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ADMINISTRATIVE ACTIONS - An inexpensive route to prevention of trademark infringement in ChinaAn administrative action is an action taken by the Administration for Industry and Commerce (AIC), based upon complaints filed by rights owners alleging intellectual property infringement. The AIC is a governmental body established to administer market activities. It has the power to investigate and issue decisions on infringement cases involving intellectual property owned by domestic and foreign enterprises. If the AIC believes that infringing activities have taken place, it can order the infringing party to stop the acts of infringement or confiscate and destroy the infringing goods and the tools or machinery used for manufacturing the infringing goods or labels. The AIC also has the power to impose a fine based on the profits generated by the infringing activities. In China, the two ways generally employed by rights owners to enforce intellectual property rights are administrative and judicial actions. Each option has its own strengths and weaknesses. Administrative actions are relatively inexpensive and are very useful in preventing infringing activities quickly where the facts of the case are straightforward. An AIC action, such as an investigative raid, can be undertaken within a matter of days after a complaint has been filed; a civil action, in contrast, may require a year or even longer for final resolution. Although the Chinese government has made some recent and important progress in handling trademark infringement matters, serious obstacles remain in the way of guaranteeing IP protection for brand owners. Some of the significant cases of the past year are as follows: Nike and Adidas In Shanghai, a dress manufacturer produced and sold 15,000 units marked with the labels "Nike" and "Adidas" for a total of RMB177,368. The US and German companies who owned the marks filed for administrative action with the Shanghai Administration of Industry and Commerce. The action was successful and the infringer faced orders to cease the violation, paid a fine of RMB 180,000 and had the infringing goods confiscated. Honda In Wuxi, a company marked their motorcycle parts with the label "Hongda". Honda took exception to this and filed for administrative action with the aim of ceasing this activity. The action was ultimately successful and the "Hongda" company was ordered to cease infringement and pay a fine of RMB 300,000 out of sales of RMB 430,000. 3M A manufacturer of aluminum and plastic boards in Ningbo had, since 2001, sold a total of RMB 811,000 of goods bearing the 3M mark. The Ningbo Administration of Industry and Commerce levied a fine of RMB 100,000, ordered a cessation of infringing activities and confiscated remaining infringing materials. Mickey Unlimited and Mickey & Co. Since April 2000, the Shenzhen "Mickey" Industrial Co. had been purchasing or commissioning others to manufacture 7,500 dresses bearing "Mickey Unlimited" or "Mickey & Co." labels. During this time it had sold 7,066 dresses for a total value of RMB 440,000. The Shenzhen Administration of Industry and Commerce ordered cessation of these activities in addition to fining the company RMB 250,000 and confiscating the remaining products. Hewlett Packard A Beijing citizen was found making and marketing printer cartridges marked with "HP". The Haidian District Administration of Industry and Commerce ordered the infringer to cease this activity and levied a fine of RMB 10,000 in addition to confiscating the counterfeit products. Figures from the State Administration of Industry and Commerce indicate they handled 37,489 cases involving trademarks with 26,488 cases specifically involving trademark infringement, indicating that enforcement in these issues is becoming more widely used. This is welcome news, as it indicates that the legal structure has developed to the extent where holders of violated rights not only have recourse to the law but are using these options on a regular basis. Nonetheless, after considering the cases above and the state of counterfeiting in China, there certainly remain structural problems. Regular readers of this newsletter understand that issues relating to enforcement, evidence collection, local protectionism and damages remain problematic. |
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