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Despite China’s many efforts to improve its systems for granting and enforcing intellectual property rights (IPR) many UK businesses are still uncomfortable about relying on Chinese legal mechanisms to protect them from would-be infringers and counterfeiters. As companies from elsewhere in Europe and the USA and especially Japan file increasing numbers of applications for patents and trademarks in the PRC the message to British companies should be this: if you wait until you feel comfortable it may be too late.
Although a rudimentary system for registering trademarks was introduced in China as far back as 1950, it was not until the 1980s that proper intellectual property laws were enacted paving the way, the government hoped, for much needed foreign investment. A trademark law was adopted in 1983, with major revisions in 1993 and 2001. 1985 saw the first Chinese patent law, which was to be amended in 1992 and 2000.
In each case, revisions to the law were brought about to improve the system for obtaining protection and enforcing it, and most of the major international agreements were recognised culminating in China’s accession to the WTO in 2001.
Now the country boasts a sophisticated framework of IP laws that bear similarities with those of many European countries.
The State Intellectual Property Office (SIPO) grants three kinds of patents:
Invention patents are much the same as the patents granted in the United Kingdom – i.e. they are granted in respect of technical ideas that are novel and possess an inventive step. Utility model patents are granted in respect of technical inventions that relate to the shape and/or structure of a product. The idea must possess novelty but a lower standard of inventiveness is required. A design patent is akin to a United Kingdom registered design, and is granted in respect of aesthetic aspects of shape or pattern in an industrial article.
Of these three types of patents, the utility model appears to be particularly favoured by Chinese applicants, partly due to its low cost, but also due to the ease with which the patent right can be obtained (the application is merely examined as to formal matters) and the speed of the process (typically 6-9 months between application and grant).
Most non-Chinese applicants appear strongly to favour invention and design patents, which may in some cases be due to unfamiliarity with utility models as a form of protection in their own country.
Chinese trademark matters are managed by the Administrative Authority for Industry and Commerce (AIC), an umbrella authority under which the registration of trademarks is handled by the Chinese Trademark Office (CTMO) and disputes are dealt with by the Trademark Review and Administration Board (TRAB). There are many similarities between the Chinese trademark laws and our own, though one notable difference is the inability to cover multiple classes of goods and services within a single registration. This particular wrinkle may disappear in the next round of amendments to the trademark law. From December last year Chinese trade mark registrations and pending applications can be searched online.
There are special provisions for protecting well-known trademarks – i.e. trademarks which are “widely known to the relevant sectors of the public and enjoy a relatively high reputation in China”. The aim is to protect against the registration of marks that reproduce, imitate or translate a well-known trademark. In such cases, where the well-known mark is registered, the would-be imitator should not be registered even in respect of dissimilar goods. Even in the case where the well-known mark is not registered, an application to register the other mark will be refused for similar goods. Trademark owners wishing to take advantage of the special provisions for well-known trademarks must seek to have their marks officially recognised as such. Certain authorities are empowered to confer “well known” status upon a mark, and the process must be instigated by the owner of the mark, usually as part of a dispute.
China also has copyright laws that aim to protect original, tangible and reproducible works in many areas, and importantly in the fields of literature, music, photography and computer software. The major international conventions such as the Berne Convention and the Universal Copyright Convention are recognised. Other notable IP rights recognise plant varieties and the design of integrated circuits.
China has made great progress in recent years to improve the legal mechanisms by which right-holders can enforce their protection in the PRC. Enforcement of IPR in China usually involves one of two approaches. The so-called “administrative enforcement” entails asking local (i.e. city or provincial) government agencies to act against an infringer. In the case of patent infringement the appropriate local authority would be the Administrative Authority for Patent Affairs (AAPA) and in the case of a trademark dispute the authority would be the local branch of the AIC.
An advantage of the administrative route is that the process is relatively speedy and low in cost. However, particularly in the case of patent disputes, the effectiveness can vary according to the authority and is limited in its effect to the particular locality. Furthermore there remains much scepticism among foreign companies about the usefulness of the administrative route when a non-Chinese corporation wishes to restrain the activities of a Chinese company or individual. Certainly foreign companies are advised to choose the forum very carefully and in particular they should avoid pursuing a Chinese entity in a locality where it is a major employer. An alternative option is to take action in another location where infringement is taking place such as where the goods are being sold, rather than where they are being manufactured. In any event, in this kind of action the local authority can only grant an injunction and is not able to award damages.
The other enforcement route is the judicial one, using one of the Intermediate People’s Courts to bring an action for infringement. The court can award injunctive relief as well as damages. Once again the forum should be chosen carefully, after taking local advice. In the case of a complicated patent dispute it is vital that a court is chosen which has a knowledgeable panel of patent judges. Independent, technical experts will be appointed by the court as necessary. There are several highly experienced courts in Beijing and Shanghai handling hundreds of patent and trademark cases each year.
An alternative to the above types of action is voluntary arbitration. This is a popular way of solving disputes in China, with many localities retaining several panels of experienced arbitrators.
The owner of IP rights in China can ask customs officials to seize infringing goods that are being imported to, or exported from, China. The Customs Office can even take action of its own initiative. However, to use this procedure the rights-owner should ideally have previously recorded all of the relevant information, concerning the IPR, with the Office. For the goods to be detained, it will be necessary to make a security payment, though from July of this year a general security sum can be paid in advance to speed up the process.
China’s intellectual property laws are due to be revised again within the next 2-3 years in line with the current Five Year Plan. For general information on the amendment of patent laws try visiting www.sipo.gov.cn Among other things the next round of amendments is expected to give more power to the administrative authorities for enforcement of IP rights and also to remove the legal requirement for Chinese companies to use local (Chinese) licensed agents when a procuring IP rights abroad, thus allowing them to source their overseas legal services directly.
In summary, China’s mid-term school report for IP might read “much, much better – must keep it up!” Meanwhile, UK companies can be confident that the Chinese IP system can serve their interests well, allowing them to take full advantage of the unique window of opportunity that the Chinese market currently presents. All they need is good legal representation and a little more faith.
Author: Steve Mohun, Partner, Haseltine Lake,European Patent & Trade Mark Attorneys, Leeds
