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IPR: Intellectual Property Rights (IPR)Strategy for SMEs in the EU Ceramics Sector – Part II
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 altPart II of this two-part article series describes the IP enforcement routes available to SMEs and outlines strategies to protect your IPR in China.
 
For a description of the types of IP most relevant to the ceramics sector, see Part I of this article published in last month’s edition of Business Tianjin.
 
The IPR that is most likely to be associated with ceramic products are trade marks, design patents and copyright.  Enforcement of IPRs in China can be generally divided into two routes: administrative enforcement and civil enforcement (the criminal enforcement process is not as widely used). In addition, cease and desist letters, complaints during trade fairs and registration of IPR with China Customs are also options. Note that by enforcing your rights, infringers may challenge them by initiating, for example, trade mark cancellation or patent invalidation proceedings.  
 

Administrative Enforcement:

 
Administrative enforcement is often considered a quick and cost-effective method to deal with straightforward infringement cases. This method involves making a complaint to the relevant administrative authorities who are designated separately or jointly to enforce intellectual property rights. Specifically, the Administration of Industry and Commerce (AIC) is empowered to enforce trade marks rights and to handle complaints of unfair competition; the Patent Administration Bureau (PAB) for invention patents, utility model patents, and design patents, and the National Copyright Administration (NCA) for copyright.
 

altCivil Litigation:

 
A company can file a civil claim against an infringer in the People’s Courts, which are empowered to order the infringer to cease the infringing act, publish an apology and compensate the claimant. Legal advice should be sought before pursuing the civil litigation option.
 
The burden of collecting evidence of infringement is primarily on the plaintiff as there is no formal ‘discovery’ process in China and the standard for preparing evidence to make out infringement of IPR for civil litigation is high, usually requiring notarisation and legalisation if evidence is from outside China. Therefore it is important to thoroughly investigate, prepare evidence properly and seek the advice of lawyers and experienced investigators.
 

Criminal:

 
Criminal prosecution of infringers (where available) has a relatively strong deterrent effect. In China a dispute may be criminally actionable if the value of the infringing goods exceeds the statutory criminal thresholds (e.g. over RMB 50,000). Again, it is the rights holder who must conduct a significant portion of the investigation and build up the case for the Public Security Bureau (PSB). If the evidence reveals criminal culpability, the PSB will pass the case on to the Public Prosecutor's office for review, and the Public Prosecutor may either conduct further inquiries or decide to indict based on the PSB’s recommendation. 
 

Strategy for Protecting your IPR: 

Identify Infringers

Having a representative office, agents or distributors in China is beneficial, and enables you to monitor infringements on the ground and filter information back. After learning of an infringement, it is normally best practice to engage a professional investigation firm to determine the extent of the problem and to uncover the responsible infringer; gathering probative evidence is often most challenging.
 

altMonitor Industry Trade Fairs Relevant to the Ceramics Industry

 
Trade fairs provide a gathering point for companies to meet with clients, find vendors, as well as overseas buyers under one roof, and to introduce new products and services. They are also prime events to monitor for infringements and to stop potential sales of infringing products which may have been destined for the EU market.
 
For effective enforcement actions at trade fairs to take place, preparation at least 2 months prior to the trade fair is key since notarisation, legalisation and translations of key documents would require time to prepare.
 
In addition, trade fairs provide a good opportunity to identify potential competitors and infringers, and collect evidence of any potentially infringing products. Ask for business cards and brochures, and record the name and number of the stalls of potential infringers.  In order to formalise the evidence collection for use in future civil actions, consider having a notary present during evidence collection. The notarisation of evidence would enable a claim for jurisdiction in the city where the trade fair took place to be made, as well as make it difficult for the infringer to later argue in court that the infringing product was not present, they did not produce the product, or even that the evidence was fabricated. 
 
Undertaking follow-up actions with the advice of a local law firm is also very important, especially in deciding whether sending the infringer a warning letter or other action is the appropriate next step to take after the trade fair. The exact nature of the claims in a warning letter will depend on the strength of evidence collected, and, of course, on the strength of the IPR. The evidence gathered at the trade fair can be used to initiate follow-up investigations into the infringer and then, if the combined evidence warrants it, take administrative enforcement actions or civil litigation. 
 
Moreover, a ‘blacklist’ of infringers can also be developed from the information gathered and provided to customs or used internally to improve your IPR protection strategy. Follow-up investigations of target websites and factories are also recommended, particularly against repeat infringers.
 
Taking such actions will not be effective in the long run if they are only one-off actions. To be effective, trade fair actions require commitment and consistent monitoring year after year. Where such trade fairs are the primary source of orders for vendors, denying infringers the connections they need to exist, namely international customers, may have a knock-on effect on those supplying to the infringer. Attacking infringements from this demand side may be used in combination or as a cost effective alternative to finding the source manufacturer (which may be costly and in some cases very difficult). If budget permits, a multi-pronged approach of attacking counterfeits from both a supply and demand side is a better course of action.
 

Develop Cease and Desist (C&D) Letter Campaigns 

Carefully timed and worded C&D letters can be effective especially if sent to previous enforcement targets. For instance, sending a C&D letter to a previous infringer before a trade fair to remind it of any past enforcement actions, your rights, and to demand it to refrain from including any infringing products in its brochures and exhibiting any infringing products at the upcoming trade fair may be very effective. Note that in some circumstances a C&D letter may not be advisable if you are preparing for litigation and need to collect evidence of the infringement – a warning letter may alert it to your actions, making evidence collection difficult.
 

Record IPRs with Customs

Given the growing competition from imported ceramics products from China and the risk of infringement, companies should seriously consider recording their trade marks and other IPR in China with the GAC. Customs in China is most effective for protection of trade marks and may also be effective for design patents, but generally less effective for copyright, patent and other technical rights.
 
If you are aware of any known infringers you can also submit a so-called ‘blacklist’ to assist Customs in determining which shipments are likely to contain suspicious goods. 
 

altTake-Away Messages:

• Make sure your products are properly registered in China as design patents, trade marks, copyright, invention patents and utility model patents. Do this as early as possible because in China if it’s not registered, it’s not yours.
• Develop your enforcement strategy; monitor ceramics industry trade fairs to identify infringers, have their offending products removed from display and gather evidence against them if you are preparing for litigation.
• For straight-forward infringement cases, use administrative enforcement through the relevant authorities. Civil litigation should be used for more complicated cases. Remember that gathering probative evidence can be challenging so seek legal advice and engage professional investigation firms if necessary.
 
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