This country-specific Q&A provides an overview to intellectual property law in China.
It will cover intellectual property rights, licensing, enforcement, establishing infringement or liability, and challenges to intellectual property.
This Q&A is part of the global guide to Intellectual Property. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/intellectual-property/
What different types of intellectual property rights exist in this jurisdiction to protect?
(a) Inventions (e.g. patents, supplementary protection certificates, rights in confidential information and/or know-how);
Invention patents, utility model patents, rights in confidential information and know-how as trade secrets.
(b) Brands (e.g. trademarks, cause of action in passing off, rights to prevent unfair competition, association marks, certification marks, hallmarks, designations of origin, geographical indications, traditional speciality guarantees);
Trademarks and certain brand related actions pursuant to the Anti-Unfair Competition Act.
(c) Other creations, technology and proprietary interests (e.g. copyright, design patents, semiconductor topography rights, plant varieties, database rights, rights in confidential information and/or know-how).
Copyright, design patents, semiconductor topography rights, plant varieties , and rights in confidential information and know-how as trade secrets.
What is the duration of each of these intellectual property rights? What procedures exist to extend the life of registered rights in appropriate circumstances?
- Invention patents: 20 years;
- Utility model patents: 10 years;
- Design patents: 10 years;
(Please note that in this article when we use "patents" it refers to invention, utility model and design patents).
- Semiconductor topography rights: 10 years after registration or first use;
- Trademarks: renewal applications may be made every ten years after initial registration;
- Copyright: 50 years from creation for works belonging to corporate entities; for works of individuals protection is life of the author plus 50 years after death;
- Plant varieties: 20 years for vines, forest trees, fruit trees and ornamental trees, 15 years for others.
Who is the first owner of each of these intellectual property rights and is this different for rights created in the course of employment or under a commission?
Generally, the creator is the first owner of the relevant IP rights. However, the default position is that employers are the first owner of patents (unless specified otherwise) and copyright works created in the course of employment provided they were created primarily using the employer's resources as part of the employee's normal duties.
The first owner of inventions/works created under commission is the entity/person who created it, unless the contract for commission states otherwise. The first owner of trademarks is the first to file an application at the China Trademark Office (CTMO).
Which of the intellectual property rights described in questions 1-3 are registered?
Invention patents, utility model patents, design patents, plant varieties and trademarks are registered rights.
Recording relevant copyright works in China is advisable but not required for enforcement.
Who can apply for registration of these intellectual property rights and, briefly, what is the procedure for registration?
Domestic and foreign companies and/or individuals can apply to register rights. Applicants should file patent applications to the State Intellectual Property Office (SIPO).
Applications for plant variety rights are filed with the State Forestry Bureau or the Ministry of Agriculture.
Trademark applications should be made to the CTMO.
If a party elects to record their copyright works in China, an application should be made to the China Copyright Office.
How long does the registration procedure usually take?
- Invention patents: 2-4 years;
- Utility model patents: 1 year;
- Design patents: 0.5-1 year;
- Trademark: 1-1.5 years; and
- Copyright (if elected): 2-4 months.
Do third parties have the right to take part in or comment on the registration process?
Third parties can challenge a patent application by submitting observations and prior art documents to SIPO after a patent application is published but not yet granted.
Third parties may oppose trademark applications published in the gazette after preliminary examination. The period of opposition is 9 months from publication.
What (if any) steps can the applicant take if registration is refused?
Patents: the applicant can submit a re-examination request to SIPO's re-examination board.
Trademarks: the applicant can file a review to the Trademark Review and Adjudication Board (TRAB).
Applicants may bring a civil action to challenge a rejection upheld by SIPO or TRAB.
What are the current application and renewal fees for each of these intellectual property rights?
