The production and trade of counterfeit goods in and from the People’s Republic of China is the thorn in the side of many well-known brands, but it’s not only the global giants that are affected. From rip-offs of fashion and beauty products to fake spirits and medicine, nearly every business could be impacted; particularly, those that manufacture their goods in the country. What should they do? Novagraaf’s Chantal Koller sets out specific traps and tips to consider when designing a trademark management strategy to tackle infringement in China.
This is the latest article in our series on IP management best practices. Please see our previous articles for advice on setting the right IP strategy, identifying the best model for IP management (‘outsourced, in-house or hybrid?’), assigning value to trademark assets and negotiating common pitfalls in management strategies.
Counterfeit activity is a menace to all modern businesses, affecting their profits, their reputation and, in some cases, the safety of their consumers. But, so persistent is the traffic in fakes – particularly online – that it can be difficult for companies to know where to start.
To develop an anti-counterfeiting strategy that is appropriately targeted, brand owners first need to assess the threat by gathering intelligence on:
- The source of the goods, distribution channels (on- and off-line), ports of entry and local instances of infringement;
- The types and volume of products affected, estimated damages and desired benchmarks for reducing the impact.
While China isn’t the only source or market for counterfeit goods, it is rightly on IP professionals’ radar as a key country of focus for anti-counterfeiting and brand protection activity.
Tackling the offline threat
In any anti-counterfeiting and brand protection strategy that includes China, techniques to identify and prevent activity are of particular importance. For example, by:
- ensuring key brand and product names are registered as trademarks, and innovative design features as design rights, enabling owners to seek legal redress for any unauthorised use of those trademark or design rights (e.g. for the manufacture, distribution and sale of trademarked goods);
- raising awareness of the issue within your business and its subsidiaries by educating staff, business partners and customers, and by providing specific training for those employees that are on the ground to help them recognise and report counterfeit products;
- actively monitoring the online and offline market, recording, reporting and carefully analysing the findings in order to define routes of action that are proportionate to the threat;
- working closely with law enforcement authorities such as the Border Force (customs) and local Trading Standards offices that have a statutory duty to enforce the criminal provisions of the Trademarks Act; and
- taking enforcement action where appropriate.
For more tips and advice on developing an anti-counterfeiting strategy, please see our anti-counterfeiting FAQs.
If the manufacture of the fake goods is taking place in China, you will need to liaise with local agents or investigators and involve local police and authorities in order to target the manufacturer at source. This is not a simple task, and you’re advised to consult your trademark attorney for advice and support on investigation, including trap purchases, trademark training, trademark recordals and legal representation in customs seizure proceedings.
Could the source of the fake goods be your own manufacturer?
When using intermediaries, be wary of common traps relating to misappropriation of designs and the resulting invasion of counterfeit products. To overcome this:
- Identify the main technical elements and protect respective IP (e.g. patents);
- Register designs before starting mass production;
- Use available copyright registration to add another IP right with unlimited validity to your portfolio;
- Include IP provisions in contracts with manufacturers;
- Mark genuine goods with IP rights registration numbers (see our advice on marking products with patent/design and trademark numbers);
- Register IP rights with Chinese customs (see 'How do I record my trademarks with customs?').
Upholding brand rights in the Chinese market
The protection of trademarks in China can be a challenging area for many outside the country. Despite recent changes to provide overseas brands with greater rights in case of disputes, parties claiming infringement often need to pursue their cases to the highest courts in order to stop the infringing party, as the Jordan case demonstrates.
Trademark watching strategies are crucial in such cases, not only by identifying infringement when it takes place (including in Chinese script), but also by collating the evidence needed to prove infringement. Find out more about trademark watching.
Continuous and persistent enforcement is key to tackling counterfeiting. It sends a clear message to infringers and enables businesses to gain a clear picture of the threat, and the returns on investment in this area. From an online perspective, this should also include:
- Notice and takedown actions
- Cease and desist letters
- Search engine de-indexing (preventing search engines from re-indexing infringing web pages)
- Requests to payment providers to suspend payment services to an infringing website
- Reporting of IP infringements to social media platforms for removal.