Strategic Tactics for Businesses to Counter Counterfeit Products on Chinese E-Commerce Platforms

Introduction

For businesses making their foray into the international market, safeguarding intellectual property rights, especially patents, becomes a cornerstone of their strategic planning. This is particularly crucial when penetrating vibrant economic markets like China. To successfully navigate this market, businesses must gain a comprehensive understanding of China’s intellectual property rights framework, which includes a variety of patent types, how to monitor infringement and how to handle infringement issues on the E-Commerce platforms, the role of customs, and the critical importance of robust contracts that are adapten the the laws in China and are enforceable in China.

 

Deciphering Patent Categories in China

China’s patent system is organized into three main categories, each designed to protect different aspects of a product or process. It is important to protect patents in China, because China has a “first-to-file” system when it comes to patents and IP. The first to protect a patent in China is the legal owner in China. This approach is different from “first-to-use” or “first-to-invent” approaches.

Invention Patents: These patents are designed to protect new technical solutions related to a product, process, or method. With a protection period of 20 years from the filing date, invention patents provide a robust defense for advanced technological innovations.

Utility Model Patents: This patent category is designed to protect new technical solutions related to a product’s shape, structure, or a combination of these factors. With a validity of ten years from the filing date, these patents primarily protect the functional design aspects of a product.

Design Patents: These patents protect new designs associated with a product’s shape, pattern, color, or a combination thereof, placing emphasis on aesthetic aspects. With a term of 15 years from the filing date, these patents help businesses maintain the uniqueness of their products in the market.

 

The Importance of Trademark Protection

In addition to patent protection, safeguarding trademarks is equally crucial in the Chinese market. Businesses should ensure they register their trademarks with the China National Intellectual Property Administration (CNIPA). Like patents, China’s first-to-file system applies to trademarks as well, reinforcing the need for prompt registration.

 

The Pivotal Role of Chinese Customs

Beyond the realm of patent and trademark filings, engagement with Chinese customs is a strategy that significantly strengthens patent protection in China. Registering patents with Chinese customs allows for the detention of shipments containing products that infringe upon registered patents, trademarks and IP, effectively curtailing the spread of counterfeit goods.

This is an effective way of preventing counterfeit products being sent out from China into others. Because you are solving the problem by the root, your IP protection in China means that that you protect yourself in other markets.

 

The Power of Contracts Adapted to the China Market

Contracts, particularly those with manufacturing entities operating within China, represent another vital element in a business’s strategy for intellectual property protection. These agreements should underscore the importance of patent and intellectual property protection, and be compliant with Chinese law. 

We often see that the court in China is not following the decisions made in other jurisdictions outside of China. Having jurisdiction in China is crucial since any legal disputes will be settled in China under Chinese law, which can expedite the resolution process and give businesses more control over the outcome. Drafting contracts in Chinese and state Chinese jurisdiction as the governing law is advisable to make them executable in China.

 

The Significance of NNN Contracts in China

In the context of doing business in China, Non-Disclosure, Non-Use, and Non-Circumvention (NNN) contracts play an integral role in protecting a company’s intellectual property. These contracts are a powerful tool for businesses to prevent their manufacturers or distributors in China from copying their products.

An NNN contract is a legally binding agreement that ensures the Chinese party will not disclose your confidential information, will not use the information outside of your business relationship, and will not bypass you to directly engage with your customers or sources. This type of contract is particularly important when sharing sensitive information, prototypes, or new products with potential partners or manufacturers in China.

Ultimately, NNN contracts are essential to a comprehensive strategy for businesses to protect their intellectual property and counter counterfeit products on Chinese e-commerce platforms. By understanding and utilizing these contracts, businesses can better navigate the Chinese market and ensure their innovative products are protected.

 

Confronting the Counterfeit Challenge on Chinese E-Commerce Platforms

Chinese retail platforms, like Taobao, Tmall, and JD.com, have seen an emergence of counterfeit goods, posing a substantial challenge for businesses. Regular monitoring of these platforms for potential patent and trademark infringements, followed by swift legal action against counterfeiters, can significantly safeguard a business’s market share and uphold brand reputation.