The official filing fees are:
- filing fee: 950RMB, substantive examination fee: 2500RMB;
- annuities: 900RMB per year for the 1st to 3rd year, 1200RMB per year for the 4th to 6th year, 2000RMB per year for the 7th to 9th year, 4000RMB per year for the 10th to 12th year, 6000RMB per year for the 13th to 15th year, 8000RMB per year for the 16th to 20th year;
Utility model patents:
- filing fee: 500RMB;
- annuities: 600RMB per year for the 1st to 3rd year, 900RMB per year for the 4th to 5th year, 1200RMB per year for the 6th to 8th year, 2000RMB per year for the 9th to 10th year;
- filing fee: 500RMB;
- annuities: 600RMB per year for the 1st to 3rd year, 900RMB per year for the 4th to 5th year, 1200RMB per year for the 6th to 8th year, 2000RMB per year for the 9th to 10th year;
- filing fee depends on the type of work, ranges from 100RMB to 2,000RMB
- no annuity;
- filing fee: 1) 300RMB; 2) 1500RMB for collective mark and certification mark
- renewal fee: 1000RMB
What are the consequences of a failure to pay any renewal fees and what (if any) steps can be taken to remedy a failure to pay renewal fees?
Patents: failure to pay the annuity on time incurs a surcharge of 25%, which must be paid within six months of the annuity deadline. If no payment is made within this period, SIPO will issue a notice of termination. The patent right will be terminated unless the applicant replies to the termination notice within two months by paying a 1,000RMB restoration fee.
Trademark renewal applications must be made within 12 months of the expiry date of the 10-year renewal term. There is a six-month grace period during which renewal applications incur a late filing fee of 250RMB.
There are no renewal fees for copyright (if registration is elected).
What are the requirements to assign ownership of each of the intellectual property rights described in questions 1-3?
Patent assignments must be in writing, stating the names of the parties, defining the rights and then filed at SIPO.
Trademark assignments must be filed at the CTMO and take effect from the date they are published by SIPO or published in the Trademark Gazette.
There is no requirement to register a copyright assignment.
Is there a requirement to register an assignment of any of these intellectual property rights and, if so, what is the consequence of failing to register?
Failure to register when required will result in an ineffective assignment.
What are the requirements to licence a third party to use each of the intellectual property rights described in questions 1-3?
Intellectual property licences, such as copyright, trademark, know-how and patent licences must be in writing and clearly set out the rights and subject matter.
Is there a requirement to register a licence of any of these intellectual property rights and, if so, what is the consequence of failing to register?
Unlike assignment, licence agreement registration is optional.
Are exclusive and non-exclusive licensees given different rights in respect of the enforcement of the licensed IP, and if so, how do those rights differ?
Exclusive licensees can either enforce rights of their own accord without consent of the licensor or file a joint action with the licensor.
Sole licensees must enforce the rights in a joint action with the licensor, unless the licensor consents otherwise.
Non-exclusive licensees must file a joint action with the licensor.
Are there criminal sanctions for infringement of any intellectual property rights, and if so, what are they and how are they invoked?
Criminal sanctions (fines and/or imprisonment) apply to "severe" infringing activities relating to copyright, trademarks, patents and trade secrets. Severity is determined by reference to the profit obtained by the infringement, loss incurred by the rights owner, quantity of infringing products and any other factors the court deems relevant.
Depending on the data available, fines of up to approximately 5 times the amount of illegal profit or 100% of the illegal revenue are issued at the court's discretion. The maximum prison sentence is 7 years for trademarks, copyright or trade secrets, or 3 years for patents.
What other enforcement options are available in your jurisdiction for each of the intellectual property rights described in questions 1-3? For example, civil court proceedings, intellectual property office proceedings, administrative proceedings, alternative dispute resolution.
(A) Civil court proceedings are available for all the intellectual property rights in section A.
(B) Administrative proceedings are available in respect of patents, copyright, trademarks, and unfair competition (trade secrets).
(C) The .CN and .中国 domain names, wireless website addresses and SMS website addresses that are registered within two years of creation can be settled by the Online Dispute Resolution Centre under the China International Economic and Trade Arbitration Commission.
(D) Customs seizure actions are available in relation to trademarks, patents and copyright. In practice, Customs are most proactive in relation to trademarks recorded at Customs.
(E) Large trade fairs in China can have complaints centres (e.g. the Canton Fair) where it is possible to file complaints in respect of patents, copyright and trademarks to get infringing products removed.
What is the length and cost of such procedures?
Civil proceedings solely involving domestic parties should take 6 months from issuing the claim to handing down a first instance judgment. Extensions of up to 6 months may be granted upon approval by the president of the court. Further extensions require higher court approval. No time limits exist for trials involving foreign parties, which generally last 6 to 9 months depending on complexity. Costs vary, but first instance trials generally cost approximately £35,000 to £85,000 per right, per defendant.
