Amazon Sellers’ Guide: Chinese IP Law

By: CJ Rosenbaum Esq., Anthony Famularo Esq., Conor Wiggins, and Moshe Allweis

Chapter Four

Copyright: Fighting Infringers and Protecting Your Products ……….. 48

Offense: Stopping Copyright Infringers ……….. 48

Defense: Fighting Off Copyright Infringement Claims ……….. 58

Chinese IP Law: Chapter 4: Copyright: Fighting Infringers & Protecting Your Copyrights

As was covered in chapter two, a seller’s “original” work that has gained copyright protection in China is protected for the life of the author (the seller) plus an additional 70 years after death. [1] While copyright protections last for a substantial amount of time, this certainly does not mean that a seller in China will not run into any issues with their copyright. There are a significant number of methods sellers can use in China to stop infringers.

(I). Offense: Stopping Copyright Infringers

There are multiple modes of attack a Seller has in their arsenal when addressing an infringer in China.

Which method the seller chooses to use is based upon multiple considerations including:

·       how much time the seller is willing to spend;

·       how much money is the seller willing to spend;

·       is the seller seeking damages;

·       how much money has been lost;

·       has the infringement risen to a criminal level?

(A) Contacting the Online Platform

When an internationally-based seller in China, it is most often discovered when the seller simply finds their own products being sold on an online-platform such as Amazon, Alibaba, or eBay, without their permission.

When copyright infringement is first discovered, the seller may seek protection at the border, begin administrative proceedings, file a civil suit, or raise criminal allegations. The seller should not forget, however, that the easiest and often simplest solution to the problem may be to simply contact the online platform that is permitting the sale of the products.

At the outset, addressing the issue via the platform is by far the least expensive route to alleviate infringement issues. Many websites, such as Amazon, have pre-established avenues called “take down” mechanisms. When Sellers are successful in employing the platform’s take down system, they are able to stop the ongoing infringement.  Take Down mechanisms to not provide the infringed party any damages for lost sales or brand degradation.

The downside to contacting the digital sales platform, however, is that it may be no more than a bandage on a far larger wound. A website removing an infringing listing does nothing to prevent that individual from selling on another site or selling via her own website or via brick & mortar stores.

Anthony’s Advice: Despite the drawbacks, contacting the online platform selling the infringing-product should be part of a Seller’s overall solution. An online platform should be able to take down the infringing product from their site which, at the very least, will at least mitigate the losses you the Seller are experiencing from this infringer stealing your product. From there, the Seller can take further and more-serious action which this chapter will cover.

(B) Border Protection

If a Seller’s issues with copyright infringement are coming from their products flowing across the Chinese border, either in or out, without their permission, then protecting copyrights via the Chinese border may be a potential solution.

The State Council of the People’s Republic of China gives customs the power to seize and protect different items via the Regulations on Customs Protection of Intellectual Property Rights.[2]

Article 2 states: 

Customs protection of intellectual property rights used in these Regulations refers to the protection provided by Customs for the exclusive rights to use a trademark, copyrights and their related rights, and patent rights… related to import or export goods and protected under the laws and administrative regulations of the People’s Republic of China. [3]

Article 2 empowers China’s border protection agents to seize any goods that they believe is infringing upon the Seller’s properly-registered copyright protections. This is, however, the limit of the power of customs enforcement to protect Sellers’ copyright protection. No damages may be issued by customs nor can they go after the infringer in the country itself, since their power ends at what comes across the border.[4]

(C) Administrative Proceedings

There are benefits to employing Chinese administrative proceedings as a means of stopping copyright infringers. An administrative proceeding is when the Seller contacts one of the local-level government offices to stop copyright infringers that are infringing in their districts. This local-level work helps to attack specific areas of infringement and can be a much quicker and less costly procedure than going through the court system to stop infringers. Furthermore, if the city-level administrative office administers a decision that is averse to the Seller, the Seller may appeal the decision to the higher province-level administrative board for review.[5]

Anthony’s Advice: Be advised, however, that the province’s administrative office will not be reviewing the merits of your case. Rather, they will analyze whether the lower-level office properly reviewed your case.

Filing a complaint at an administrative office to begin proceedings on the Sellers copyright infringement action is relatively straightforward. The Seller needs to go to the city-level administrative office where the infringement has taken place and bring evidence such as: a copyright ownership certificate, a Chinese recordal certificate, original/draft of the product, a copy of the infringing works, and a purchase receipt of where the Seller can buy these infringing items. [6]

While administrative proceedings can be done more quickly and cheaply than legal proceedings and can be done at the local-level and appealed to higher offices, there are a significant number of drawbacks to this method.

First and foremost, administrative offices cannot issue damages. [7] In addition, because proceedings must begin at the local-level, fluency in Chinese will be needed.  This method of redress also seems to require some ability to work the Chinese government.

Similar to other methods that stop the continuing sales, sales, administrative offices lack the power to order anyone to pay damages for prior infringement. [8] In other words, administrative offices cannot stop infringers until a judgement is reached. During the entire investigation and, if the Seller appeals a decision, the appeal process, the infringer may still be able to sell these illicit goods without any hindrance.

(D) Judicial Protection – Civil

There are benefits to bringing a civil action in the People’s Court against an infringer such as the court’s ability to issue preliminary injunctions, to preserve evidence of the infringement and to issue damages.[9] Before a case can be brought, the Seller must demonstrate that their copyright is an original work.

