Following a mail-bomb case in Hangzhou City in 2011, the Ministry of Public Security announced plans to introduce a real-name registration system to strengthen the surveillance of parcels in the postal system and prevent similar crimes. The system requires every sender to provide a means of personal identification when sending a parcel by mail. If a pilot project in Zhejiang province is successful, the ministry will roll out the system across China.

The ministry's plan could have significant benefits for IP rights owners. A large number of independent websites - that is, websites with their own domain name, rather than virtual shops within a Taobao-style online marketplace - use servers outside China and sell infringing goods to consumers outside China, but operate from within the Chinese territory. Such sales of counterfeit goods are one of the biggest problems for companies in their attempts to police their IP rights.

Such websites typically operate by cybersquatting at a domain name that resembles a well-known name, then redirecting to the infringer's website from which the counterfeit goods are sold. The biggest difficulty for IP rights owners is tracking down the counterfeiters. The websites normally provide little contact information and the counterfeiters provide fake names and addresses when dispatching their merchandise. IP rights owners face ever-higher costs for anti-counterfeiting investigations, with no guarantee of a positive result.

The most common tactic is to file a domain name dispute, which may help the rights owner to discover the domain name in question. However, it costs far more for a rights owner to initiate the dispute resolution procedure than for a infringer to build a new website; as a result, this approach is not cost-effective.

The real-name registration system may resolve the IP rights owners' dilemma and provide a way to challenge infringers directly. Once fully implemented, the system will greatly increase the risks for infringers and will make it easier for owners of popular trademarks to turn the spotlight on the individuals behind counterfeiting activities. Once the operators are identified and located, IP rights owners may adopt a range of anti-counterfeiting strategies, including administrative or criminal raids and litigation for damages, to fight back against online infringement.

For further information on this topic please contact Zhu Zhigang or Wang Danliang at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000), fax (+86 10 6894 8030) or email ([email protected] or [email protected]).