Enforcement

Forums of Justice 

A unique feature of China's intellectual property enforcement mechanism is the so-called double track (litigation in court or administrative resolution) system. That is to say, one may bring an action against the infringer directly in a court or request the relevant administrative authority to handle the disputes. It is important to note that administrative resolution can stand by itself and is not necessarily a procedure prior to judicial resolution.

-   Court system

The court system consists of the following four levels:

1.        Supreme People’s Court;

2.        High People’s Courts, each province, autonomous region as well as the municipality directly under the central  

           government has one high people’s court;

3.        Intermediate People’s Courts, each major city has one or two intermediate people’s court;

4.        Basic People’s Courts, each county and each district of major cities has a basic people’s court.

China has adopted a “two instances” system for trials. In most cases there will only be one appeal from the first instance court to a higher court which will give a final decision. At present, a total of 43 intermediate people’s courts, located in different cities throughout China, are authorized to act as first instance courts to deal with foreign-related trademark cases and patent cases.

- Administrative Authority for Patent Affairs

It is a distinct feature of the Chinese patent system that administrative authorities for patent affairs are established as departments of the local governments in all the provinces, autonomous regions, municipalities and certain cities. The function of the authorities is to administer patent affairs and handle patent disputes in the areas of their jurisdiction. The authorities are not branches of the State Intellectual Property Office of PRC (SIPO) and do not accept patent applications.

-  Administration of Industry and Commerce (AIC)

Administration of Industry and Commerce is a governmental agency in charge of corporation, market supervision, etc. Its branches extend nationwide and reach the township level. The China Trademark Office is under the administration of central AIC.

-  Bureau of Quality Technical Supervision (BQTS)

The BQTS is established as a governmental agency to supervise product quality nationwide.

-  Copyright Administration

The National Copyright Administration (NCA) is a governmental agency responsible for copyright administration and enforcement nationwide.

Patent Enforcement

Infringement

A person will be liable for patent infringement and actions can be brought against him if he committed, for business purposes and without authorization of a patentee, any of the following acts: 

- making, using, offering to sell, selling or importing the patented product;

- using the patented process;

- using, offering to sell, selling or importing the product directly obtained by the patented process.

Preliminary Injunction

Where any patentee or interested party has evidence to prove that another person is infringing or will soon infringe his patent right and if such infringing act is not checked or prevented from occurring in time, it is likely to cause irreparable harm to him, he may, before any legal proceedings are instituted, request the people’s court to adopt measures for ordering the suspension of relevant acts and the preservation of property.

Compensation for the Damage

The amount of compensation for the damages caused by the infringement of the patent right shall be assessed on the basis of the losses suffered by the patentee or the profits which the infringer has earned through the infringement. If it is difficult to determine the losses or the profits, the amount may be assessed by reference to the appropriate multiple (1-3 times) of the amount of the exploitation fee of that patent under contractual license.

Any person who, for production and business purposes, uses or sells a patented product or a product that was directly obtained by using a patented process, without knowing that it was made and sold without the authorization of the patentee, shall not be liable to compensate for the damage of the patentee if he can prove that he obtains the product from a legitimate source.

Criminal Sanction

Passing off a patent of another person as ones own patent is a criminal offense if the circumstances are serious. The infringer will be subject to a penalty or detainment or up to three year's imprisonment.

Judicial or Administrative Actions

A patentee or an interested party may bring an action against an infringer in a court having jurisdiction or seek to resolve the dispute through the administrative route by making a request to the relevant administrative authority for patent affairs. The administrative authority is empowered to order the infringer to stop infringing acts and to mediate in the amount of compensation for the damage caused by the infringement. In case of passing off, the administrative authority may order the confiscation of the illegal gains by the infringer, and fine the infringer up to three times their illegal gains or RMB 50,000 (about 6,050 USD) if there are no illegal gains.

Jurisdiction and Choice of Venue 

The jurisdiction of courts over patent infringement litigation is determined by the Supreme Court and only intermediate courts designated by the Supreme Court can be the courts of first instance.

A patent infringement case should be brought before the court where the infringer is located, or where the infringement takes place, or the place where the infringing products are made or sold.

For administrative resolution, the request should be filed with the administrative authority for patent affairs in the place where the infringer is located or where the infringement takes place.

Statutory Limitation

An infringement suit must be initiated within two years from the date on which the patentee or any interested party obtains or should have obtained the knowledge of the infringing act.

Burden of Proof

The plaintiff has to submit evidence to prove his claim against infringement and to support his claim for damages.

The burden of proof will be born by the defendant if the litigation concerns a process patent for the manufacture of a new product filed after January 1, 1993. Therefore, in the case of a charge against a person for the infringement of a process patent for the manufacture of a new product, the defendant denying the charge should present evidence proving that his product is not manufactured using the patented process. However, for a process patent filed before January 1, 1993, the burden of proof will be born by the defendant no matter whether the process is for the manufacture of a new product or not.

