One of the main concerns many foreign investors have when approaching the Chinese trade fair circuit is how to protect their intellectual property while at a fair. Here we examine what can be done to protect your interests.
IPR complaint centers
One initiative in a series of activities of the Chinese Government to enhance intellectual property right (IPR) protection was the establishment of IPR complaint centers. Since 2006, around 50 such service centers have been opened in 12 provinces and municipalities to record complaints on IPR infringements. The 12 locations include Beijing, and Heilongjiang, Gansu and Jiangsu provinces. All complaint centers use the same telephone number (+86 - city code - 12312).
For foreigners, these complaint centers offer the advantage of having one single point of contact, thus avoiding the task of finding one's way through the Chinese IPR administration. On the other hand, the complaint centers so far only offer their services in Chinese. Once a company has used a complaint center to record an infringement, it cannot file an administrative action. Follow-up can also be done only via the complaint center and not directly with the responsible departments, which might be disadvantageous.
Preliminary conditions for administrative and judicial enforcement
As in any other part of the world, the first thing that a court or an administration will do before a lawsuit is to check whether the plaintiffs have active legitimacy according to the law. A plaintiff must be a natural person, legal person or other organization with direct interests in the case. Before filing an administrative or judicial action, the rights holder should make sure that their patent rights have been duly registered in China. In case of a patent for invention, before its announcement and publication by the State Intellectual Property Office, the applicant enjoys no protection. The patent law provides a partial protection after publication against third parties exploiting the invention. In this case, the patent applicant has the right to ask them to pay royalty fees for the period between the publication of the patent and its registration (issuance). However, only after the registration (issuance) of the patent is full judicial enforcement possible. In the case of utility model and designs, protection is offered only after full issuance. Furthermore, when filing an action against an infringement, the holders of a utility model must also provide the administration with a search report.
In China, one way to formally enforce IPR is to harness the power of the state. The technical supervision bureau, the administration for industry and commerce, the copyright office and patent administration office are all designated separately or jointly to enforce IPR. These agencies are empowered to conduct inspections of suspected infringers. Some are empowered to actually seize infringing goods and impose fines. The nature of the rights infringed and the complexity of the case will determine which agency to use. The costs of the raid against the infringer vary depending on the circumstances.
Even if the administrative procedure offers an economically cheaper and faster alternative to the more expensive and lengthy court proceedings, there are a number of reasons why administrative procedures lack attractiveness, especially when it comes to the enforcement of patents. Some of them are endemic to the administrative proceeding system: No interim injunctions and no damages can be obtained through administrative proceedings. Unlike in the case of administrative enforcement of trademarks, no raids are conducted by the administration against the infringers. According to the special set of norms regulating patent infringement administrative proceedings, the infringer must be always notified in advance of the pending action. Furthermore, unlike in the case of administrative enforcement of trademarks, the procedures for the administrative enforcement of patents are more complex and require fulfillment of more formalities, which make the process something halfway between the trademark administrative enforcement and the court civil proceedings. Many courts, especially those of the big industrial and commercial cities like Beijing and Shanghai, have improved the quality of their judges and shortened the length of the proceedings. These courts are better prepared to decide complex technical matters than the administration.
(We will continue this article in Issue No. 15.)