There are multiple levels within the People’s Court: Basic, High, Intermediate, and Supreme. Each level consists of different chambers: civil, administrative and criminal.[10] Internationally-based Sellers, such as in the U.S. and U.K., will likely have their matters heard in the Intermediate Courts.[11]

A benefit of employing China’s civil judicial system is that the court may impose a preliminary injunction. This is a power that web platforms, customs, or administrative offices cannot offer sellers. A preliminary injunction provides immediate relief to the Seller because it halts all infringing activity until the issues are resolved. Preliminary injunctions can be difficult to obtain and costly. The Seller is often required to post monetary bond estimated at the gross revenue lost by the infringer during the injunction-period.  The bond will be used to reimburse the infringer if the case is lost – if the infringer is found not to have infringed upon the plaintiff’s intellectual property rights.[12]

Another benefit of a civil action is that the court has the power to preserve infringing materials for examination.[13] This is another power that solely exists in the court system. Administrative actions, remedies via customs and or complaints asserted on sales platforms do not result in preservation orders.

A third benefit to a civil action, and likely the most important to the Seller, is that the People’s Court has the power to award damages. Not only can the court award damages, but there is also technically no limit to the amount the court may award.  As China’s overall concern with intellectual property issues have increased, so have the damage-payments; a sign of good things to come for sellers seeking justice in the People’s Court.[14]

(E) Judicial Protection – Criminal

Criminal courts in China, like the civil courts, have powers attractive to Sellers seeking justice such as the ability to issue preliminary injunctions, to preserve infringing materials, and to issue damage awards. In addition to these powers, the criminal courts may also issue criminal sanctions such as additional fines and incarcerate infringers.

Before a Seller can raise a civil claim to a criminal level, the Seller must prove that the infringement rises to a criminal level. This level is dictated by Article 217 of the Criminal Law of the People’s Republic of China.[15] The categories of sales that apply to criminal infringement suits are those infringers who:

(1)   copy and distribute written, musical, movie, televised, and video works; computer software; and other works without the permission of their copywriters;

(2)   publish books whose copyrights are exclusively owned by others;

(3)   duplicate and distribute audiovisual works without the permission of their producers;

(4)   produce and sell artistic works bearing fake signatures of others. [16]

The infringements can neither be done accidentally nor a small-amount. The Seller must also prove that the infringer had “knowledge” [17] of his or her infringement and that he or she “gain[ed] a huge amount of illicit income” from the sales. [18]

CJ’s Side Note: The evidence must be brought before the People’s Court or to the Public Security Bureau before the discovery process. Meaning, the Seller must have gathered this evidence on their own or with the help of an attorney before the Seller has the legal-access to all the infringers documentation. This makes bringing a criminal suit that-much-more difficult for the Seller when attempting to bring a civil action.

If a Seller can meet the threshold requirements before the court, the Seller may be able to inflict the most serious punishments against the infringer. Besides preliminary injunctions during trial and damage payments at the conclusion, an infringer may be “sentenced to not less than three years and not more than seven years of fixed-term imprisonment and a fine, if he causes particularly serious consequences.” The infringer, in a criminal trial, faces not just the halting of their business and damage-payouts to the Seller, but imprisonment for their actions. Besides making the Seller whole again for having their business stolen, criminal sanctions are the ultimate deterrent against others in China thinking they can scam the Seller.

(II). Defense: Fighting Off Copyright Infringement Claims in China

While the media seems to only publicize the widespread copyright infringement from Chinese-nationals against American Sellers, this is not the full story. There are cases where Chinese Sellers or Chinese business have brought copyright infringement suits against Americans, Europeans and other foreigners in China who infringe upon Chinese products and sell them in China and abroad.

In December of 2012, a group of eight Chinese authors successfully prosecuted a copyright infringement suit against Apple.[19] Apple was found guilty by the People’s Court of having violated Chinese Copyright Law by hosting third party apps that sold infringing copies of the authors’ books.[20] Apple was forced to pay $165,000 to the eight authors.[21]

Sellers should notice this case and take heed, not because of the final judgement (which obviously was not very serious for Apple), but to keep in mind that this type of suit is possible. When entering the Chinese market, a seller will likely be thinking almost entirely about what to do if their copyrights are infringed. As this case highlights, however, foreign companies and foreign sellers are susceptible to claims that they infringed upon Chinese intellectual property rights.

Chinese IP Law: Chapter 4 – Conclusion

Copyright protections are automatic in China under the Berne Convention, but that does not mean those protections are recognized by Chinese courts. The savvy Seller will register their copyrights in order to provide more protections to products, both offensively and defensively, upon entering the Chinese marketplace. As the Chinese intellectual property landscape continues to develop and the Chinese courts become more sophisticated, the Chinese government, will likely become more willing and capable to protect its citizens’ intellectual property rights. The modern-day Seller should prepared for a future where it is just as likely that their rights will be infringed upon as is that they will be accused by Chinese people and companies of infringement.

[1] Copyright Law of The People’s Republic of China, art. 21, § 3 (Feb. 26, 2010).
[2] Regulations on Customs Protection of Intellectual Property Rights, Decree No. 395 of State Council of the People’s Republic of China (effective Mar. 1, 2004).
[3] Id. art. 2.
[4] About Customs Enforcement of Intellectual Property Right (IPR), General Administration of Customs People’s Republic of China (Nov. 18, 2014), http://english.customs.gov.cn/Statics/aafe7743-c701-4795-91e3-6f3fdf7ce397.html.
[5] Roadmap for Intellectual Property Protection in China, EU-China IPR2, 16.
[6] Id. at 17.
[7] Id.
[8] Id. at 17.
[9] Id. at 14-15.
[10] Id. at 14.
[11] Id. at 15.
[12] Id. at 14.
[13] Id.
[14] Id. at 15.
[15] Criminal Law of the People’s Republic of China, art. 217, § 7 (Mar. 14, 1997).
[16] Id.
[17] Id. at art. 217.
[18] Id.
[19] Apple Fined By China Court for Copyright Violation, BBC News (Dec. 28, 2012).
[20] Id.
[21] Id.