Where the infringement relates to a patent for utility model, the court or administrative authority may ask the patentee to furnish a search report made by the SIPO.

Appeal

The decision of the court of first instance can be appealed to the court at higher level whose decision is final. The statutory time limit for an appeal is 15 days after the date on which a written judgment is served for domestic parties, or 30 days for foreign parties having no residence in China.

The decision of the administrative authority may be appealed to the intermediate court having jurisdiction within 15 days from receipt of the notification if a party is not satisfied with the decision. The judgment of the intermediate court can be appealed again to the court at higher level.

Trademark Enforcement

Infringement

A person shall be liable for trademark infringement if he commits any of the following acts:  

-    using a trademark that is identical with or similar to a registered trademark in relation to identical or similar goods without the authorization of the owner of the registered trademark;

-    selling goods using a trademark that is identical with or similar to a registered trademark in relation to identical or similar goods without the authorization of the owner of the registered trademark;

-    counterfeiting, or making without authorization, representations of a registered trademark of another person, or sell such representations;

-    changing a registered trademark and putting goods bearing the changed trademark on market without authorization of the owner of the registered trademark;

-    causing, in other respects, prejudice to the exclusive right of another person to use a registered trademark.

Preliminary Injunction

Where the owner of a registered trademark or an interested party has evidence showing that another person is engaged in or will soon engage in an act of infringement of the former's exclusive right to use his registered trademark and that, unless the act is stopped in a timely manner, irreparable injury will be caused to his legitimate rights and interests, he may, before instituting legal proceedings, apply to the people's court for measures stopping the act and preserving the latter's assets.

Preservation of Evidence

To stop an act of infringement, where evidence may be destroyed or lost or become difficult to obtain in the future, the owner of a registered trademark or an interested party may, before instituting legal proceedings, apply to the people's court to have the evidence preserved.

The people's court shall make a decision within forty-eight hours from receipt of the application. Where the people's court decides to provide the preservative measures, the decision shall be executed immediately.

The people's court may order the applicant to provide security. Where no security is provided, the people's court shall reject the application.

Where the applicant fails to institute legal proceedings within fifteen days from the day on which the people's court takes the preservative measures, the people's court shall revoke the measures.

Compensation for the Damage

The amount of damages for infringement of the exclusive right to use a registered trademark shall be the profit that the infringer has earned through the infringement during the period of the infringement or the losses that the infringee has suffered through the infringement during the period of the infringement, including any reasonable expenses the infringee has incurred in his effort to stop the infringement.

Where the profit earned by the infringer or losses suffered by the infringee through the infringement mentioned in the preceding paragraph cannot be determined, the people's court shall grant a compensation not exceeding RMB 500,000 yuan (about 60,500 USD), according to the circumstances of the act of infringement.

Where a party unknowingly sells goods that are in infringement of the exclusive right of another person to use a registered trademark, but is able to prove that he has obtained the goods lawfully and to identify the supplier, he shall not be held liable for damages.

Criminal Sanction

Any person who, without the consent of the owner of a registered trademark, uses a trademark that is identical with the registered trademark in relation to identical goods, if it constitutes a crime, shall be prosecuted according to law for his criminal liabilities in addition to compensating the damages that the infringee suffers.

Any person who counterfeits, or makes without authorization, representations of a registered trademark of another person, or sells such representations, if it constitutes a crime, shall be prosecuted according to law for his criminal liabilities.

Any person who knowingly sells goods that bear a counterfeited registered trademark, if it constitutes a crime, shall be prosecuted according to law for his criminal liabilities in addition to compensating the damages the infringee suffers.

The infringer may be subject to a maximum of seven years imprisonment.   

Judicial or Administrative Actions

In trademark infringement cases, administrative actions through AIC are the most effective and most frequently chosen approach. The administrative authority for industry and commerce may, upon determining the infringement has taken place, order the infringer to immediately stop the infringing act, confiscate and destroy the infringing goods and any implements specifically used to manufacture the infringing goods and counterfeit representations of the registered trademark, and may impose a fine.

In comparison with court proceedings, the administrative proceedings are both efficient and cost-effective. If damages are sought, however, judicial proceedings are highly recommended.

Jurisdiction and Choice of Venue

 A trademark infringement may be brought before court where the infringement takes place or the infringer resides.

The request for administrative actions may be filed with the AIC in the place where the infringement taked place or the place of the infringer 's residence.

Statutory Limitation

Administrative or court actions against trademark infringement must be brought within 2 years from date that the trademark owner knows or should have known the infringing acts.

Appeal

A party may request reconsideration of the decision of an AIC by the AIC at higher level. The decision of the higher AIC can be appealed to the court having jurisdiction.  

In court proceedings, a party may appeal to the court of second instance if he/it is not satisfied with the judgment of the court of first instance. The judgment  of the court of second instance is final.