Recently a European company was telling me that (at least) one Chinese company was copying and selling two lines of its products in China and other countries. (Let’s assume that the products in question are furniture.) The question was whether it was possible to take advantage of the remedies provided by the anti-unfair competition legislation against the counterfeiter. (Needless to say this European company had not registered the design of its products in China.)
There is an Anti-Unfair Competition Law in China. The name seems to suggest a law that provides unconditional protection to the victims of their competitors’ illegal unlawful or unfair commercial practices.
However, it is not easy for a company to resort to the remedies provided by the Anti-Unfair Competition Law.
Unfair Competition: the Legal Definition
In China, the legal definition of unfair competition involves a company using names, packaging or decorations (including designs, colours, or a combination of both) which are the same or extremely similar to those of famous products, causing great confusion among consumers.
Requirements to be protected by the Anti-Unfair Competition Law
The main requirements of the Anti-Unfair Competition Law are:
- the products must be well-known in China (the furniture in question is well-known only in Europe);
- the packaging or decorations of the products must have very marked, distinct features.
In addition, there are also other factors that may hamper any legal action taken based on the Anti-Unfair Competition Law. Some of them are:
- the claimant has a very heavy burden of proof (burden of proof which will cover, among other things, evidence that the products are well-known in China and that the counterfeiters are using the same names, packaging and decoration as the original products);
- the judge’s broad discretion when assessing the evidence (for instance, the criteria used to determine whether a product is well-known or not);
- the remedies offered by the Anti-Unfair Competition Law are usually regarded as remedies to be applied when the specific intellectual property rights involved (i.e. trademarks, patents or copyrights) have not been registered. Therefore, these remedies are regarded as residual and available only under special circumstances;
- according to Chinese standards, the Anti-Unfair Competition Law is an “old” piece of legislation. (It was enacted in 1993.) The Anti-Unfair Competition Law is still effective. However, it is regarded as a piece of legislation which has been replaced by all the laws and regulations on intellectual property matters issued after China’s accession to the WTO in December 2001.
To sum up, the remedies provided by the Anti-Unfair Competition Law are not easily available.
Therefore, in China, it is very important to register trademarks, patents, designs and copyrights in order to be able to resort to the more effective remedies, specifically provided for each of these intellectual property rights.