How to protect a trademark from infringement in China? – Counterfeits

All counterfeits are infringements but that does not mean all infringements are counterfeits. There are general principles of interpretation with a view to deterring counterfeit activity. The Trademark Counterfeiting Act of 1984 for example, adopts the original Lanham Act definition of counterfeit that:

A “counterfeit” is a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.[1]

Such “counterfeit” mark must be used on the same services or goods which are covered by IP right owner’s registration. Nevertheless, it is not necessary for the infringers to know IP right owner’s mark is being registered.[2] Intellectual property right owner frequently employ private investigators to detect alleged counterfeit goods. Defendant cannot bring up an excuse of willful blindness against the penalties of the counterfeit statute.[3]

The general rule attributed by the Supreme Court in the Ives case[4] indicates that:

“[L]iability for trademark infringement can extend beyond those who actually mislabel goods with the mark of another. Even if a manufacturer does not directly control others in the chain of distribution, it can be held responsible for their infringing activities under certain circumstances. Thus, if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply to its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorily responsible for any harm done as a result of the deceit.”[5]

China for example, the purpose of recording IP rights at custom in China is to stop exporting and importing infringement product. The General Administration of Customs (GAC) is an administrative agency within the government of the People’s Republic of China. The China’s custom has the authority to protect IP rights by confiscating infringing goods and imposing fines on infringers. For circumstances that the infringement of IP rights exceeds a certain threshold, the custom authorities may impose criminal proceedings against the infringing party.

In China, IP rights can be recorded with GAC in Beijing. Although it is not compulsory to record IP rights with GAC in order to apply criminal proceedings against the infringing party, however it would be considered as extra protection. If your IP rights are registered with custom, the customer would have the power to detain any suspected infringing consignment of goods and be more pro-active to detain counterfeit goods as the recordal provides custom officials with easy access to internal IP databases to determine whether goods passing through customs are genuine or counterfeit.

Once you registered your IP with GAC, your rights can be enforced through two channels:

1. If you know an infringing shipment is going to pass through one of the Chinese ports, you can notify custom officials to seize the goods.

2. Without any notification, custom officials may recognize your mark and to seize a suspicious shipment (ex officio action).

What can be registered?

Patents (including patents for invention, utility model and design patents), trademarks, copyrights are all the types of IP rights can be recorded with the GAC. Please note that separate applications need to be filed for separate IP rights. Nevertheless, only IP rights registered in China can be recorded with GAC.

Why is it important to protect your trademark from infringement?

It is important to register your trademark against counterfeit especially dealing your business with countries across Asia. The impact on your company could be substantial as it can lead to loss of business, reputation, revenue and competitive advantage without imposing a right business strategy.

China has developed a comprehensive system of IP laws to comply international standards set by the World Trade Organization (WTO) in 2001. China is also a party to key international agreements in regards to intellectual property rights. These include Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Madrid Protocol, and Paris Convention for Industrial Property Protection. Nevertheless, IP laws are territorial for which is enforceable in China only with valid domestic registration.

 

[1] 15 U.S.C. section 1127; 18 U.S.C. section 2320(e)(1).

[2] 15 U.S.C. section 1116(d)(1)(B).

[3] 5 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition section 30:94 (4th ed. 2002); Lorillard Tobacco v. A&E Oil.

[4] Inwood Labs., Inc. v. Ives Labs., Incs., 456 U.S. 844, 854-55 (1982).

[5] Ibid.

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