The amended Anti-unfair Competition Law in China became effective on 1 January 2018. The revised law makes amendments in relation to unfair competition, trade secrets, denigration, commercial bribery, false advertising, premium sale and the internet. This article focuses on major changes in connection with intellectual property rights (IPR).
The new law draws a clearer line between unfair competition and trade mark infringement, and reinforces the severity of liability for acts of unfair competition. The major changes in respect of IPR-related unfair competition are:
1. Removal of “passing off a registered trade mark of another person” from the definition of unfair competition. This is now defined as an act of trade mark infringement only and so now falls within China’s Trade Mark Law.
2. New definition (briefly stated) of unfair competition in relation to IPR includes:
a. use, without authorisation, of logos identical with or similar to others' product names, packaging or decorations, which enjoy a certain level of reputation of recognition, that cause the user’s products to be mistaken for the products of others or mistaken as having a connection with others;
b. use, without authorisation, of others' enterprise names (including abbreviations, trade names, etc.), social organisation names or personal names (including pen names, stage names, translated names, etc.), which enjoy reputation or recognition, and cause the user’s products to be mistaken for the products of others or to be mistaken as having a connection with others;
c. use, without authorisation, of the main part of others' domain names, website names, web pages, etc., which enjoy reputation or recognition, and cause the user’s products to be mistaken for the products of others or to be mistaken as having a connection with others; or,
d. other acts of confusion sufficient to cause the user’s products to be mistaken for the products of others or to be mistaken as having a specific connection with others.
The final broad definition, “other acts of confusion”, provides leeway for the authorities to designate other unspecified acts as unfair competition if the situation on its facts merits it. The scope of the new law will thus become clearer following future judicial interpretations and judgements.
3. Formulae for calculation of compensation for engaging in unfair competition. The quantum will be determined according to actual loss suffered by the business operator as a result of the wrongful of acts, or will be calculated with regard to profits generated by the infringement if actual loss is difficult to establish. Compensation shall include reasonable expenses incurred in stopping the infringing acts. Where both actual loss and profit are difficult to assess, the court will determine the amount of compensation of up to RMB 3 million (circa. US$ 500,000) depending on the circumstances of the case. The formulae are the same as those for calculating compensation in trade mark infringement lawsuits.