As China lawyers, we are all too frequently contacted by our clients who need help dealing with IP infringement in China.  As a first step, we analyze the situation and propose a course of action.  The following is an amalgamation of memoranda, done so as to convey both what goes on out there and how to deal with it.  Most importantly, however, it is intended to provide a path towards preventing IP infringement through proactive trademark and copyright registrations.

In reading the memo, please note that Company A is our client and the company to whom the memo is written.

Introduction.

This memo outlines next steps for dealing with the ongoing infringement of Company A’s intellectual property in China.

As you are already aware, Website1 and Website2 currently have multiple listings for unauthorized “Brand Name A” products: Website1 has listings for “The Brand Name A” ______ and “The Brand Name A” ______; Website2 has listings for “The Brand Name A” ______ and “The Brand Name A” _______. I am certain that we could find numerous other instances of infringement on other websites if we looked, but these are two of China’s biggest online marketplaces. For instance, we just ran a search on another leading e-commerce site, ______, and found a listing for “The Brand Name A _______.” This _______ is identified as having been published by “________ Publishing,” which we do not recall being one of your OEM suppliers.

To generalize, you are facing — and will continue to face — two main kinds of infringement: (1) the unauthorized manufacture and sale of products that you already produce (e.g., The Brand Name A _______) and (2) the unauthorized manufacture and sale of products that you do not already produce (e.g., The Brand Name A _________ and The Brand Name A _________).

Generally speaking, the most efficient way to enforce IP rights in China is with a registered trademark. China has no common-law trademark rights, which means that unlike in the United States, Company A does not have rights to the “Brand Name A” trademark with respect to every conceivable product in China. Indeed, the only way for Company A to obtain trademark rights in China on a particular product is for Company A to register a trademark covering such product. Right now, your trademarks in China only cover certain products in Class ____ (specifically, _________) and in Class ____ (specifically, __________________, sold as a unit). Nearly every other product — whether one you actually make (like ________ or _________) or one you do not make (like _________ or ____________) — is not covered by your existing trademarks.

Our recommendations follow:

I.  File IP Complaints with Website1 and Website2.

The fastest and easiest way to have infringing links removed from a Chinese e-commerce site is to submit a request to that site. Website1 is part of the ________ group of companies, and so you should be able to use your existing _______ account to file an IPR complaint. With respect to Website2, considering the past difficulties in communication that we have had with the company that runs that site, we recommend that we contact the supervisor at Website2 (with whom we have dealt in the past) who handles IP complaints, and submit a complaint directly to him, rather than having you submit such a complaint through their online form.

The above method should work fine with The Brand Name A ________ product, assuming the postings are not for the resale of legitimately purchased goods. However, it is possible that the above method will not work (and in fact it should not work) with the ___________product on Website1 or the ___________product on Website2, because your China trademarks do not extend to such products. We should nonetheless proceed as if the trademarks do extend to such products. We note that this method worked with Website2 before, largely because Website2 has shown itself to be relatively unsophisticated in terms of its understanding of trademark law.

II. Register Additional Trademarks with the Chinese Trademark Office

Even if Websites 1 and 2 both agree to take down all of the objectionable links, relying on Company A’s two existing China trademarks is not a viable long-term solution. We strongly suggest that you file additional trademarks to cover (1) all of the goods that you already sell, (2) any goods that you might sell in the future, and (3) any goods that you want to prevent anyone else from selling as a “Brand Name A” product.

This last category is the trickiest, for two reasons. First, how do you decide which goods to protect? You probably do not need to worry about “Brand Name A” carburetors or pianos. On the other hand, you probably should worry about “Brand Name A” candles and picture frames. (Some large companies with nearly unlimited budgets, like _________, simply file trademarks to cover virtually all possible goods.) Second, China has a use requirement for all registered trademarks: if you do not use a registered trademark in commerce at least once every three years, it will be at risk of cancellation. That said, China does not have an affirmative requirement to prove use; a trademark is presumptively valid unless a third party challenges it for non-use. This means that if you file a trademark solely to prevent a third party from using that trademark, it will be valid until a third party challenges it, but will be valid for at least three years.

