"Enforcing your trademark rights against infringements in China" by Vincent Zhang, Partner at YINGKE Law Firm

Vincent Zhang, Partner

Admitted to the Chinese Bar
15F, 500 Hengfeng Road, Shanghai, China
Tel: +86-21 6056-1394
Fax: +86-21-6056-1299
Email: vzhang@yingkelawyer.com

June 17, 2013 By Vincent Zhang

Over the years, we, as attorneys in the firm, have been assisting multinational clients in enforcing their trademark rights against infringements in China. Here is a summary of the recommended steps to take legal actions in China.

Investigations on the target company

The first step is to conduct pre-action investigations on the target company to secure the evidence, such as samples of the infringed products and photos of the illegal production facilities.

For example, a client discovered a potential trademark infringement of their products in an exhibition held in China. However, there is no clear evidence whether the target has in reality been using the trademark to manufacture the same or similar products and sell to the customers. In-depth investigations shall focus on the manufacturing and distribution of the infringing products by the target company, including its manufacturing process, distribution channels, financial figures for sales of products and whether any third party is involved in the infringement.

As a result of the investigations, if the client can obtain evidences on the infringing activities of the target company, the client may have two options:

-     a cost-effective way is to negotiate with the target company and resolve the case by settlement if both parties can have agreement on the cease of infringement and reasonable compensation; or

-     take further legal actions as outlined below.

 Enforcing the trademark rights through legal proceedings

There are two primary ways in which a trademark owner can enforce its rights in China: through an administrative procedure or through a criminal or civil judicial procedure.

Administrative procedure

In China the Administration on Industry & Commerce (AIC) has the power to investigate trademark infringement cases and punish the infringer by imposing a fine and confiscating the products.

The trademark owner can file an infringement claim to the relevant AIC and request it take administrative investigations on the alleged infringements. During such investigations, the AIC will conduct on-site inspection of the plants, question the parties concerned, copy the contracts, vouchers, account books and other relevant materials relating to the infringing activities of the alleged infringer.

If the AIC concludes there is an infringement, it will fine the infringer, seize goods or equipment used in manufacturing products, and/or obtain information about the source of goods being distributed, however in most cases, AIC cannot award compensation to the trademark owner. If an infringement is suspected of being criminal, the case will be transferred to the court for trial.

Civil procedure

Civil lawsuits are the most powerful tool to fight the infringers and protect the trademark rights. In the event of a finding of infringements, the court may grant an injunction on infringing actions and award damages to the owner. In general the damages awarded by a court are much higher than the fine imposed by AIC, thus will compensate the losses of the owner and act as a deterrent to other potential infringers.

The amount of compensation is the profits obtained from the infringement during the period of infringement, or the losses suffered by the trademark owner because of the infringement during that period, including the reasonable expenses (e.g. attorney fees) paid by the trademark owner to stop the infringing acts. If it is difficult to determine the profits or the losses, the court will award compensation of up to RMB500,000 (approximately US$80,500) depending on the circumstances.

Criminal liability

If the infringement is a serious case, the infringers will be subject to criminal liabilities.