This content is from: China (PRC)

Sponsored discussion: How to fight online infringement in China

Kai Yang, Wen Zhong, and Peng Zheng of Liu, Shen & Associates discuss how to combat online infringement in China and why brand owners need to take the fight to counterfeiters in the physical realm.

What legal provisions are there for rights holders to stop counterfeiters online? Does the new Trademark Law or implementing regulations have any provisions that make it easier for rights holders to protect their brands online?

Kai Yang: There are no specific provisions that apply to internet trademark infringement in China’s Trademark Law, but there is also nothing stopping rights holders from relying on the general provisions regarding trademark infringement and legal remedies to stop internet infringement. For example, rights holders can file a civil litigation action with the courts, or file an administrative complaint with the local Administration of Industry and Commerce (AIC).

Furthermore, China’s Tort Liability Law also covers internet infringement and remedies, including internet trademark infringement, which can be helpful for the rights holders. According to Article 36 of the Tort Liability Law, there are two main forms of internet infringement: direct infringement by the internet user or internet service provider (ISP), or the ISP’s tort liability for another party’s direct infringement.

The first form, direct infringement, is not much different from common trademark infringement. The second form applies when an internet user is infringing upon another party’s trademark right via the ISP’s service. The right holder has the right to require the ISP to take necessary measures to stop the infringement. If the internet service provider refuses to do so, it will also be subjected to joint and several tort liability along with the direct infringer. Furthermore, if the ISP knows that another party is infringing trademark rights but does not take any necessary measures to stop such infringement, the rights holder has the right to require the ISP to take joint and several tort liability along with the direct infringer, without the prior notice.

Furthermore, for internet infringement provisions, the copyright law and general practices in China provide many examples, so cases involving internet trademark infringement remedies may refer to copyright regulations and practice.

Wen Zhong: There are several provisions concerning domain name infringement in the relevant trademark regulations and judicial interpretations. The Interpretation of the Supreme People’s Court Concerning the Application of Laws in the Trial of Cases of Civil Disputes Arising from Trademarks provides that the registration of the same or similar words of another party’s trademark as the domain name and using such domain name for the trade of relevant goods or services shall be recognized as trademark infringement.

Meanwhile, the Interpretation of the Supreme People’s Court on Application of Laws in the Trial of Civil Disputes over Domain Names of Computer Network specifies that if the registrant of the domain name has the bad faith to register the domain name which or the main part thereof constitutes the imitation or copy of another party’s well-known mark, or is the same or similar to the other party’s trademark which is likely to cause confusion among the relevant public, such action will be recognized as trademark infringement, and the trademark holder can file a civil case with the court against the domain name registrant.

Peng Zheng: The new Trademark Law did not have a specific provision on internet trademark infringement; however the new Implementing Regulations to the Trademark Law promulgated on April 30, 2014 gives the related provision on the internet trademark infringement: “Article 75. To provide any other person with storage, transportation, postal service, concealment, business place or online trading platform in his infringement of the exclusive trademark right, belongs to the acts of ‘providing facilities’ in Article 56(6 )of the Trademark Law”, and therefore shall constitute the trademark infringement.

What should an effective anti-online counterfeiting program look like?

Kai Yang: For an effective anti-online counterfeiting program, the right holder needs to gather information about the online infringer. In some circumstances, an investigation may be needed. Once a rights holder has found and saved evidence of the infringement, it may attempt to take down the infringing site by sending an infringement notice to the internet service providers first, together with the trademark registration certificate, identity certificate of the complainant, the infringers’ web addresses where the counterfeits are being sold, basic information about the counterfeiters and grounds to prove that the sold products are counterfeits. Furthermore, it is better to do a notarization of the webpage where counterfeits are sold in advance. Notice may be given by mail, email, fax, or on the specific webpage.

Wen Zhong: Rights holders should keep in communication with the ISP. Once the ISP receives the notice, it will then review the complaint, contact the suspected infringer about the matter, and make comments or decisions on the matter. The ISP may or may not take actions to stop the accused of infringement based on their own judgment on the matter.

Peng Zheng: If an ISP fails to deal with the counterfeiter, the right holder can file a civil case against the infringer and list the internet service provider as a co-defendant.

Should an anti-online counterfeiting action try to trace the counterfeits to their physical suppliers and warehouses? If so, what is the best way of doing that?

Kai Yang: When preparing for an anti-online counterfeit action, it is always advisable to be prepared to trace the counterfeits to the physical suppliers and warehouses, because this is the most effective way to prevent the infringing acts. If the right holder cannot fix the physical location of the counterfeiters, the infringers can simply establish a new online store to continue to sell the fake goods even if the old online store is closed.

Wen Zhong: To trace the goods back to the counterfeit suppliers, the right holders may, by itself or via a third party or a professional investigator, contact the ­counterfeiter online first, using a hidden identity, to trace the physical suppliers, step by step, to dig them up.

Peng Zheng: During the process, fixing the infringing evidence is the most important. There are many ways of fixing the evidence, such as having evidence of the online trade notarized, including evidence of payments and purchases, as well as any receipts.

There are other methods as well. For example, the investigator can also offer to place a big order, in order to arrange meetings with the suppliers and request to visit the factory and warehouse of the counterfeiter.

