Intellectual property (IP) is a significant property in China and IP right (IPR) is a very important right recognised and protected by Chinese law. In recent decades, China has established its legislative framework for IP protection, including the Copyright Law (enacted in 1990 and amended afterwards), the Trademark Law (enacted in 1982 and amended afterwards), the Patent Law (enacted in 1984 and amended afterwards), and the Anti-unfair Competition Law (enacted in 1993, with amendment in November 2017 which will come into force on 1 January 2018, dealing in part with trade secrets protection), etc. (together referred to as the “IP Law”). To enforce the IP Law, Chinese government has well established multiple administrative and judicial authorities, which could be deemed as one of the characteristics of Chinese IP enforcement.
2. Administrative Enforcement on IP
The Chinese government has established and authorised multiple administrative agencies to enforce the above-mentioned IP Law. The major ones include: SIPO (State Intellectual Property Office), NCA (National Copyright Administration), SAIC (State Administration for Industry and Commerce), and GAC (General Administration of Customs), etc. A short summary on the functions of these IP related administrative enforcement agencies is as follows:
SIPO: It is an administrative agency enforcing patent law and patent related legal and administrative matters. The first function of SIPO is to accept and examine patent applications and grant patent rights for inventions, utility models and designs. For applicants whose patent rights have been approved by other countries’ patent agencies, they must apply for their patent rights with SIPO in order to be granted Chinese patents. However, the prior-application in other countries enable the patentee to enjoy certain rights to priority. Another essential function of SIPO is to re-examine patent application and invalid patent rights accordingly.
NCA: It is an administrative agency responsible for the administration of copyright nationwide. To perform its responsibility, NCA has also established sub-agencies at the provincial level across China. One of most significant functions of NCA concerning IP enforcement is that NCA and its sub-agencies have the power to impose administrative penalties, such as confiscating unlawful gains, confiscating and destroying infringing copies, imposing a fine on copyright infringers if certain copyright infringements are ascertained. If the infringement circumstances are serious, NCA and its sub-agencies can even confiscate key materials, tools and instruments mainly used to produce infringing copies. In practice, local governments have established independent agencies responsible for administrative enforcement on the cultural aspect of the market, which covers copyright enforcement.
SAIC: It is a very powerful administrative agency with broad powers and functions in China. One of the administrative sub-agencies under SAIC is the Trademark Office who is responsible for handling the trademark and trademark related matters. The same as patent, the right holder of a trademark must apply for trademark registration with the Trademark Office if an entity or individual intends to have exclusive use-right of the trademark in China unless the trademark is already well-known world-wide which enjoys special treatment under the Trademark Law. The same as the powers NCA enjoys, SAIC, especially the Trademark Office, has broad power to enforce the Trademark Law. SAIC has power to impose administrative penalties on trademark infringers if certain infringement activities are confirmed.
GAC: It is the administrative agency handling customs matters including the IP related customs matters. According to the Regulation on the Customs Protection of Intellectual Property Rights (enacted in 2003), right holders, who have evidence to prove that the imported or exported goods are infringing their IP rights, may apply to GAC for attaching the goods on ports immediately. After investigation, if the infringement is confirmed, GAC has the power to take enforcement measures, including confiscation, on the goods. This is an effective measure for IP right holders to seek immediate remedies whenever their IP rights have been seriously infringed in China by cross-border business activities.
3. Judicial Enforcement on IP
Judicial enforcement on IP is one of the functions of Chinese judiciary. There are four levels of courts established in China, including the District or Basic Courts, the Intermediate Courts, the Provincial High Courts and the Supreme Court. In China, the principle that the second instance being the final instance is adopted by the Chinese civil, administrative and criminal procedure laws, which means for most cases, a party can only appeal once after the first instance judgment is handed down. There are three kinds of IP related lawsuits heard by Chinese judiciary in order to enforce the IP Law.
Administrative lawsuit: The administrative lawsuit in China means that the lawsuit brought by a party, who disagrees with the administrative decision made by a concerned administrative agency that impacts the party’s interests directly, claims for revoking or invalidating the administrative decision with a Chinese court that has competent jurisdiction over the dispute. Based on the IP Law mentioned above, most of administrative decisions made by SIPO, NCA, SAIC and GAC, etc., relating to administrative enforcement on IP, could be sued by the interested parties before Chinese courts.
