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Four years have passed and the clock is ticking mercilessly. The pressure is certainly mounting on China's performance in meeting its World Trade Organization obligations. Since joining the trade body in December 2001 and opening its markets, China's imports have rocketed to new heights. US exports to China last year alone had surged more than 80% from 2001. Nonetheless, foreign companies in China continue to face some major challenges. Many of their grievances stem from a lack of transparency in regulations, restrictions on distribution, and more importantly, rampant violations of intellectual property rights.

The US Chamber of Commerce, in a recent report, stated that "China's intellectual property rights enforcement remains wholly inadequate and is the most visible area of WTO noncompliance." It was alleged in the said report that of some 2,000 administrative enforcement cases handled by authorities in the eastern province of Jiangsu last year, only two were transferred to courts for criminal investigation.

In joining the WTO, China has pledged to significantly step up its efforts to strengthen its intellectual property rights protection regime. In this regard, the Chinese government has formulated comprehensive intellectual property rights laws and regulations. It has also revised its intellectual property laws and regulations to bring them more in tune with WTO rules and to provide companies with a better business environment for intellectual property protection. In addition, China is a signatory to the most important international intellectual property agreements. Therefore, it is, legislatively, on par with international standards for the protection of intellectual property rights. Chinese authorities and businesses have recognized the fact that having a proper system of intellectual property protection in place not only benefits foreign investment but also domestic companies.

Trademarks are one of the most important areas of intellectual property. In China, the primary law of trademark protection enacted by the National People's Congress (NPC) is the Trademark Law, which was adopted on 23 August 1982 and came into effect on 1 March 1983. The law was subsequently amended for the first time on 22 February 1993 and came into effect on 1 July 1993. The second revision (the Modified Trademark Law or MTL) was adopted at the 24th Session of the Standing Committee of the Ninth National People's Congress on 27 October 2001 and came into effect on 1 December 2001. In consequence, the administrative regulations on trademark are being modified and substantial changes to the Chinese trademark law system are being made.

Apart from making tremendous progress in trademark legislation, the country's trademark watchdog has further devised extensive measures to improve and streamline the administration of trademarks, protecting their exclusive rights of use and maintaining the reputation of well-known brands, and to foster an intellectual property rights-conscious environment in society.

In China , there is a dual-track system for intellectual property rights protection under which the interested parties may seek to resolve intellectual property rights-related disputes through administrative procedures or legal proceedings. Each option has its own strengths and weaknesses. Administrative actions are relatively inexpensive and very useful in preventing infringing activities expeditiously where the facts of the case are simple and straightforward. Judicial actions should be taken where the registered owner is seeking damages or where liability is disputed.

Administrative actions are particularly valuable for situations that call for injunctive relief and punitive actions only.

In trademark infringement cases, administrative actions through administrative authorities for industry and commerce are the most effective and most frequently chosen approach. The MTL has been enacted, among other purposes, to enhance the effectiveness of administrative enforcement against trademark infringements. It contains provisions that give the trademark administration wider investigatory powers, provide more administrative measures to combat infringing acts, and improve the administrative enforcement mechanism.

In the case of an act infringing the exclusive right to use a registered trademark, anyone can complain or report to the administration for industry and commerce, at or above the county level, of the location where the infringer has its domicile or where the infringing act is committed. Trademark administrative departments under the administrative bureaus for industry and commerce have been established at the central, provincial, city, prefectural and county levels; below the county level, there are administrative offices for industry and commerce. Today, there are well over 7,000 full-time trademark administration personnel throughout China , in addition to 300,000 part-time personnel.

Chinese trademark administrative authorities exercise their legal powers and functions to preserve law and order within the field of trademarks, mediate disputes, encourage fair competition, settle cases involving violations of trademarks rights, and protect the interests of the masses by maintaining a good social and economic environment.

In China , the administrative procedures for resolving disputes concerning trademark rights are fairly simple and convenient. Cases can be quickly filed for official examination and possible prosecution, with investigation following promptly and efficiently. This is advantageous to the owners of the rights.

In making a request for the administrative authorities to handle an infringement dispute, the interested party should submit a written request, accompanied by proof of his interest and legal rights, details of the infringer, evidence of the infringing act, and a complaint, containing a statement of the cause and facts of the case and claims.

It should be noted that under China's Trademark Law, it is obligatory that foreign companies appoint designated agents to handle matters related to trademarks. This also applies to the handling of trademark infringement disputes, which means that the request for settlement of the dispute should be made by the designated agent on behalf of the interested party.

