A Primer for Intellectual Property Enforcement in China

Now that?China?is the second-biggest economy in the world, very few companies can resist its lure. This has resulted in foreign businesses clambering over each other to get a foothold in what is a rapidly expanding market. However, the Chinese landscape is difficult to navigate and poses a number of problems; none more so than intellectual property (IP). Foreign companies must pay special attention to the IP protection and enforcement regime in?China. Failure to do so can be extremely damaging to your business.

Unlike popular belief portrayed by some foreign media, it is not only possible to enforce IP rights in?China, but also cost-effective to do so by tackling the problem at its source. To succeed in IP enforcement in China, right holders must be willing to learn and engage with the system, and the choice of good local counsel is important.

There are three main enforcement options: administrative enforcement, civil litigation, and criminal prosecution.

The main bodies responsible for conducting administrative enforcement are:

• Market Supervision Administration (MSA) - trademark and unfair competition matters;
• Intellectual Property Office (IPO) - patent issues; and
• Copyright Office - copyright infringement.

Administrative proceedings for trademark enforcement via the MSA are usually quick and inexpensive. IPO and Copyright Office actions, particularly in the more developed cities, can also be an effective means of enforcement. In areas with a high level of foreign investment, Chinese authorities may be more willing to take action in order to encourage further foreign investment. These types of proceedings can be a useful?means of obtaining evidence for use in subsequent civil litigation.

Judges in?China?are becoming more IP savvy and sophisticated, especially with the establishment of specialized IP courts in Beijing, Shanghai, and Guangzhou. Although most litigation in the civil courts is between Chinese companies, foreign companies are beginning to engage with the system. Claimant win rates in?cities like Beijing, Guangzhou, Shenzhen,?and Shanghai?are encouraging. Although damages awards are not on the same scale as in the?USA, UK,?and?Europe, high ones over RMB 10 million (c.a. USD 1.5 million) are granted more frequently. Assuming the thresholds for criminal action are met, the sanctions for such offenses have a very good deterrent value.

It is possible to record IP rights centrally with the General Administration of Customs. This is relatively inexpensive and it is recommended that rights are recorded as Customs have a valuable role to play in enforcement, particularly in relation to clear-cut cases of infringement.

In conclusion, with a burgeoning middle class with money to spend,?China?provides exciting opportunities for foreign companies looking to invest or distribute in the?Far East. Nonetheless, since?China?operates a "first to file" system for trademarks and patents, it is important that foreign companies take adequate steps to maximize IP protection in?China. Most importantly, foreign companies should apply to register their IP before entering the Chinese market and, if the need arises, be prepared to enforce these rights.

(By Dr. Jian Xu. Last updated: Oct 2024)

- This article is an excerpt from my E-book, '365 Intellectual Property Tips for China: A Comprehensive, Strategic, and Practical Guide for Legal Professionals' available on Amazon. You are welcome to check it out (and read it for free if you are a Kindle Unlimited subscriber).

- Alternatively, you may check out my China Intellectual Property Series (4 book series), which consists of my China Patent, Trademark, and Copyright Law Handbooks, in addition to the above 365 China IP Tips.

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- Should you have any questions on China IP, please feel free to contact me: [email protected]