Appeals must be filed to the immediate superior court and appeal decisions should conclude within three months of the date they are placed on the appeal court's trial docket. The president of the court may grant extensions in special circumstances. Parties have six months from the date of the second instance decision or the date the party becomes aware (or ought to have been aware) of the relevant facts to apply for a retrial at the Supreme People's Court.
Administrative departments carry out regular infringement investigations when requested to do so by an IPR holder. Administrative proceedings have no specific timeframe but are usually felt to be quicker than civil proceedings and, if the administrative department is proactive, can be completed within a month or so. Costs are approximately £15,000 to £30,000.
Domain name disputes submitted to the Online Dispute Resolution Centre are usually granted an award within 60 days. Costs depend on the number of arbitrators. If just one arbitrator is appointed, the party who filed the complaint bears the costs. If more than one is appointed, the costs are shared equally. Domain name disputes cost approximately £6,000 to £10,000.
Where court action is available, please provide details of which court(s) have jurisdiction, how to start proceedings, the basics of the procedure, the time to trial, the format of the trial, the time to judgment and award of relief and whether any appeal is available.
Two factors determine jurisdiction in Mainland China: where the defendant is domiciled and where the infringing act takes place.
Intermediate People's Courts generally hear first instance IP cases. However, the Supreme People's Court has appointed several Basic People's Courts to hear IP cases brought in the province of the appointed court and designated adjacent regions. Trademark cases (with the exception of well-known trademarks) are heard in lower level district courts.
In 2015, China established specialist IP courts in Beijing, Shanghai and Guangzhou to hear the following IP disputes within the courts' respective jurisdictions:
- Civil and administrative actions involving patents, semiconductor topographies, plant varieties, complex trade secrets, and copyright relating to computer software;
- Administrative actions against a State Council department or a People's Government of county level or above for an administrative act involving copyright, trademark, and unfair competition; and
- Civil actions involving well-known trademarks.
Intermediate People's Courts, which sit at the same level as specialist courts, in the Beijing, Shanghai and Guangdong regions no longer accept cases concerning the abovementioned actions, with the exception of the Guangdong-based Shenzhen Intermediate People's Court, which has its own IP tribunal. District courts in these regions no longer accept actions concerning items (1) and (3) above. In regions without a specialist IP court, Intermediate People's Courts will hear (1) to (3) above.
In addition, the Beijing specialist IP Court has jurisdiction over first instance administrative cases relating to objections against: (a) licensing and confirmation of validity of patents and trademarks; (b) compulsory licence decisions and compulsory licence fees; (c) any other act by a public authority involving licensing and confirmation of intellectual property rights.
Specialist IP tribunals with cross-regional jurisdiction have also been established in Nanjing, Suzhou, Wuhan and Chengdu to hear IP cases in these (and adjacent) regions.
• How to start proceedings, the basics of the procedure the time to trial
Plaintiffs must file pleadings at the court with jurisdiction. Provided the conditions to bring an action are met, the court shall place the action on its trial docket within seven days of receipt and notify the parties of its acceptance. If the conditions are not satisfied, the court will announce its decision not to accept the case within seven days of the case being filed.
The parties will exchange evidence. Usually, there will be a separate evidence exchange hearing.
Cases concerning only domestic parties should conclude within six months of the date the case was accepted. Cases involving foreign IP owners have no fixed timeline but ideally take 6-9 months.
• The format of the trial, the time to judgment and award of relief
Courts try civil cases in public, except those involving State secrets, private matters of individuals (including trade secrets), or where the law stipulates otherwise.
Simple IP trials usually last 1 day, complex trials can be longer. At trial, the court will first verify the litigants, set out the cause of action, notify litigants of their rights and obligations and enquire whether the parties have submitted applications or abstentions. Trials begin with a court investigation which involves hearing statements by the litigants, and then examining witnesses (if any) and documentary evidence. Following this, the court will hear submissions from both sides. The parties may engage in mediation prior to judgment. There is no fixed timeline from trial to written judgment (and, occasionally, this can take a significant amount of time). Once the written judgment is issued, it is enforceable by the court of first instance or a court at the same level as the court where the property subject to execution is located.
