Two quick and harrowing facts: According to Business Insider, from 2008 to 2010, almost 70% of all counterfeits seized globally came from China. Even worse, during that same period, 87% of all counterfeit goods seized in the U.S. also came from China. This probably isn’t the first time you’re hearing that a lot of counterfeit goods come from China, but when you see the statistics backing up that notion, it seems even more outrageous. Whether the proliferation of counterfeit goods coming from China is the result of looking the other way, paying the right person off, or just a lack of respect for intellectual property rights, it’s hard to imagine anything other than the worst when it comes to design protection in China. However, some recent news has given us reason to be optimistic. Amendments were recently passed by China's National People's Congress which are set to go into effect on May 1, 2014 and aim to beef up the country’s intellectual property system. The changes to the current system include making the application process more efficient, strengthening trademark enforcement, and targeting trademark squatters.
As it is now, an applicant for trademark protection in China must file a separate application for every class of goods. Under the new rules – and in line with the application process in the U.S. – applicants will be able to file one application to cover many classes of goods. This will not only decrease the paperwork involved in comprehensive protection but it will also decrease the cost of applying for trademark protection.
Another huge change under the new rules will address the issue of bad faith registering or trademark squatting, which is basically registering a trademark with the intent to sell it to the rightful owner. Currently, there are no real limitations on bad faith registration in China and, so, an entrepreneurial person may spot a brand on the rise and register the trademark in China before the designer has time to do so. The only real way to rectify the situation is for the designer to pay (a sometimes huge fee) the squatter for the mark. The new rules seek to put an end to this by allowing the rightful owner of an already-used but unregistered mark to block the application of a squatter. Also, “trademark agencies” are prohibited from making bad faith applications and will face fines if they do.
As to enforcement, the new rules will increase the fines imposed on trademark infringers and create a more thorough infringement test equivalent to America's likelihood of confusion analysis. The new law also includes a burden-shifting provision, which allows a court to require discovery from an alleged infringer.
These are just a few of the major changes that will be implemented in 2014, but all in all, the new law seems promising – at least on paper. What’s even better is that this intellectual property overhaul in China is welcomed along with the recent news that Alibaba Group, a huge e-commerce firm in China, has partnered with Louis Vuitton to battle counterfeits. Taobao Marketplace, which is owned by Alibaba Group, is China’s largest consumer-to-consumer online shopping outlet and it is oftentimes flooded with counterfeit goods. Under the agreement with LV, Taobao will implement preventative measures to stop the sale of fakes while also taking down product listings suspected of selling counterfeit goods.
Who knows, in five or ten years the figures mentioned at the beginning of this article could be a lot less shocking. It sure seems that things are moving in the right direction for that possibility.
Jennifer Williams is a recent law student grad, who writes about fashion, the legal avenues available for protecting it, and the ways in which the laws are falling short. For more from Jennifer, visit her blog, StartFashionPause, or follow her on Twitter.