caused trouble in the past for the administrative authority which was only in charge of trademark infringement to take administrative action because of the conflict between trademark rights and patent rights. However, now, with a unified enforcement team, the administrative authority is entitled to do a comprehensive evaluation and make a quick decision on the action accordingly.