Do big online markets such as Taobao have anti-counterfeiting programs? If so, how do they work and how can brand owners take advantage of them?

Kai Yang: Yes, many big online markets in China such as Taobao have anti-counterfeiting systems. For example, if the right holder finds that there are counterfeits on Taobao, the rights holder can send the infringement notice to Taobao, together with the trademark registration certificate, identity certificate of the complainant, the infringers’ web addresses, basic information about the counterfeiters and written grounds to prove the sold products are counterfeits.

Taobao will then review and check the infringement notice, notifying the accused infringer of the complaint for a response, and if Taobao believes the complaint is justified and authentic, it will remove the specific counterfeiting URLs. In some instances, for example if a particular online store on Taobao sells a large number of counterfeits, or if it is found to be committing other severe acts of trademark infringement, Taobao may find that this online store has violated the site’s terms and conditions and will impose punishment, such as limiting or even closing the business of the online store.

Wen Zhong: The trademark owner is advised to maintain a close relationship with big online markets such as Taobao, via its own IP team or trusted IP lawyers who are expected to have expertise on handling trademark infringement matters. This is because online infringement varies a lot and often takes on new patterns. Some of the infringers are walking subtly in the grey area, which from time to time brings the ISP difficulties in determining whether certain online activities constitute trademark infringement. Quite often, the accused infringers will respond to a complaint, coming back with arguments and excuses which make it difficult for the ISP to make a determination.

Peng Zheng: Furthermore, the costs in taking online anti-counterfeit action is comparatively very low, so we highly recommend that trademark owners keep a close watch on the internet to find online counterfeit sales. Whenever counterfeiters are found, the trademark owner should take immediate action. If more such action is taken, the internet service provider will pay more attention to infringement notices.

Can brand owners take advantage of criminal provisions to stop online counterfeiters? If so, what do brand owners need to do to make an anti-counterfeiting case a criminal case?

Kai Yang: Articles 213 and 214 of the Criminal Law contain provisions concerning crimes relating to trademark infringement. For those who use the identical trademark without the trademark owner’s permission, if the circumstances are serious, they shall be sentenced to a fixed-term imprisonment of not more than three years or criminal detention or be fined or both. If the circumstances are very serious, they shall be sentenced to a fixed-term imprisonment of no less than three years but not more than seven years and shall also be fined.

For those who knowingly sell counterfeit goods, if the amount of sales is relatively large, the infringer shall be sentenced to a fixed-term imprisonment of not more than three years or criminal detention and be subjected to fines or both. If the amount of sales is huge, they shall be sentenced to fixed-term imprisonment of no less than three years but no more than seven years and shall also be fined. According to the related judicial interpretations, the starting point to prosecute the criminal trademark infringement cases is where the amount of illegal business is valued at RMB 50,000 ($8,000).

Wen Zhong: The criminal provisions are not limited to offline cases, and internet trademark infringement can also be governed by these provisions if the amount involved meets the standard for prosecution. To take advantage of criminal provisions, the collection of detailed information about the counterfeiter is a must, such as the name and address of the counterfeiter. This evidence should be obtained in advance, so that the criminal jurisdiction can be ascertained. Evidence of online infringement may lead to a substantial offline investigation, and evidence collection is crucial in order to successfully criminally prosecute the infringer.

Peng Zheng: The trademark owner should provide the local police with the trademark registration certificate, identity certificate of the trademark owner, basic information about the counterfeiters and a written statement certifying that the sold products are counterfeits. Then the police will review these materials and make the decision as to whether to accept the case. If they accept the case, the police will take action against the counterfeiter, and when the investigation is completed, the police will transfer the case to the procuratorate who will bring the case to the court for the criminal prosecution.

What tips do you have for working with the government, such as law enforcement and administrative agencies in fighting online counterfeiting?

Kai Yang: Generally speaking, the administrative handling of online counterfeiting cases is similar to that in normal counterfeiting cases.

Like a criminal complaint, it is necessary to know the counterfeiter’s true name and address to file the administrative complaint, and then file the trademark infringement complaint with the local AIC that has the territorial jurisdiction over the counterfeiter.

Wen Zhong: The document submitted to the AIC normally should contain the following: trademark registration certificate, notarized identity certificate of the trademark owner or its exclusive licensee, basic facts of the infringement, the name and address of the counterfeiter, and a written statement if any to establish that the products being sold are counterfeit and if possible samples of the genuine and counterfeit products. If the trademark owner hires an agent to file the administrative complaint, a notarized power of attorney is also needed.

Peng Zheng: Know as much as possible about the infringer via investigation first. Fixation of evidence through a notary public is recommended if the situation allows. Also, contact the authority on document and establish any needed power of attorney before the action and quickly move to file the action with the authority so as to ensure a higher likelihood of seizing the infringing products on the spot. Furthermore, brand owners should prepare in advance if appraisal on trademark infringement is required, and urge the authority to take the action as quickly as possible by persuading the officials that the case is urgent or for certain reason you could not afford waiting long.

Finally, it is important to always keep a positive attitude towards the officials even if the result is not to your expectation and believe that the officials are on your side.

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