China took a great step as regards protection of intellectual property rights by joining the World Trade Organization (WTO) in 2001. It must now comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This agreement, also known as the Marrakesh Agreement, dating from April 15, 1994, lists the protected intellectual property rights, defines standards for an international harmonization of legislation and provides for multilateral commercial sanctions against States that do not keep their commitments.

However, it should be noted that even before its adhesion to WTO, China was already a party to the majority of international intellectual property agreements: the Paris Convention for the protection of industrial property, ratified by China on March 19, 1985, which provides in particular for the protection of well-known trademarks; the Berne Convention for the protection of literary and artistic works, which China signed in October 15, 1992; the Protocol and the Madrid Agreement concerning the international registration of trademarks, approved by China on October 4, 1989 and on December 1, 1995 respectively. The Chinese courts regularly refer to these international texts to justify their decisions.

In addition, the national Chinese legislation cannot be described as lacunar. The first law on trademarks dates from August 23, 1982, and has been amended twice since, in 1993 and 2001. It is today possible for enterprises to protect their trademarks effectively, even under Chinese national law alone.

Concretely, the protection of a trademark requires that it be registered with the Trademark Office of the State Administration of Industry and Commerce (SAIC). Before it can be registered, the trademark must meet certain conditions; it must be available and distinctive. The trademark may be represented by words, an image or even be in three dimensions: Ferrero Rocher registered its trademark in the form of a 3D image of the chocolate. It is advisable to also register trademarks under a Chinese name, that is, to translate them into Chinese characters either by transliteration or a semantic translation. Indeed, the majority of Chinese consumers know foreign trademarks only by their Chinese name. The protection of the trademark lasts for 10 years from the time of registration.

The Trademark Law such as it was amended in 2001 illustrates a real desire of the Chinese government to afford greater protection to the holders of trademarks. The law now allows natural persons to register their trademarks, hitherto reserved to legal entities. It also makes it possible to contest in court the decisions taken by the Trademark Office of the SAIC. It establishes the concept of well-known trademark, which means that such a trademark enjoys stronger protection even if it was not registered in China. To date, 98 foreign trademarks have been recognized as well-known trademarks in China, such as Rolex, Wal-Mart, L'Oreal, Porsche, Boss, Nescafe, or Michelin.

It should be noted that companies can also defend their trademarks based on other Chinese regulations, which do not result directly from reflection in the area of the protection of intellectual property rights: for instance, the Anti-Unfair Competition Law of October 1, 1993, the Law on Product Quality of September 1, 1993, the Consumer Protection Law of October 31, 1993 or the recent Law on Food Safety which came into effect on June 1, 2009.

There thus exists a judicial apparatus upstream, but also the means of making it apply downstream. Companies that are victims of infringement of their trademarks therefore have two types of recourse: administrative and judicial recourse. Although it is not possible to obtain damages, companies generally opt for administrative recourse because it is considered the most effective. The local trade and industry authorities have investigative powers and, in particular, can:

order the immediate cessation of the infringement, the confiscation or the destruction of the counterfeit products and the equipment used for their manufacture,

seize the revenues resulting from the sale of the counterfeit products,

impose fines of up to three times the illegal profit that was made.

The General Administration for Quality Control, Inspection and Sanitary Control can also be used, for example if the counterfeit products endanger the health of consumers.

Companies can also exercise judicial recourse. As regards civil proceedings, the aggrieved company can take action in order to obtain compensation for the damage caused and the cessation of the illicit activities. The company can request that protective measures be taken in order to avoid the destruction of evidence or the occurrence of irrevocable damage. Four makers of luxury goods (Burberry, Chanel, Prada and Vuitton) won their case before a civil court of Beijing in 2005 against one of the owners of the Silk Market, a place where fake products are sold in the Chinese capital. The owner of the market and five retailers were ordered to pay 13,000 dollars in compensation. The sum is nonetheless highly symbolic, given that the companies were claiming 300,000 dollars in damages.

In the criminal field, it should be noted that Chinese law has an aspect which can sometimes be prejudicial to the initiation of legal action. In China, the seriousness of the offence is a factor, whereas in other countries it is only taken into account in the determination of the compensation. Thus, criminal proceedings can be initiated against a counterfeiter only if the latter produced or sold fake products of a value of more than RMB 50,000.

However, once criminal proceedings have been initiated, severe penalties can be handed down, with possibilities of imprisonment for up to 7 years.

It should be noted that a customs retention procedure has been implemented since 1992 which considerably hinders the expansion of counterfeit goods in China. This procedure makes it possible to prevent counterfeit products from leaving China. To benefit from it, the holder of the intellectual property rights must formulate a “request for protection”, and prove that his rights are registered in China. This request for protection is subsequently circulated to all customs stations allowing customs officers to identify the counterfeit products. These are then seized, presented to the applicant, and confiscated if the applicant confirms that they are imitations. The customs authorities can then decide to destroy the products. The number of customs seizures has been rising steadily in recent years.

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