China Trademarks: A brief introduction to trade mark enforcement by AIC

December 08, 2017

China, being a rapidly developing market with a highly flourishing economy, is a main source of trade mark infringement, troubling trade mark owners. Today, we make a brief introduction to one of the most efficient measures for cracking down on trade mark infringement – the AIC enforcement action.

According to the law, where a trade mark infringement happens, the parties of interest may institute a legal procedure with the People's Court or request the Administration for Industry and Commerce (AIC) for action. So the AIC is the competent authority for administrative action against trade mark infringement.

There are different levels of AIC, as an organ of government of different levels. Usually, AIC at county level or district level where the infringer is domiciled will examine and accept the complaints for trade mark infringement. If the AIC at county (district) level believes there is a case, it will instruct its subordinate to take a raid action.

AIC at municipal level does not usually handle trade mark infringement directly, unless the infringement involves huge amount of value or the infringement involves several counties or districts where coordination from their common superior AIC at municipal level is needed.

Of the channels to deal with trade mark infringements as stipulated in the Trademark Law – civil litigation, criminal litigation, AIC action and Custom protection – AIC action is the most efficient one, taking only one to three months.

AIC can directly stop the infringement and impose a fine, as opposed to a civil litigation. There is no threshold of value involved to initiate an AIC action, as opposed to a criminal litigation. AIC actions are aimed at trade mark infringements in domestic market other than in the process of imports and exports, as opposed to the Custom protection.

In the year of 2016, AIC at all levels investigated and handled 28,189 trade mark infringement cases, with a total value of RMB 354 million (around $54 million), of which, 293 trade mark infringement cases were handed over to the Public Security Bureaus for criminal investigation, with a total value of RMB 160 million (around $27 million).

To initiate an AIC action, you need

1) To obtain information of the infringer and get samples of infringing goods. Notarisation of the process of obtaining infringing samples is not requisite, but highly advisable, because notarised evidence will be requisite for further legal procedures.

2) To prepare the requisite document, including a certificate of incorporation (for a company complainant) or a copy of passport or ID (for an individual complainant), there needs to be a copy of the trade mark registration certification or other documentation to prove the complainant's legal rights and a power of attorney, in case an attorney is involved. For foreign complainants, the aforementioned documents should be notarised and legalised with a Chinese translation.

3) To prepare a complaint.

Then the complainant files all the above document with the relevant AIC, which will examine the documentation to decide whether to accept the complaint and to take the action.

For a straightforward trade mark infringement case, it will be easy and quick for the AIC to make a decision and take an action. For cases requiring judgment on similarity of the trade mark and goods it will take a while, because the AIC will have to take the risk of being sued for a wrong judgment. In that scenario, the complainant must do a lot of persuasive work until the AIC believes there is a likelihood of confusion.

Upon acceptance of the complaint, the AIC will have the infringer's premises raided, and the infringing goods sealed and seized. AIC will also investigate the amount of value of infringement. The complaint will be required to issue a certification in support of the AIC's decision to the effect that the seized goods are counterfeit.

As remedies, the AIC can order the infringer to immediately stop infringement, confiscate or destroy infringing goods, destroy tools mainly for manufacturing infringing goods or labels and impose a fine where applicable.

In addition to trade mark infringement cases, AIC can also deal with the following matters:

1) Non-standard use of registered trade marks;

2) Unfair competitions (anti-counterfeiting; infringement of trade secret; commercial disparagement and etc.);

3) Violations of Advertisement Law;

4) Unlicensed business activities.

The complainant should also collect evidence and file a complaint.

All in all, AIC action is an incisive and frequently-used way to fight against trade mark infringements.

A bit of final information:

Due to an system reform on government structure, AIC in some provinces has been consolidated with other government organisations to produce a new organisation called "Administration for Market Supervision", which has taken over the responsibilities of investigating and handling trade mark infringement matters.