Moreover, owning the intellectual property rights in China provides businesses with a significant advantage. If a violation occurs, we simply send the link to the infringing product to the E-Commerce platform together with the information that the information of our client that shows that our client is the legal owner of the patents, trademarks and designs in China. The Chinese E-Commerce platform is then obligated to remove the product. This is a powerful tool for businesses to protect their interests and maintain their competitive edge in the market.

 

The option of suing the infringing Chinese company

Owning patents, trademarks, and intellectual property (IP) in China provides businesses with a significant strategic advantage when it comes to countering counterfeit products on Chinese e-commerce platforms. This ownership is critical to a comprehensive strategy to protect a business’s unique products and brand identity.

When a business is the registered owner of patents and trademarks in China, it has the legal right to control how its IP is used within the country. This means that if another company infringes on this IP, the business has the right to take legal action against the infringing party.

Furthermore, having contracts that are adapted to Chinese law and setting jurisdiction in China can greatly facilitate the process of taking legal action against an infringing Chinese company. These contracts, which should be drafted in Chinese and state Chinese jurisdiction as the governing law, provide a clear legal framework for resolving disputes. They set out the rights and obligations of each party and provide a mechanism for enforcing these rights in China.

In the event of a dispute, the business can take the infringing party to court in China. The Chinese courts will then apply Chinese law to the dispute, and the business can seek remedies such as an injunction to stop the infringing activity, damages for any loss suffered, and an order for the destruction of the counterfeit goods.

 

Conclusion

To navigate the Chinese market successfully, businesses need to adopt a strategic amalgamation of understanding patent types, leveraging Chinese customs, crafting legally sound contracts, protecting trademarks, and actively addressing the issue of counterfeiting on digital platforms. This multifaceted approach will protect businesses’ innovation, facilitating secure and prosperous business activities in China.

 

Frequently Asked Questions

  1. What are the strategic tactics businesses can use to counter counterfeit products on Chinese e-commerce platforms? Businesses can use a variety of strategies, including owning patents, trademarks, and IP in China, having robust contracts with manufacturers and distributors, registering patents with Chinese customs, and actively monitoring e-commerce platforms for potential infringements.
  2. Why is owning patents, trademarks, and IP in China important? Owning patents, trademarks, and IP in China gives businesses the legal right to control how their IP is used within the country. If another company infringes on this IP, the business has the right to take legal action against the infringing party.
  3. What is the role of NNN contracts in countering counterfeit products? Non-Disclosure, Non-Use, and Non-Circumvention (NNN) contracts are a powerful tool for businesses to prevent their manufacturers or distributors in China from copying their products. These contracts also ensure that any legal disputes will be settled in China under Chinese law.
  4. How can businesses leverage Chinese customs to protect their IP? Registering patents with Chinese customs allows for the detention of shipments containing products that infringe upon registered patents, effectively curtailing the spread of counterfeit goods.
  5. Why is it important to have jurisdiction set in China? Having jurisdiction set in China means that any legal disputes will be settled in China under Chinese law. This can expedite the resolution process and provide businesses with more control over the outcome.
  6. What actions can businesses take if they find counterfeit versions of their products on Chinese e-commerce platforms? Businesses can take legal action against the counterfeiters. If the business owns the IP in China, it can send the link to the infringing product to the e-commerce platform, which is then obligated to remove the product.

 

 

Contact us if you need legal help in China, like drafting contracts that follow Chinese law, background investigation of Chinese companies, protecting patents, trademarks, and verification of contracts to the law in China, etc.

If you require our assistance or have further questions about our services, please do not hesitate to contact our Customer Relationship Manager, Jan Erik Christensen, at janerik@ncbhub.com. We look forward to hearing from you and helping your business succeed in China.

 

 

 

 

Contact us if you need help with drafting of contracts that follows Chinese laws and are enforceable in China, background investigation of Chinese companiesprotecting patents, trademarks, verification of contracts to the law in China, or help with other legal challenges that you have in China.

If you require our assistance or have further questions about our services, please do not hesitate to contact our Customer Relationship Managers Jan Erik Christensen, at janerik@ncbhub.com  or Milla Chen, at huimin.chen@ncbhub.com. We look forward to hearing from you and helping your business succeed in China.