Online counterfeiting in China - how to deal with a growing trend

07 May 2015

David Allison, Rieko Michishita

One of the key trends on the Chinese counterfeiting landscape in recent years has been the explosion of counterfeit products and sites appearing online. Whereas counterfeiters in the past used to have a physical factory or store, nowadays many of these entities operate in a purely digital environment and distribute their products on a global basis.

Recent high profile spats between Alibaba (the world’s largest e-commerce site) and the Chinese government demonstrate that these problems are not diminishing and the online threat is likely to be a recurring headache for brand owners for the foreseeable future.

So what should brand owners do to minimise this threat?

You need the tools to protect yourself…

All brand owners need to obtain basic IP rights in China if they are to have any hope of protecting themselves. Even if the rights holder’s primary market is outside China, Chinese focused rights are essential to any programme aimed at reducing or eliminating the threat from online pirates.

Trade marks

Trade mark protection is a must. Since China operates a 'first to file' trade mark system (rather than a first to use) it is crucial that brand owners file for their key marks in China at an early stage. It should be noted that the Chinese Goods and Services Classification list has recently been amended to add various new types of internet products and services, including e-commerce in Class 35, and these new services should be considered in any filing strategy.

Copyright registration - overlooked but useful…

Copyright is becoming an increasingly useful tool to 'fill in the gaps' where a brand owner does not have clear trade mark rights in China. Registration is relatively easy to obtain and even simple stylized words and phrases (that would not ordinarily attract copyright protection in some jurisdictions) are being granted registration. We have found that an official registration certificate can be useful in China to demonstrate that the rights holder has some form of prior right and this can assist in convincing platform owners and ISPs to take down counterfeit sites and products. It is also useful to prepare copyright registrations for anything that can be used in e-commerce channels, for instance, logos, packages, labels, promotional materials and product pictures.

Service providers will only act where evidence is clear

Alibaba (for the Chinese market; for the overseas market), TaobaoTMall and JD are the key e-commerce sites in China. Each has their own ‘notice and takedown’ processes to enable complaints to be filed against suspicious products and sites. From our experience, these processes do work and can be a time and cost effective way to combat online counterfeiting. However, a hastily written email complaint will not cut it. The main online platforms receive hundreds of complaints daily and only those complaints which follow mandated processes (which often involve registering online) and are supported by clear evidence of prior rights (e.g. trade mark or copyright certificates) will have much chance of success.

Counterfeit sites outside the e-commerce platforms

Stand-alone counterfeit websites pose their own problems. While all traditional remedies are available (e.g. cease and desist letters, administrative action or litigation), the main difficulty in shutting down stand-alone sites is identifying the people behind the sites. That said, the Chinese market is highly regulated and many products or services require government approval or licences to be able to launch in China. Thus, if products or services sold online do not have proper approval, administrative action filed on the basis of unlicensed business may in certain cases be a viable option.

 

This article is part of BrandWrites by Bird & Bird - May 2015

Authors

Image of David Allison

David Allison

Partner
China and Hong Kong

Call me on: +86 10 5933 5688
Michishita-Rieko

Rieko Michishita

Partner
China and Hong Kong

Call me on: +86 10 5933 5688