Civil lawsuit: Civil lawsuit is frequently brought by IP right holders to the Chinese courts when they seek enforcement of their IP rights in China. If the alleged IP infringements are proved, upon request by right holders, Chinese courts will enforce the IP rights by rendering remedies to right holders, such as injunction and monetary damage, etc. The courts may order infringers to stop/discontinue infringing activities in the courts’ judgment, which has the similar function as an injunctions order issued by Western courts. Under certain circumstances, Chinese courts can even issue pre-litigation injunction, upon right holder’s request. In addition to injunction, Chinese courts can also order infringers to pay monetary damages to right holders upon request. The Chinese IP Law entitles right holders to claim monetary damages based on the following factors: benefits gained by infringers; losses suffered by IP right holders; statutory damages up to RMB 500,000 for trademark and copyright infringements, RMB 1 million for patent infringement.
Criminal IP lawsuit: According to the Chinese Criminal Code and the relevant Chinese Supreme Court’s judicial interpretation, activities infringing patent, copyright, trademark or trade secret, could constitute IP crimes if certain thresholds are met. The threshold for constituting an IP crime is met if the illegal business revenue reaches RMB 50,000 or illegal profit reaches RMB 30,000. And if the “especially severe consequences” occurred, the infringer can be imprisoned up to three years or seven years. Although the criminal punishment is the most powerful measure to enforce IP Law in China, in practice, only a few IP infringers are criminally prosecuted for many reasons.
4. Recent Development of Judicial Enforcement on IP
Typically IP lawsuits are heard by the judges in civil divisions of ordinary courts and it is still the general practice in most ordinary courts. To meet the need of handling the significant increase of IP related lawsuits and dealing with the special features of IP related disputes, some courts established IP divisions in their courts. In 2014, the Chinese judiciary made a big leap on IP enforcement by establishing IP Courts in Beijing, Shanghai and Guangzhou. The judges in the IP Courts are supposedly more professional and more specialised in IP related legal matters. Although there is still an argument on whether Chinese judiciary should form the IP Courts, judicial enforcement on IP has been strengthened and the trial quality of IP related lawsuits has been upgraded since the establishment of these IP Courts. According to recent news release by the Chinese Supreme Court, certain special IP divisions with broader jurisdictions in comparison with the ordinary courts have been formed in certain provinces in 2017, which is a strong signal sent out to the world that judicial enforcement IP will be continuously strengthened in China.
As mentioned from the very beginning, the IP enforcement system has been well established in China during past decades. These IP enforcement agencies mentioned above have played a significant role in protecting IP rights, curbing infringing activities and punishing infringers. As a result, in general, IP owners’ rights can be effectively enforced in China, although there is still plenty of room for further improvement and progress.
ZY PARTNERS is a full-service law firm with special expertise on IP based in Beijing, China. The firm now has over 50 highly-skilled lawyers and patent attorneys representing domestic and international clients in sophisticated business transactions, transnational contentious matters and IP prosecution in China. The firm has been regularly ranked as PRC leading IP firm since 2009.
Mr. Zhou Qiang has substantial experience in representing Chinese and foreign clients before Chinese courts, domestic and international arbitration institutes. He also has a wealth of experience in representing Chinese companies, as well as foreign companies, in solving their disputes through negotiations and mediation.
Mr. Zhou has filled the position of legal expert in IP-related legal matters, specialising in copyright, trade secrets and the application of international IP systems in China under the WTO and TRIPS rules.
Mr. Zhou has degrees from Jilin University’s Department of Law, where he graduated in 1982 with a LL.B. as well as from the University of Iowa’s College of Law in 1995 where he earned his LL.M. He has worked as a law clerk and an associate judge for the Chinese Supreme Court from 1982 to 1991.
Ms. Deng Wei has substantial experience in advising international clients on IP protection in China. She has represented clients in civil proceeding, administrative litigation and criminal proceeding in IP-related matters. Ms. Deng also specialises in Commercial Law, Foreign Investment-related Law and Labor Law. She offers a full range of commercial law services for multinational corporations in various industries. She deals with both litigation and non-litigation matters.
Ms. Deng obtained her LL.B. degree from the Law School of Minzu University of China in 2011. She is now pursuing a Master’s Degree in Civil and Commercial Law in Renmin University of China.
Mr. Zhou Qiang
+86 10 5879 0066-208
Ms. Deng Wei
+86 10 5879 0066-209