IP: China’s alternative administrative route for enforcing intellectual property

Administrative actions may be quicker, cheaper and just as effective as court rulings

In Western countries, we look to the courts to enforce intellectual property rights. In China there are two enforcement routes the IP owner can take: judicial and administrative. Those who take the administrative route are almost exclusively Chinese. When it comes to enforcing IP rights in China, perhaps, like choosing a restaurant in a new town, Western business should consider “where the locals eat.”

In the provinces and designated cities, there are various administrative agencies with local offices that can redress infringement of IP. For patent infringement, there are local intellectual property offices (IPOs) that are overseen by the State IPO; for trademark infringement and trade secret theft, local Administration for Industry and Commerce (AIC); and for IP infringement generally, there is the local General Administration of Customs office, which can ban the import/export of infringing goods. These local offices operate as a quasi-judicial authority, and are staffed (albeit sparsely) with people who specialize in their respective areas of IP law. They can issue injunctions and thus halt the infringement. They can even enlist the police to assist in enforcing their orders. But the agencies do not have the authority to award monetary damages. Also, there is no established appeal procedure, so if a party is dissatisfied with the agency’s decision, it would have to take the case to court to change the result.

The IP owner can use the variety of enforcement authorities to its advantage: If one particular authority does not cooperate (perhaps because of local protectionism), it may be possible to achieve the desired objective by involving an alternative agency. If, for example, patent infringement is difficult to prove, but obvious quality defects exist in the counterfeits, it may be possible to act based on product quality and consumer protection rules. Similarly, if a software copyright case would be hard to bring, a trademark action based on counterfeited packaging rather than the copyrighted contents may be more desirable. In China, prior discussions with the available authorities are appropriate to determine the best possible channel for bringing an enforcement action.

An interesting example of the effectiveness of administrative enforcement versus the court system is seen in the area of trademarks. The first instance concerns Yi Jian Lian (YJL), a famous basketball star in China. A Chinese sports products company registered the trademark “yi jian lian” even though there was no business relationship between YJL and the company. YJL filed a cancellation action with SAIC since the trademark law says that no trademark shall prejudice another person’s existing prior rights in a trade name or the right to exploit their own famous name. YJL provided substantial evidence to establish his popularity in China before the filing date of the trademark and, on that basis, SAIC rightly cancelled the company’s mark as infringing upon the famous name right of YJL.

Contributing Author

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Thomas Ross

Thomas Ross is a litigation partner at Marshall Gerstein & Borun LLP in Chicago, and a Fellow of the Litigation Counsel of America....

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