This entry in intended to complete this series about IPRs protection, therefore I am going to briefly examine the other pieces of legislation having an impact on this subject. (A very useful web-site to help the foreign investor understanding IPR in China is the following:
http://www.chinaipr.gov.cn/
).
The legislative framework that somehow affect the field of intellectual and industrial property rights does not end with the overview offered up to now. The regulatory instruments described in the previous entries outline the main contents of the theme, but others still have significant influence on both determination of these rights, and on the effectiveness and consistency of the same. First, with reference to the “determination”, it is worth noting that the
General Principles of Civil Law
(
GPCL
), adopted with the aim of protecting civil rights and interests of citizens and legal persons, they also contain an express reference to
Intellectual Property Rights
(In particular Articles 94 to 97 and 118 of the GPCL). Second, with reference to “consistency”, must be mentioned the
Regulations on Customs Protection of Intellectual Property Rights
having the aim of ensuring effective protection of these rights. However, these Regulations have been replaced by the “new”
Regulation Regarding Customs Protection of Intellectual Property Rights of the People’s Republic of China,
adopted at the 30th Session of the Permanent Committee of the State Council on the November 26, 2003, in force March 1, 2004.
(Regulations on Customs Protection of Intellectual Property Rights
, promulgated by the State Council, July 6, 1995, and in force from October 1, 1995. Also have to be considered the
Rules for the Implementation of the Regulations for the Customs Protection of Intellectual Property Right,
adopted by the
General Administration of Customs
, September 28, 1995).
There are other pieces of legislation having an impact on IPRs, i.e.:
–
Advertising Law of the Republic of China
, where Articles 4, 11, 12, 21 and 38 are of particular relevance because they expressly prohibit unfair conduct and misleading conduct for the promotion of inventions.
–
Regulations of the MOFTEC and the SAIC concerning the Administration of Trademarks for Foreign Trade
, one of the purposes is to preserve the right deriving from the registration of the trademark.
(
In particular Article 1 of the
Regulations of the MOFTEC and the SAIC concerning the Administration of Trademarks for Foreign Trade
states: “
For the purpose of safeguarding the business order of foreign trade, preserving the legitimate rights and benefits of trade mark registrant, encouraging enterprises to explore international market by adopting trade mark strategy and promoting the development of foreign trade of the country, the present Regulations are formulated in compliance with “Foreign Trade Law of the People’s Republic of China” and “The Trademark Law of the People’s Republic of China”).
–
Supplementary Resolution on Punishment for Crimes of Counterfeiting Registered Trademarks
), adopted with the scope to address the infringements on trademarks.
–
Regulations on administration of audio-visual products
issued by National Copyright Administration which basically integrate the disposition of the Copyright Law.
Some companies operating in China make the calculation that it will cost less to turn a blind eye to the abuse of their IPR than to fight. In a few cases this may work, but it is seldom a viable long-term strategy.
Registration of IPRs is essential in China (and advisable for copyright and well-known trademarks) if a foreign entrepreneur intend to use this kind of asset when doing business in China. If not registered these rights, then the foreign investor will not be able to enforce them.
Relevance of the Anti-unfair Competition Law (
http://www.wipo.int/wipolex/en/text.jsp?file_id=125970
)
This law, promulgated in 1993 (and which became effective in 2007):
“
is formulated with a view to safeguarding the healthy development of socialist market economy, encouraging and protecting fair competition, repressing unfair competition acts, and protecting the lawful rights and interests of business operators and consumers
.
”
There are provisions forbidding practices such as false advertising, slander and revealing trade secrets. The law also protects rights owners against the infringement of trademarks: it is an offense to
“feign the others registered trade mark
,
”
but unregistered trademarks receive protection only if they are well known—in which case they are protected solely against identical or similar goods or services (i.e., it is still possible to apply a well-known, unregistered brand’s name to a different type of product). This contrasts with the position for registered trademarks, which are protected against products or services that are dissimilar. This means that it is advisable to register even a well-known mark in China.
“Unfair competition” shall refer to a business operator’s acts violating the provisions of the Law, infringing upon the lawful rights and interests of another business operator and disturbing the socio-economic order.
In particular should be considered acts of unfair competition the following:
(1) Counterfeiting a registered trademark of another person.
(2) Using for a commodity without authorization a unique name, package or decoration of another’s famous commodity, or using a name, package or decoration similar to that of another’s famous commodity, thereby confusing the commodity with that famous commodity and leading the purchasers to mistake the former for the latter.
(3) Using without authorization the name of another enterprise or person, thereby leading people to mistake their commodities for those of the said enterprise or person.
(4) Forging or counterfeiting authentication marks, famous-and-excellent-product marks or other product quality marks on their commodities, forging the origin of their products or making false and misleading indications as to the quality of their commodities.
(5) Selling perishables or live commodities.
(6) Disposing of commodities near expiration of their validity duration or those kept too long in stock.
(7) Selling commodities at a reduced price for the purpose of clearing off debts, change of business or suspension of operation.
(8) Conduct tie-in sale of commodities or attach any other unreasonable conditions to the sale against the will of the purchasers.
(9) Engaging in any of the following lottery-attached sale activities:
(a) lottery-attached sale conducted by such deceptive means as falsely declaring prize or intentionally making a person designated inside win the prize;
(b) lottery-attached sale employed as a means to sell goods of low quality at a high price;
(c) lottery-attached sale in form of lottery-drawing with the highest prize exceeding CNY 5,000.
(10) Spreading of false information to damage competitors’ commercial credit or image.
A business operator who violates the provisions of this Law and thus causes damage to the infringed business operators, shall bear the liability of compensation for the damage. If the losses of the infringed business operator are difficult to estimate, the damages shall be the profits derived from the infringement by the infringer during the period of infringement. And the infringer shall also bear the reasonable expense paid by the infringed business operator for investigating the infringer’s unfair competition acts violating his/her lawful rights and interests.
A business operator whose lawful rights and interests are infringed upon by unfair competition acts may bring a suit in a people’s court.
The provisions of the Law contained in Chapter IV directly deal with “legal responsibility,” therefore whether the owner of a determined IPR believes he/she suffered from an infringement of his/her IP rights reference must also be done to this piece of legislation.
This entry was intended to expose the other pieces of legislation having an impact on IPRs and to highlight the importance of the Anti-unfair competition law in the sphere of IPR protection. It should be clear that the legal framework concerning IPRs in China is vast and fragmented, and only putting all the pieces of this puzzle together it is possible to have an efficient protection of these rights in China.
(Some of these articles are extracted from my work titled M&A and Takeovers in China, so if you are interested in this topic, please visit:
http://www.kluwerlaw.com/Catalogue/titleinfo.htm?ProdID=9041140484
).
Cristiano Rizzi