Article 2 of the Anti-Unfair Competition Law states the key principles that shall be observed by the operators whenever they conduct market transaction activities. Individuals or entities shall act in compliance with the voluntariness, equality, fairness, honesty and credibility principles and observe generally recognized business ethics.

The same law identifies the acts that could infringe the above principles, defined as unfair competition acts: counterfeiting other’s registered trademark; using famous product’s name, dress, decoration, or similarity of the above without prior permission, and cause public confusion; using other’s trade name without prior permission and cause public confusion; forging signs of authentication, geographic indication and source of origin (Article 5 of Anti-unfair Competition Law).

Well-known goods refer to commodities that have achieved certain market popularity within the territory of China and are known by the relevant public, and the court will consider following factors: the time, region, volume and consumers of product’s distribution, the duration, degree and scope for any promotion, and the product protection situation in China and abroad.

Governments and their subordinate departments may not abuse their administrative power to restrict others to buy the goods from the companies designated by them, and to restrict the lawful business activities of other entities and individuals; may not restrict the entry of goods from other regions into the local market and the entry of local goods to other markets (Art. 7th of Anti-unfair Competition Law).

In addition, under the Anti-unfair Competition Law, an entity or an individual:

  • Shall not propagandize falsely the quality, composition, performance, manufacturer, origin and so on through advertisement to mislead the consumers. The advertisement agency shall neither assist the false promotion and advertisement, which he has been obviously aware or ought to know (Art. 9th of Anti-unfair Competition Law)
  • Shall be prohibited to infringer other’s trade secret by stealing or threatening other entities to tell their secrets. This can be doneby disclosing or using the trade secrets obtained through previous methodsorby disclosing, using or allowing others to use the trade secrets disregarding the owner’s requirement of keeping the secrets (Art. 10th of Anti-unfair Competition Law)
  • Shall not sell goods at a price under cost for the purpose of squeezing out his competitors, however this is not the case if the following reasons are apparent, it shall not constitute unfair competition: selling fresh or live goods; disposing goods that approaching expiration or overstocked; seasonal discounts; for paying off debts or going out of business (Art. 11th of Anti-unfair Competition Law)
  • Shall not fake and spread fake facts to damage the competitor’s good will or the commodity’s reputation (Art. 14th of Anti-unfair Competition Law).

Using a famous product’s name, dress, decoration, or similarity of the above without prior permission and causing any public confusion, shall result in the counterfeit company being ordered to stop the infringement act, the unlawful income shall be confiscated, and the administrative authority is entitled to impose a fine 1-3 times of the unlawful income; for those which constitute as a crime, they shall be pursued with criminal liability (Art. 21st of Anti-unfair Competition Law).

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Integrated Circuits Layout Design (ICLD) refers to the 3-dimensional disposition of the two or more elements, at least one of which is an active element, and some or all of the interconnections of an integrated circuit, or such a 3-dimensional disposition prepared for the manufacture of an integrated circuit (Art. 2nd of Regulation of Protection for ICLD).

It is only registered integrated circuits layout design which is protected by law. The protection term is 10 years from the date of registration or of first commercially used anywhere in the world, whichever earlier. However, no matter registered or commercially used, a layout-design shall no longer be protected by this Regulation 15 years after the completion date of creation (Art. 15th of Regulation of Protection for ICLD).

Following acts shall constitute infringement against other’s layout-design rights without prior authorization from the owner: reproducing a protected layout-design in whole or partial with originality; importing, selling, or otherwise distributing for commercial purposes a protected layout-design, an integrated circuit incorporating such a layout-design, or any goods containing such an integrated circuit (Art. 30th of Regulation of Protection for ICLD).

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Geographical Indication (GI) is defined by the Trademark Law as a sign indicating the place of origin of the goods of which the special quality, reputation or other characteristics are primarily determined by the natural conditions or other humanistic conditions of the location involved.

Under this law, the GI can be protected as collective mark or certification mark. In order to apply for the registration, the applicant shall provide documents certifying that the GI is under the legal protection in the country of origin, together with the other documents specifically required by the law for the collective mark or a certification mark.

Once registered, the GI will be protected in the same ways as other trademarks and the owner will enjoy the exclusive right to the use of the GI.

Other rules provide special provisions for GI protection: 1. The Regulation of the People's Republic of China on the Place of Origin of Import and Export Goods, issued by the Stage Counsel, and; 2. The Provisions on the Protection of Geographical Indication Products, issued by General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ),and; 3. Implementing Measures for the Provisions on the Administration of Marks of Origin, issued by AQSIQ, and; 4. Administrative Measures Concerning the Registration of Collective Marks and Certification Marks, issued by the State Administration of Industry and Commerce( SAIC), and; 5. The Measures for the Administration of Geographical Indications of Agricultural Products established by the Ministry of Agriculture, focusing mainly on raw agricultural product. However, after all the mentioned measures there is still a missing practical approach concerning the protection of foreign GIs.

