Five key takeaways from INTA's China sessions

The INTA Annual Meeting took place from May 10 to 14 in Hong Kong – the first time the event has been held in Asia. The China panels hosted speakers from private practice lawyers and in-house counsel at Tencent, Google and Microsoft to Supreme Court judges and representatives of the Quality Brands Protection Committee.

Many strategic tips were given to brand owners to help them survive in China's dynamic and challenging IP system. Overall, while regulatory developments and the rising number and complexity of cases show progress, practitioners advised brand owners that there is no substitute for having a thorough understanding of laws and how infringers break them.

1. File early (and think about classes)

Upon entering or securing position in the market, brand owners should apply for their trademarks before infringers beat them to it. One key amendment of the new Trademark Law allows for the multi-class application of trademarks. “But if an application for one class is opposed, the entirety of your application will be pending,” said Jun He Law Offices' Qiang Ma, who moderated the China Regional Update panel. He added that since this causes delay, “Single class application may therefore be preferable.”

2. Monitor use closely (including on social media)

Once active in the Chinese market, “It is important to monitor and identify conflicting infringing marks as early as possible,” said BMW's Jochen Volkmer, who recommended reviewing online files and the trademark gazette. He continued: “Conducting both online and on-site investigations and collecting bad faith evidence are also critical, as is lobbying work for most important cases. Civil action must be initiated before the defendant registers his trademarks.”

Given much of today's business transactions occur via the internet, brand owners were advised by speakers at the Social Media in China session to harness the potential of social media in China and be aware of the legal pitfalls associated with online activity. Stanislas Barro of Kering encouraged brand owners to keep an eye on comments on social media sites and monitor online traffic daily as “everything goes online within minutes”. Online defamation and false information distribution are everyday nuisances for big brands – illustrated by Barro's experiences with Gucci infringers and slanderers – but these can spin out of control and damage a brand owner's reputation and sales.

3. Takedown requests are ineffective

The volume of takedown requests is increasing every year, though online social media takedown is disruption at best, according to Barro, since it only addresses the visibility issue. Infringing products will pop up again elsewhere. He added that “Civil and criminal enforcement is the real deterrent and optimising investigation techniques and mobilising key actors, such as the legislator, courts, enforcement authorities, brand owners and online operators, are very important.”

Betty Wang of Tencent and Emily Burns of Google also voiced their concerns about safe harbours and takedown measures for online infringement; Wang proposed a more credible discipline system and user policy as well as an efficient notification and takedown system.

4. Use the judiciary

Taking criminal and civil action against infringers is necessary to stop the supply and distribution of counterfeit products and to discourage future infringers. Baker & McKenzie's Lan Li explained the steps to initiate a criminal procedure against counterfeiters: firstly, public prosecution takes place, where the rights owners report or complain to the Public Security Bureau (PSB) – which has the power to investigate and interrogate suspects and to search and inspect premises and phone/email records – and the administrative authorities transfer the case for criminal prosecution. The case then heads to trial for private prosecution where the rights owners directly initiate the criminal proceedings before the court.

Shaoping Yin, a judge from the Supreme People's Court who spoke at INTA's Trademark and IP Issues in China: Government Perspective session, provided some promising updates about China's IP judicial system, revealing that an increasing number of judges are handling IP cases (around 2,600 now). In 2013, 114,000 cases were tried in relation to IP – a number that is likely to rise futher. The Trademark Law changes were also a means to boost efficiency in granting rights and to achieve consistency in protection and implementation. “The judiciary's advancement will further lead to more people willing to choose this channel to solve disputes,” according to Yin.

5. Criminal enforcement remains difficult

Steven Wang, IP counsel for Philips and Acting Chair of the Quality Brands Protection Committee, provided tips to brand owners from many experiences with counterfeiters. In a case involving Philips, GE and Panasonic against Changzhou Shenlai, which exported millions in revenue of fake starters and light bulbs to Africa, Wang learned that close cooperation with authorities to push the case forward was crucial to the destruction of the entire global network and supply chain. His recommendations to brand owners included stepping in early, giving full around support to authorities and fixing evidence prior to transferring for criminal prosecution (as judges and courts have higher evidence requirements than prosecutors).

But not all infringers and counterfeiters can be caught since there are serious obstacles in the way of criminal enforcement. Evidence adoption remains more favourable for suspects than for IP owners, selective use of collective evidence leads to arbitrary results in goods valuation, IP owners' right of information and involvement in the criminal process is often ignored and a number of original equipment manufacturer (OEM) issues remain unsolved, said Microsoft's Edward Yang.

In addition, public perception and political legitimacy (such as the OEM debate and Anti-Counterfeiting Trade Agreement failure) can hinder progress. Further solutions need to be found by attacking demand – the individual buyers who knowingly buy counterfeits. “Overall, managing compliance risk and working hand in hand is critical for the advancement of criminal IP enforcement,” said Yang. “Authorities, brand owners and consumers all need to come together.”


By Katherine Jo