How does the court acquire any necessary information (fact or technical) and in what circumstances does it do so?
a) Is there a technical judge, a judge with technical experience, a court appointed expert, an expert agreed by the parties, and/or parties' expert witness evidence?
Technical judges are available for IP trials on a non-compulsory basis. Courts may appoint experts for technical fact-finding. It should be noted that party-led expert evidence is not the norm in China (although becoming more regular in complex patent cases).
b) What mechanisms are available for compelling the obtaining and protecting of evidence? Is disclosure or discovery available?
Disclosure/discovery is unavailable in China. Parties have no obligation to voluntarily disclose documents whether positive or negative to the case.
Courts may grant an Evidence Preservation Orders (EPO) against a party to obtain specific evidence. An EPO will be granted if the applicant demonstrates that the evidence is at risk of loss or may be difficult to obtain from the defendant in future. Non-compliance with an EPO may lead to a fine or detention, depending on the seriousness of the breach. The most serious cases may constitute a criminal offence, punishable by up to three years in prison and a fine. Detention is rare in IP cases.
How is information and evidence submitted to the court scrutinised? For example, is cross-examination available and if so, how frequently is it employed in practice?
Cross-examination by a party's counsel of fact witnesses and/or expert witnesses is available in China in instances where such evidence is led. However, this by no means happens in all IP cases. In practice, China's legal regime prefers documentary evidence, scrutiny of which takes place via court debate led by counsel.
What customs procedures are available to stop the import and/or export of infringing goods?
Customs undertake regular checks, and may stop the import/export of infringing goods of their own accord. In practice, this is likely to happen only in relation to trademarks.
Rights holders may voluntarily record their rights and licensees at Customs. This procedure is a much more effective way of ensuring infringing goods are seized. Nevertheless, it is important to provide Customs with as much intelligence as possible concerning any infringing activity to maximise the chances of seizure.
Are any non-court enforcement options or dispute resolution mechanisms mandatory in respect of intellectual property disputes in any circumstances? If so, please provide details.
Administrative enforcement is available as explained at question 17 above.
What options are available to settle intellectual property disputes in your jurisdiction?
Disputes may be settled via mediation using a mediation agreement. Parties may submit the mediation agreement to court to obtain a mediation award. The mediation award is enforceable.
What is required to establish infringement of each of the intellectual property rights described in questions 1-3? What evidence is necessary in this context?
Copyright infringement requires evidence the plaintiff owns the relevant work which is capable of copyright protection and the defendant has copied a whole or substantial part of the copyright work without permission. Ownership can be proven through copyright statements asserting ownership, photographs of the work, a copyright registration certificate or an agreement governing copyright ownership.
Patent Infringement requires evidence the plaintiff owns the relevant patent right. For invention or utility model patents, the plaintiff must prove that the defendant has, for commercial purposes, manufactured, used, offered for sale, sold or imported a product which infringes the patent in suit. Invention patent infringement includes the use of a process, offering for sale or selling a product directly obtained through a process which infringes the patent. Plaintiffs may argue construction both literally and/or using the doctrine of equivalents. In relation to a design patent the plaintiff must prove the defendant, for business purposes, manufactured, offered for sale, sold or imported a product which infringes the patented design (i.e. it is the same or substantially similar to the design patent).
Trademark infringement firstly requires evidence that the plaintiff owns the relevant trademark. The plaintiff must prove the defendant is using a mark that is identical to a registered trademark on the same goods without the authorisation of the trademark registrant or using a mark that is similar to a registered trademark on the same goods, or using a mark that is identical with or similar to a registered trademark on similar goods, which may lead to customer confusion, without the authorisation of the trademark registrant. Proof of use can include product packages, sale contracts, advertising materials, products bearing the mark.
Evidence of similarity should be supplied in the form of a comparison with the plaintiff's mark.
Trade secret actions require evidence of breach of China's Anti-Unfair Competition Act. To achieve this, the plaintiff must show that the defendant improperly obtained their business secrets by theft, promise of gains, intimidation or other improper means. Disclosing, using or allowing others to use the business secrets improperly obtained will also amount to a breach. The plaintiff must prove the relevant trade secrets have been properly contained to remain confidential.
