Unlike most of other counties, China provides, besides the
civil action, an administrative route (AIC action) to solve
trademark infringement. When you have trademark enforcement
issues, you need to compare the pros and cons of each of the
solutions provided by Chinese law, and then deploy the most
appropriate strategy to crack down on the infringers.
The AIC action:
The AIC action has been known for its simplicity and
Anyone, not necessarily a licensed lawyer, can represent the
right owner to file a complaint. For straightforward
counterfeit case, the AIC usually cooperates with the right
owner and takes actions rather quickly. The AIC seizes the
counterfeits and in exceptional circumstances the transaction
records. A penalty (cease of infringement plus fine) will be
issued within 2-3 months and the counterfeits will be destroyed
If an infringer is punished two times for trademark
infringement in 5 consecutive years, or three times for unfair
competition in 2 consecutive years, the AIC can put him into a
"black list" for special supervision.
It is, however, becoming more and more difficult to push the
AIC to take action unless the case is a simple and
straightforward counterfeiting case. This is due to a number of
legal changes and administrative decisions. As a result, the
official statistics show that the number of AIC actions is
declining: 66,230 in 2012, 56,870 in 2013, 42,450 in 2014, and
34,000 in 2015.
The newly revised Trademark Law (2013) contains some of
these changes. It sets up a short time limit for the
examination of trademarks (9 months) and for opposition
procedures (12 months). It further stipulates that in case of
failure in the opposition, the trademark is immediately
registered (article 35.2). Finally, and this is not something
new, according to an SPC's judicial interpretation on the
conflict with prior rights (2008), a registered trademark
cannot sue another registered trademark.
The combination of the above rules explain why it is
becoming difficult to motivate the AIC: if the target explains
that it just filed a trademark, the AIC prefers to wait until
the end of the examination period. Even if an opposition is
pending, the AIC prefers to wait and make sure that it is not
going to raid a trademark that would become automatically
registered if the opposition fails.
Moreover, the AIC is now reluctant to take action against
the distributor. According to the new Trademark Law (article
60.2), when the distributor has evidence to prove that he
obtained the infringing goods through legitimate channels and
indicate the name of the supplier, the seized product shall be
returned with simple prohibition to sell.
Finally, since the right owner is not legally a party to the
AIC procedure and cannot officially "push" the case, the
efficiency of the action largely depend on the AIC motivation.
And for the reasons below the AIC's motivation is not anymore
what it was:
- The central government's recent policy is to weaken the
AIC's functions and powers in order to alleviate their
interference on the market economy;
- The AIC is merging with other enforcement agencies (TSB,
FDA, etc.) into a Market Supervision Administration. Since
the focus is food and drug security, the FDA is taking the
lead on both manpower and resources.
- The quota of fines is no more a factor of performance
evaluation for the AIC.
- The newly revised Administrative Procedure Law (2014)
requires that, in case of administrative lawsuit against an
administrative agency, the person in charge of said agency
shall appear in court.
Even so, the AIC action remains the most cost efficient way
to deal with straightforward counterfeit case.
Moreover, it can be used as well to preserve infringing
evidence or get the sales records or other information about
the supplier or counterfeiting chain in a combined litigation
The civil action:
The civil action is, of course, more expensive and time
consuming than the AIC action. But it is the primary choice
when you have to deal with complicated cases, like copy of
trade name, imitation of trade dress, use of look-alike
trademark (even already registered if you can prove your
trademark is well-known) etc. and if you want to obtain
First, the civil action is more flexible. Unlike the AIC
action in which you only rely on the ex officio investigation,
you can build your civil case, from the evidence collection to
the forum of the case.
Second, the judges are usually well trained and more
open-minded, and have a rich experience in dealing with
complicated cases. You have better chance to get comprehensive
protection in a civil action.
Last but not the least, the civil action is the only legal
procedure that allows you to get damages. The new Trademark Law
has raised the statuary damages up to RMB 3 million. The SPC is
encouraging the judges to grant punitive damages against repeat
offenders. You can also use the evidence preservation and
property preservation measures to increase the chance to get as
much damages as possible.