Foreign companies manufacturing or selling products in China know the importance of developing a comprehensive strategy to ensure that their brand is well protected. Intellectual Property (IP) infringement in China is not uncommon and starting legal actions to stop this violation can be slow and expensive.
A possible step to act against the infringement is a well-crafted cease-and-desist letter. This action can often provide a faster, more affordable recourse than court litigation.
Registering a trademark in China is not enough. Companies that deal with IP infringement in China, have two options: pursuing administrative remedies or court litigation. Both options entail substantial legal fees and slow outcomes.
In contrast, cease-and-desist letters, sometimes referred to as “lawyer’s letters,” often generate faster and more cost-effective results.
The Chinese government recognizes the importance of intellectual property as a part of the country's development and has taken several steps to improve the legal protection of IP in general.
Recent amendments to China’s Trademark Law, including those relating to bad faith registrations and use requirements, may take some time to come into effect. Unpleasant situations may occur if brand owners don’t stay vigilant and believe that they can relax.
The effectiveness of cease-and-desist letters can be significantly influenced by factors such as the cultural and legal contexts.
Relationships are highly valued by Chinese business culture, which can sometimes be leveraged to reach an amicable resolution to IP disputes. To be taken seriously, it is critical for the cease-and-desist letter to be based on a strong Chinese legal foundation, and not just international law.
Creating a cease-and-desist letter to conform to China’s legal framework and cultural norms will enhance its effectiveness, expedite resolution, and save money.
Effective cease-and-desist letters should include:
A clear outline of the infringed IP rights, supported by legal documentation.
Specification of infringing actions, accompanied by evidence.
Demand a halt to the infringing actions and sometimes, the destruction of the infringing goods.
The offer of a window for the recipient to respond, usually by a specific date.
Depending the Chinese company engaging in the IP infringement, an offer to enter into an IP licensing agreement, paying licensing fees.
Cease-and-desist letters can be a cost-effective and swift initial step in combating IP infringement in China. Their effectiveness, however, often depends on the infringer’s profile and the precise nature of the infringement.
It is vital to base the strategies on Chinese legal and cultural frameworks. For instance, leveraging the value placed on business relationships in China can sometimes provide an alternative pathway to resolving disputes amicably, potentially through negotiated settlements or licensing agreements.
The significance of drafting cease-and-desist letters in Chinese cannot be overstated. Aligning your cease-and-desist letters with China’s legal and cultural framework is crucial for them to be taken seriously and to work.
The strategy executed against the infringement should be backed up by due diligence to understand the infringing entity’s profile and if a cease-and-desist letter will be an effective move. It is crucial to conduct due diligence on the infringing Chinese company before sending any cease-and-desist letter.
Foreign companies operating in China can benefit from designing more effective brand protection and enforcement strategies, as well as make any necessary adjustments.
Due to its business growth, economic development, and improved Chinese law regarding the protection of intellectual property (IP), in the last few years China has become a more attractive market for foreign companies.
A well-designed trademark protection and enforcement strategy, adjusted and evaluated regularly, will empower brand owners, and help them react quickly when a defensive action is needed.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms. Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.