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Having discussed the basic judicial protection of trademarks in China, I would now like to share my opinions on the following hot issues:

1.      How to Stop and Imprison Counterfeiters

Counterfeiting is not only related to the infringement of trademark rights but also related to the violation of laws and regulations regarding public safety, product testing and maintaining market order.  The penalty for violating the laws or regulations concerning these later issues is more swift and severe.  In order to stop the infringement and punish the infringers, we should utilize multiple remedies as the case may be, taking into consideration the criminal, civil or administrative methods.

As for large scale counterfeiting, the rights owner can file a complaint with the Public Security Bureau.  In accordance with China’s criminal litigation procedures, the infringement activities can be effectively stopped at the investigation stage, and the suspects as well as their properties can be more easily controlled at this stage.  If the evidence is insufficient to file a criminal complaint, the rights owner can turn to the Administration for Industry and Commerce, requesting it to conduct an investigation and to order that the infringing activities cease.  If there is enough evidence to prove the infringement, the rights owner can file a civil lawsuit to protect its right, and request a temporary injunction before or during the lawsuit to quickly stop the infringing activities.  In some cases, the rights owner can ask for a permanent injunction, which the court may order after the hearing.  In that case, if the defendant refuses to abide by the injunction order, the rights owner can ask the court to take enforcement measures.

Criminal culpability for infringement of trademark is defined by law.  Articles 213, 214 and 215 of the Criminal Law of the PRC describe certain acts of trademark counterfeiting that may be subject to criminal procedures and penalties.  Article 213 of the Criminal Law addresses the crime of counterfeiting a registered trademark, Article 214 addresses the crime of selling merchandise under a fake trademark and Article 215 addresses the crime of illegally manufacturing, and selling another's registered trademark.  Under these three Articles, if the circumstances are serious, or if the amount of sales is relatively large, the suspect can face imprisonment or criminal detention of up to three years.

The PRC Supreme People’s Court and the Supreme People's Procuratorate issued two interpretations titled: Interpretation Concerning Some Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon Intellectual Property Rights to lower the thresholds for criminal culpability with respect to trademark infringement.  For example, for infringement upon one trademark, if the amount from illegal business operations proceeds is no less than RMB50,000 or the amount of illegal gains is no less than RMB30,000, it would be regarded as "serious circumstances" or "relatively large amount"; for infringement upon more than two trademarks, if the amount from illegal business operations proceeds is no less than RMB30,000 or the amount of illegal gains is no less than RMB20,000, it would be regarded as "serious circumstances".  In addition, the standards for conviction and sentencing of individuals set forth in the Interpretations shall also apply to the conviction and sentencing of entities.  Moreover, the Criminal Law of the PRC also provides a legal basis for other criminal behaviors like manufacturing counterfeit and shoddy goods.  For those activities that fail to meet the thresholds of criminal culpability, the administrative penalties such as fines can be applied as the circumstances require.

In order to prosecute one's infringement upon a trademark, evidence collection is one of the most important components.  We must pay more attention to the nature, motive, amount and scope of the activities which may become evidence.  Interested parties can provide evidence to the Public Security Bureau at their convenience.  For the private prosecution, the rights owner should take great care in collection and preparation of the evidence as the standard is much higher in the private cases.

2.      How to Obtain Compensation

According to Article 56 of the PRC Trademark Law, the amount of compensation for infringing upon the right to the exclusive use of a trademark shall be the proceeds obtained from the infringement during the period of infringement, or the losses suffered by the infringed due to the infringement during the period of infringement including the reasonable expenses paid by the infringed to stop the infringing acts.  If it is difficult to determine the proceeds obtained from the infringement, or it is difficult to determine the losses suffered by the infringed due to the infringement, the people’s court shall determine the appropriate compensation up to the statutory maximum of RMB500,000 based on the nature of the infringing acts.  In addition, the relevant trademark interpretations also stipulate that the fees for investigation to stop the infringement as well as the reasonable attorney fees can also be awarded to the rights owner.  Evidence collection also plays an important role in the compensation determination.  Rights owners should learn to take advantage of evidence preservation, property preservation and temporary measures.  As for the statuary compensation, the rights owners should make use of all the potential factors regulated in the interpretations to gain support from judges.

To ensure the rights owners are able to obtain adequate compensation, the third draft amendment of the PRC Trademark Law, states that the statutory compensation has been increased from maximum RMB500,000 to a maximum of RMB1,000,000.  In addition, judgments in recent years indicate the change in attitude by the China courts.  The courts have increased the amount of compensation in the infringement cases so as to protect the legitimate interests of the rights owners.  For example, last June, the Supreme People’s Court issued a final judgment on a trademark infringement case between Japan’s Yamaha Corporation and three Chinese companies in Zhejiang Province.  The Court ruled that the three defendants should compensate RMB8.3 million to Yamaha Corporation, which is the highest ever damages award granted in a trademark infringement case in China.

3.      Outlook for IP Development in China

Due to the global financial crisis, the conditions and factors which support China’s high rate of economic growth have changed.  Lower exports, lack of financial support, dropping stock prices and slumping real estate markets, lack of operation and lay offs make the "sound and rapid economic growth" an ongoing challenge, and has placed great demands on IP policy and litigation.

However, we are sure that China will insist on maintaining the principles of “reform and opening up to the outside world” and “construction of an innovative country.”  On this basis, the peaceful development, which indicates the pursuit of internal harmony and external equality, is still the general trend for future development.  But to make the transition from controlling the high rate of economic growth to improving the economic growth, we need to establish a more powerful, impartial, transparent, and convenient IP judicial protection system, and we should strive to enhance international IP cooperation.

At this time the PRC Supreme People’s Court is considering establishing an intellectual property appellate court in Beijing.  In addition, the Supreme Court is actively conducting an investigation on the unified standards for judicial practice, such as infringement cases and authorization of trademark rights or patents.  Some measures to simplify the complicated judicial proceedings of IPR administrative authorization and to reform recurrent litigation are now in development.  In the judicial reform of China, we are paying more attention to the transparency of judicial enforcement, the honesty of judicial adjudication, and the communication between judicial institutions and civilians.  We are also creating a more attractive environment for the development of enterprises during the global financial crisis.

Finally, we are starting to organize professional legal service teams which have international legal service experience, and excellent language skills to improve the quality of the domestic or international legal service.

The third amendment of the PRC Trademark Law is on the way, we believe that the new Trademark Law will do much better in meeting the needs for the development of society and balancing the interests of the relevant parties.

The improvements and developments of the intellectual property protection system will provide a sound legal environment for the stable and rapid economic development of China, and such improvements and developments will also provide positive influences on the economic development and intellectual property protections for other countries around the world.

Thank you for your attention.