Trademark infringement has always been a major concern for firms doing business in China. However， as new figures emerge, it seems that this problem is only getting worse. According to the Customs General Administration (CGA) The total value of all goods seized for trademark infringement totaled over RMB328,000,000 in 2007.
The process of Customs seizures is the primary line of defense for trademark owners to prevent the infringing goods from reaching the market. Under current protocol the CGA will monitor all good during export inspection for suspicious trademarks. If an item is deemed to be questionable, the suspected goods will be detained, and the rights owner will be notified. If infringement is verified, Customs will then confiscate the goods and issue a nominal fine. While this process has had limited success in preventing the export of counterfeit goods, it lacks sufficient deterrent measures as the seizure of goods and small monetary penalty do not outweigh the potential gains of exporting these infringing goods.
How then is a trademark owner supposed to deter the exportation of infringing goods? Recent research has shown that China has sufficient laws and regulations to hold the exporter civilly liable for trademark infringement. This will force exporters to pay significant compensation to the rights owner and will act as strong deterrent to exporting counterfeit goods.
The legal basis for imposing civil liabilities on the exporter includes Artile 118 of the General Principles of Civil Law of the PRC which states that the trademark owner is entitled to compensation from the infringer. Also Article 56 Article 56 of the Trademark Law of the PRC sets out various elements to be taken into account when determining the amount of compensation to be awarded, including the illegal gains obtained by the infringer from the infringement, the loss suffered by the rights owner including its “reasonable costs” in stopping the infringement, and a right to statutory damages of no more than RMB 500,000, to be awarded by the court according to the details of the infringement.
In addition to these regulations, there are a number of other articles, detailing the various forms of copyright infringement and the corresponding monetary penalties applicable to said infringement.
Edward Lehman, Managing Director of Lehman, Lee and Xu said that “the emergence of these regulations as a method of penalizing trademark infringers will have a massive impact on the market. Not only will these heavy penalties serve as a deterrent that will prevent exporters from continuing to engage in infringing activities, it will also serve as a warning to other potential exporters. We at the firm are very excited to help our clients take advantage of these measures in order to punish copyright infringers and protect our client’s interests.”