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New trademark law China heralds further conformism

China’s new trademark law coming into effect on 1 May proves that even China has finally conformed to international intellectual property laws and regulations. The reason: enlightened self-interest. This is something Dutch entrepreneurs will profit from as well.

By Michiel Haegens

Shopping at Likea supermarket, soft drinks by Apple and a shady Rolex web shop. It all seemed possible in China. For a long time this country had a dubious reputation when it came to the protection of intellectual property. Large-scale trademark and patent infringement went unpunished. Well-known American and European companies – without knowing it themselves – seemed to develop all sorts of activities in China that were not in their usual line of business. Even today China is still known as a no-go area in terms of trademark law; a cowboy country. Undeservedly so, because China has come a long way. As regards intellectual property the recalcitrant adolescent seems to have conformed to the customs and conventions of doing international business. That is good news indeed; after all, China is one of the most important business partners of the Netherlands and the EU.

Shortly after the UN World Intellectual Property Day, China’s new trademark law became effective on 1 May. This legislation is much more in keeping with the European rules than it was before. An important amendment, for instance, is the adoption of a kind of reversed burden of proof. Who thinks that their rights are infringed in China, can now charge the infringer – on the condition that the charges are properly substantiated. Under the new legislation the accused party will then have to prove they did not act in bad faith much sooner than was previously the case. Another amendment is that from now on a trademark can be registered for multiple classes simultaneously. In conclusion, the trademark owner’s position is improved vis-à-vis parties infringing the rights in bad faith, the prosecution of a trademark application is shortened, and trademark law violations will be punished more severely from now on. Infringers may be in for substantial fines – the level has been upped by several hundred percent – or they may even end up in prison. All in all amendments that Western companies can be utterly pleased with.

In the past the West tried to impose their intellectual property rules on China. Companies were after all suffering damage as each product was copied immediately. If manufacturing took place in China, the copy sometimes even reached the market before the genuine product did. However, monopolising new ideas is at odds with the communist ideal. Western companies learned the hard way that this was a dead-end street; after all China got no benefit at all from combatting these practices. Attempts to get China to amend legislation therefore all came to nothing, until Chinese companies themselves started profiting from intellectual property agreements.

China is currently transforming from a manufacturing economy into a creation economy. We are gradually leaving behind the days the country only manufactured cheaply what others had thought out. ‘Invented in China’ is no longer an exception. Large Chinese enterprises place value on their intellectual capital being protected at home and abroad. Running a successful business after all requires the basic condition of a level international playing field.

As from 1 May not only Western companies profit from the improved Chinese intellectual property laws and regulations, so do Chinese companies. It may have taken quite a while, but as a Chinese saying goes: only the head wind will make the kite fly higher. Expectations are that China will be handling other intellectual property-related issues in the same way as is now the case with trademark law. The fact that it is a win-win situation will fuel this steady development. Not just the West, but China in particular should profit from it. Now that there are laws in place, the trick is to use them wisely and make the most of the opportunities. This is something that requires expertise as well as a proper understanding of the Chinese way of doing business.