We propose that we work together to come up with a list of classes and goods that will achieve the broadest trademark protection for Company A’s intellectual property. We suggest that you file any such additional trademarks for (1) the phrase “_____________” (2) “The Brand Name A” logo, and (3) any other logos or phrases that you would like protected.

It generally takes around 16 months to register a trademark in China, and you have no rights in a trademark until registration, so we advise moving quickly.

III. Register Copyrights with the China Copyright Protection Center

China’s copyright law is formally quite similar to that of the United States: a valid Chinese copyright exists at the moment a creative work is put into tangible form in any other country that is a signatory to the Berne Convention. However, as a practical matter Chinese agencies and courts do not take action on an unregistered copyright.

Registering your copyrights will allow you to take action against counterfeit Brand Name A products, whether or not the postings (or products) are identified as such. Armed with such copyright registrations, you could take action against (for instance) a bootleg _______ with another title on the cover, a _______ that is simply called a “_________” _______, and a ______ that contains the exact same content but with a different title.

We strongly suggest that you register copyrights for all copyrighted material created or controlled by Company A: your _______s, ________s, and _________s, and also any _________ that have a tangible form, whether as ________s, ________s, or otherwise.

It generally takes around three months to register a copyright in China. You have no enforceable rights in a copyright until registration, so we would advise moving quickly on this as well.

IV. Register Trademarks and Copyrights with China Customs

Registering your trademarks and copyrights in China establishes your rights in such intellectual property. Enforcing your rights requires additional steps. As noted above, to remove infringing postings it is virtually always necessary to contact the e-commerce site. And to stop infringing products from being exported from China requires, at minimum, that you separately register your trademarks and copyrights with China Customs.

Note, however, that China Customs only inspects large shipments. They will not inspect small shipments for infringement, primarily because they cannot determine whether such shipments represent counterfeit goods or legitimately resold goods.

Registration with China Customs is only possible after issuance of formal trademark and copyright certificates.  For this reason as well, we advise moving quickly with trademark and copyright applications.

V. Attempt to Identify Infringing Parties

Though fighting IP infringement in China can be like playing a game of whack-a-mole, sometimes it is possible to discover the identity of infringing parties. In many cases the infringing manufacturer has a connection to a manufacturer you are using to produce your goods. Sometimes they are one and the same. Needless to say, knowing the identity of the infringing party informs the potential actions that we can or will want to take.

We would be happy to discuss the possibilities for investigating the identity of infringing parties. At the very least, we should collate and analyze the information available online. To the extent such infringement becomes systematic and/or endemic, we should discuss further steps such as hiring third-party investigators in China.

VI. File a Complaint with AIC and/or File a Lawsuit

Once we have solidified Company A’s IP portfolio by registering the appropriate trademarks and copyrights and identifying serial infringing parties, we can consider taking formal action beyond requesting e-commerce sites to remove infringing postings. There are two main options for formal action:

(1) File a complaint with the Administration of Industry and Commerce (AIC), the national-level agency that handles IP disputes and enforces IP rights.

(2) File a lawsuit with a Chinese court that has jurisdiction over the defendant.

These approaches both have good and bad points. Filing a complaint with the AIC is usually cheaper and more likely to result in a quick injunction and/or a seizure of the infringing goods. However, the AIC does not have the power to award monetary damages for infringement or to require indemnification; for that, you would need to file a lawsuit.

Note that for both of the above approaches for dealing with China IP infringement, the identity and location of the infringing party makes a big difference. If the infringing party is a large state-owned enterprise, or is the major employer in a smaller city, the chances of either the AIC or the local courts taking meaningful action go down

We are not at this stage yet, so it would be premature to outline a formal strategy for pursuing infringers. But generally speaking, we would work with our partner law firms in China to formulate the best strategy for you.

Conclusion

“The Brand Name A” has become a famous brand in America and beyond, and because of that you will inevitably be facing increasing intellectual property infringement in China. To fight against this we recommend that we move forward with (1) filing IP complaints with Websites 1 and 2; (2) registering additional trademarks in China; (3) registering copyrights in China; and (4) registering your existing trademarks with China Customs.