The Anti-Unfair Competition Act can be the basis of an action in respect of various counterfeiting actions and unauthorised use of another's brand. Article 5(2) of the Act provides that unfair competition includes unauthorised use of names, packaging or decoration unique to well-known goods (or services) or the names, packaging or decoration similar to those of well-known goods (or services) so that their goods are confused with the well-known goods of others, causing buyers to mistake them for the well-known goods of others. Article 5(3) provides alternative grounds for an unfair competition claim. This requires evidence of the use, without authorisation, of another's enterprise name or personal name, leading purchasers to mistake goods for the goods of others. It is necessary to provide evidence that the plaintiff's name, packaging, or decoration was sufficiently unique or similar to create a link in consumers' minds. This is similar but distinct from proving well-known trademark status, which is a much higher standard.
Evidence could be pleadings by the parties, documentary evidence, audio-visual materials, electronic data, witness testimony, expert opinion and inspection records and examination. It is common to submit documentary evidence as proof of infringing activities with notarised purchases serving as evidence of manufacture/sale of infringing goods.
What defences to infringement are available?
General defences include challenging the validity of IP rights.
For unregistered rights (i.e. copyright), defendants can argue the right does not amount to a copyright work and/or there has been no copying (or they had permission from the owner to copy).
For registered rights defendants can use the standard defences.
Who can challenge each of the intellectual property rights described in questions 1-3?
Any individual, corporation or organisation can challenge these rights, but an interest is required in order to challenge trademarks.
When may a challenge to these intellectual property rights be made (e.g. during any registration process or at any time during the subsistence of the right)?
Patents: observations and prior art documents can be submitted to SIPO after a patent application is published but not yet granted. After the rights are granted or registered, an invalidation request can be filed.
Trademarks: when an application has been given preliminary approval, an opposition can be filed against the mark when it is published in the gazette. After the rights are granted, invalidation against the registered mark can be requested. An application for cancellation due to non-use can be commenced after a mark has been registered for three or more years.
Briefly, what is the forum and the procedure for challenging each of these intellectual property rights and what are the grounds for a finding of invalidity of each of these intellectual property rights?
Invalidation requests relating to patents must be filed to the re-examination board of SIPO.
The grounds for invalidation are as follows:
Invention and utility models patents: lacking novelty and/or inventiveness over the prior art, and/or non-compliance with formality requirements, e.g. insufficient disclosure and clarity.
Design patents: being the same or substantially similar as a single reference or bearing no obvious differences to a single reference or multiple references in combination (i.e. the prior design corpus).
Trademarks: prior rights, prior use, cross-class protection for well-known marks, improper registration, and/or bad faith applications. Trademark invalidation requests should be filed at TRAB.
Are there any other methods to remove or limit the effect of any of the intellectual property rights described in questions 1-3, for example, declaratory relief or licences of right?
SIPO may grant compulsory licences of invention patents and utility model patents in exceptional circumstances, e.g. in a national emergency, or to protect public health or the public interest.
SIPO may conduct a substantial examination of the application upon request by an applicant at any time. If an applicant fails to request substantial examination of the patent within three years of the date of the patent application, the application shall be deemed as withdrawn.
The limitation of actions for patent infringement is two years from the date the patentee becomes aware of the infringement.
Faced with a formal threat of action for intellectual property infringement, a person can apply to court for a declaration of non-infringement.
What remedies (both interim and final) are available for infringement of each of the intellectual property rights described in questions 1-3?
Remedies include injunctions, damages, public apologies, destruction of any infringing products and tools or moulds used for the infringing activities.
What are the costs of enforcement proceedings and is any kind of costs recovery available for successful parties? Is there a procedural mechanism enabling or requiring security for costs?
Litigation fees, attorney's fees, notarisation fees, and other expenses arising from the proceedings can be claimed, to be borne by the losing party. The costs awarded to the successful party are ordered at the court's discretion and in most cases only a very low percentage of fees are recovered.
There is no analogous concept of a security for costs application in China. However, a plaintiff may apply for an Asset Preservation Order against a defendant to freeze money assets during proceedings. Any frozen assets can be used to pay any damages and/or costs awarded by the court.