Legal options for protecting trademark right

By Spring Chang and Shen Huijuan, Chang Tsi & Partners

The PRC Trademark Law and related laws present trademark rights holders with several ways of protecting their lawful rights and interests. In addition to their own internal protection efforts, rights holders may, depending on the circumstances, enlist the help of the administrative and judicial authorities to protect their trademark rights in the following ways.

Administrative complaints

Spring Chang 苍雨春, Chang Tsi & Partners 铸成律师事务所, Partner 合伙人
Spring Chang
Chang Tsi & Partners

Pursuant to section 53 of the PRC Trademark Law, a trademark registrant or other interested party may request that the Administration for Industry and Commerce (AIC) deal with an infringement of its exclusive right to use its registered trademark. If the AIC determines that infringement has occurred, it will order the infringer immediately to cease the infringement, and it will confiscate and destroy the infringing goods and the tools used to manufacture the infringing goods or create the representations of the registered trademark. The AIC may also impose a fine.

In such a case, the rights holder typically lodges a complaint in respect of the alleged infringement, following which the local AIC conducts an investigation of the infringement, temporarily seizing the infringing articles. If it determines that infringement has taken place, the AIC will impose an administrative punishment, confiscate the infringing products and may impose a fine. If the rights holder demands that the infringer pay economic damages, the AIC may, at the request of either or both of the parties, attempt mediation. If the infringer is dissatisfied with the decision of the AIC, it may institute an administrative action in a people’s court.

In practice, trademark rights holders who are familiar with intellectual property law and practice in the PRC will, in many circumstances, tend to choose this option. It is flexible, inexpensive and quick, and often yields quick results. This option is effective for cracking down on the manufacture and/or sale of counterfeit products within a defined area.

Recordal, investigation and seizure

Shen Huijuan 申会娟, Chang Tsi & Partners 铸成律师事务所, Attorney 律师
Shen Huijuan
Chang Tsi & Partners

A rights holder that has registered its trademark in the PRC may opt to file that trademark, as well as the names of the persons licensed to use it, with the General Administration of Customs for the record, so as to secure fuller customs protection. If a local customs authority, in examining imported or exported goods passing through customs, discovers a suspected infringing product carrying a trademark that is on file but for which no licence has been granted, it will temporarily seize the goods and promptly notify the trademark rights holder, asking it to confirm the nature of the suspected goods. If the rights holder believes the suspected goods to be infringing goods, the customs authority will detain the goods and conduct an investigation. If, after its investigation, it determines that the suspect goods are infringing goods, it will confiscate and dispose of them, and may impose a fine on the infringer.

In a major manufacturing and exporting country like the PRC, the recordal of trademarks with customs so as to secure customs protection is especially important. To facilitate the determination by the customs authorities of the nature of the goods, the rights holder may, at the time of recordal, define limits in the recorded particulars of trademark licensees, such as limitations on the duration of use, and the method and port of import or export.

Through customs recordal and investigation or seizure, a trademark rights holder can quickly discover and stop the export of infringing products. This option is particularly applicable to famous international brands that are likely to be counterfeited and exported overseas. It should be noted that, with respect to infringement that involves the use of similar trademarks on similar goods, customs offices currently tend to be conservative when it comes to enforcement.

Infringement suits

The two options mentioned above are limited in their application. First, administrative punishments imposed by AICs and customs authorities are not final; if either the punished party or the rights holder is dissatisfied with the decision, it may file for administrative reconsideration with the relevant authority or institute an administrative action in court. Second, AICs and customs authorities do not accept petitions that seek payment of economic damages by the infringer. Accordingly, with respect to serious or large-scale infringements, rights holders may have evidence preserved and institute a civil infringement suit in the competent people’s court, demanding that the infringer halt the infringement or pay damages.

The procedure for commencing a lawsuit is relatively complex, the standards of evidence are more stringent and, if the case is complex, it may take more time. However, an effective court judgment has the advantages of being enforceable and final.

A rights holder can, on the basis of an effective judgment in its favour, crack down more effectively on the infringer and obtain corresponding damages. Furthermore, a favourable judgment can also lay a solid foundation for the rights holder’s future efforts to safeguard his trademark rights.

Criminal investigation

With respect to infringements that are serious enough to meet the criteria for a criminal case, the rights holder may lodge a report with, and provide leads to, the competent public security authority. The public security authority will investigate the leads and if, through its investigation, it determines that a criminal IP case is constituted, it will transfer the case to the prosecutorial authority for public prosecution.

In general, this option addresses extremely serious instances of infringement. If the infringement constitutes a criminal offence, the infringer faces the prospect of a prison sentence. Accordingly, this option has the greatest deterrent effect on infringers.

As the investigation procedure for IP crimes is relatively specialized and there are substantial difficulties in determining that infringement has occurred and the value of infringing products, trademark rights holders need to cooperate closely with the public security authority and the prosecutorial authority in both the instigation and the progress of a criminal case.

Spring Chang is a co-founder of and partner at Chang Tsi & Partners. Her practice focuses on intellectual property. Shen Huijuan is an attorney at Chang Tsi & Partners.

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