Waging war on the well established misuse of dummy corporations

    By Zhang Xu and Nikita Xue, HFG
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    Several years ago, infringers active in China headed for offshore legal jurisdictions, where they registered enterprise names similar or identical to famous brands, then added elements such as “international” or “holding” to those names and masqueraded as affiliates of those famous brands, committing infringements on the mainland in areas such as authorised processing, OEM production, etc. We call these registered shell companies, which provide a lawful front for effecting the infringement, dummy corporations.

    The relevant countermeasures taken by the rights holders affected by dummy corporations can broadly be divided into two areas:

    • Within China, filing complaints with the administration for industry and commerce or instituting legal actions in court, with the main grounds being the use of the dummy corporations of trade names that are identical or similar to famous brands constitute strademark infringement or unfair competition; and
    • Taking legal action in the places where the dummy corporations are registered. For two reasons, legal actions taken in China have been more important for rights holders:

    1) The objective of almost all the registrants of dummy corporations was to produce and sell infringing products in China in some sort of “lawful” manner, and they lacked any overseas market;

    2) Even if legal action taken by a rights holder in the offshore place of registration proved successful, it meant little to the infringer because it could quickly secure the registration of another dummy corporation, and at little cost.

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    Zhang Xu and Nikita Xue are both partners at HFG

    HFG

    上海武定路969号

    华祺大厦14层

    14/F, Hua Qi Building

    No. 969 Wuding Road, Shanghai

    邮编Postal code: 200040

    电话Tel: +86 21 5213 5500

    传真Fax: +86 21 5213 0895

    www.hfgip.com

    电子信箱E-mail:

    xzhang@hfgip.com

    nxue@hfgip.com

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