When the administrative authority for industry and commerce receiving the complaint is of the view that the infringement is established, it may, in exercising its investigatory powers to gather evidence, (i) inquire of the interested parties involved, and investigate facts relevant to the infringement of the exclusive right to use the trademark;
(ii) examine and make copies of the contracts, receipts, account books and other relevant materials of the interested parties relating to the infringement;
(iii) search the place where the party is suspected of committing the alleged infringing act; and (iv) inspect any articles relevant to the infringement; any articles that prove to have been used for the infringement of another person's exclusive right to use the trademark may be sealed up or seized.

In the course of its information-gathering investigation, the administrative authority for industry and commerce is empowered to take certain measures to stop an infringing act. Among others, it may order a halt in the production, sale and distribution; seize and destroy the symbols of infringing trademarks; remove and destroy the infringing trademarks on the remaining goods; and confiscate printing plates and other instruments directly and specially used to manufacture the infringing goods and counterfeiting representations of a registered trademark. Where infringing trademarks are not detachable from their goods, it may order and supervise the infringing material be destroyed.

In a non-criminal case of infringement, the administrative organ for industry and commerce may also impose, according to the circumstances of a particular case, a fine not more than three times of the illegal business revenue. When it is impracticable or impossible to assess the amount of the illegal business revenue, the fine shall be no more than RMB 100,000.

The competent administrative authorities responsible for handling trademark disputes may also order the infringer to pay for damages based on the request of the applicant. In calculating the amount of compensation, an infringee can choose between two methods thereof: one is based on the profits made by the infringer through the infringement during the infringing period; and the other is based on the damages suffered by the infringee. Both may include the appropriate expenses incurred by the infringee for stopping the infringing activities. If it is difficult to determine the benefits that the infringer has acquired through the infringement or the losses that the infringee has incurred from the infringement, the authorities shall, depending on the circumstances of the infringing act, impose an amount of compensation of no more than RMB 500,000. The lawyer's fee provided for by the relevant state department may also be included.

Where an interested party is dissatisfied with the decision made by the administrative authorities, it may, within 3 months from receipt of the notification of the decision, institute legal proceedings in the people's court in the place where the administrative authorities are located. If it fails to do so and the decision is not implemented within the time limit, the administrative authorities may apply to the court for compulsory execution.

If an interested party is dissatisfied with the decision made by the administration for industry and commerce, it may, within 15 days from receiving notification of the decision, apply to the administrative authorities at a higher level for reconsideration of the decision. A written request should be submitted for this purpose.

The authorities concerned should then decide within 10 days whether to handle the matter. If the said authorities decide to take on the case, a decision on the reconsideration should be made within 2 months from receipt of the application for reconsideration.

If the interested party is dissatisfied with the decision on reconsideration, it may, within 15 days from receipt of the notification of the decision, institute administrative proceedings in the people's court. If it fails to institute such proceedings and adheres to the decision within the specified period, the administrative authorities concerned may request the people's court for compulsory execution.

If a case of infringement upon the exclusive right to use a registered trademark is so serious as to constitute a crime, the administrative authorities concerned shall refer the infringing party to the judicial authority for prosecution in respect of his criminal liability according to law, in addition to being liable to pay compensation for the damages suffered by the infringed.

Over the past few years, administrative organs of industry and commerce at all levels across China have fully exploited their advantages in trademark administrative law enforcement - simple procedures, high efficiency and complete networks. Focusing on the protection of the right to exclusive use of registered trademarks, and diligently carrying out their responsibilities, they have investigated and dealt with a large number of trademark infringement and counterfeiting cases, effectively defending the rights of registered trademarks of both local and foreign trademark owners, and safeguarding the legitimate rights and interests of consumers.

Trademark protection is a theoretically simple, but practically, a more intricate matter in China. In a large developing country with a population of more than 1.3 billion, the Chinese government is fully aware that a complete and comprehensive trademark protection system cannot be established overnight. China is faced with heavy tasks in pushing forward the development for protection of trademark rights and certainly has a long way to go in this regard.

At present, different types of trademark infringement can be seen in China. In reality, taking counteractive measures to protect trademark rights requires prudent planning and efficient management and supervision. Moreover, without appropriate proactive steps to safeguard trademark assets from the beginning, the efforts of investors are time and again frustrated and in vain. Therefore, it is strongly recommended that investors first trademark their businesses by adopting a comprehensive trademark protection plan before embarking on their business journey by making substantial investments in commercial promotions and advertisements.