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The Anti-Unfair Competition Law, came into force on December 1, 1993, and provides protection for any Trade Secret.

Under Article 10, the Trade Secret is all the technical information and operational information. For instance, the technical know-how, processes, production method, customer lists, cost and price information, etc., which are not known to the public, which have economic value and practical applicability, and for which the owner has taken measures to keep secret.

A trade secret is infringed every time that there is a misappropriation of it ascertained. The acknowledge of the trade secret constitutes infringement when the information is obtained from the owner by stealing, promising gain, using coercion or other improper means; as well when others disclose, use or are allowed to use trade secret achieved by those means. Constitutes infringement also the disclosure or the use of the trade secret when this act is done in breach of a confidentiality obligation or, at the end, when a party uses or discloses a trade secret knowing (or should have known) that it has been misappropriated.

In China acting and prevailing against an alleged infringement is difficult, because with a high burden of proof on the plaintiff, the enforcement of the infringements becomes harder.

However, a trade secret’s owner may decide to react to the infringement in different way: with an administrative action, a lawsuit or a criminal action. 

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"New Varieties of Plants" refer to varieties of plants bred artificially or developed from natural discovered plants, which possess novelty, specialty, homogeneity and stability and are duly denominated (Art. 2nd of Regulation of New Varieties of Plants) 

The term of protection for vines, forest trees, fruit trees and ornamental trees is twenty years and that for other plants is fifteen years from the date of granting (Art. 34th of Regulation of New Varieties of Plants).

Where anyone produces or sells, for commercial purposes, the propagating material of a granted variety without the authorization of the variety right owner, the owner or any related party may report to agricultural and forestry department of provincial level governments, or may directly institute a court proceeding (Art. 39th of Regulation of New Varieties of Plants).

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Chinese customs could play an important role in terms of IPRs protection. The customs are in charge to prevent and stop the export and import of the infringement and counterfeiting products.

According to the Customs IP Regulations, the IP rights can be recorded with the General Administration of Customs (GAC) together with the products situation and legitimate manufactures, importers and exporters. In order to obtain protection, the registration before the customs is not mandatory, but it assures a wide protection since the custom acquires the authority to take the initiative and intercede independently when the products that are passing the border seem infringing products.

The IP rights that can be registered with the customs are trademarks (exclude service trademarks), patents (invention patent, utility model patent, design patent) and copyrights.

The recordation is valid for 10 years from the date on which the General Administration of Customs grants it or to expiration date of the IPR rights if the duration of the rights is less than 10 years. When the IPR rights were renewed, the recordation can be renewed accordingly.

Find out here about HFG Customs Program.

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In China the most used tool to deal with counterfeits is the administrative enforcement, the so called Raid Action. After proper evidence collection – some time supported by the formality of public notary officer – the owner of the Intellectual Property Rights can contact the relevant Administration to obtain inspection and seizure of the goods. After the action usually a punishment and an injunction are issued to anti-counterfeiting infringer.

Often raid actions are generated by surveys performed in certain areas (province or cities) and collectively – survey and raid actions – are called as Anti-counterfeiting campaigns.

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Traditional market places are leaving room to internet developing new retail concepts such as Taobao, Ali-express, Alibaba etc.

These platforms are always used by a counterfeiter to develop their business and thus represent a great opportunity. But at the same time a challenge to the Intellectual Properties Rights.

HFG have developed tools and expertise to face the threats arising from the web which may consist in notice and take down programs, C&D letters, administrative raids, etc.

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Always more frequently, companies are engaged in cross-border technology and transfers with Chinese partners. When a technology transfer has to be finalized, the most important thing to think about is the protection of intangible assets. 

There are several cases in which the technology and know-how of a company have been obtained in a misappropriated way by the other partner.

To avoid this situation it is important to think and plan a good IP protection strategy in order to protect the IP rights involved in the technology transfer is a necessary step before starting any activities. 

Drawing up a good license agreement, or, for example, a Joint Venture (JV) agreement if the technology transfer is realised through the establishment of a JV, or through other kind of investments, as well as preparing a good non-disclosure agreement, are all practical measures for the protection of IPRs as part of a technology transfer.

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An essential step to protect Intellectual Properties Rights is the choice of a domain name and its registration.

The risk of being a victim of cybersquatting activities is very high. We have seen many cases in which third parties registered one or more domain names corresponding to the name or trademarks of other parties.

The outcome in these situations is a domain name dispute, which can result in the cancellation or transfer of the domain name from one party to the other through an amicable settlement, the arbitration way or litigation.

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