The European Commission has published its 2023 Report on protecting and enforcing intellectual property rights in third countries (europa.eu, 17 May 2023). This Report draws up a list of countries where the level of protection of intellectual property rights is considered to be of concern. For this purpose, the Commission relies primarily on the following indicators:
– the level of counterfeiting;
– the quality of legislation;
– efficiency in the implementation of legislation;
– respect for intellectual property rights in international forums;
– level of economic development (pp. 8 and 9 of the Report).
China remains the primary concern of the European Commission (priority level 1). This is followed by India and Turkey (priority level 2), then Argentina, Brazil, Ecuador, Indonesia, Malaysia, Nigeria, Saudi Arabia, and Thailand (priority level 3) ( p.9 of the Report). The efforts and shortcomings of these States in the fight against counterfeiting are described in the Commission’s Report.
Let us recall that Chinese legislation on intellectual property has been constantly evolving since China’s accession to the World Trade Organization in 2001. Nevertheless, the Commission recalls that China’s share in total e-commerce-related counterfeits is 76% (p. 21). Moreover, difficulties persist, having, as their origins, the vagueness and incompleteness of the law and, consequently, legal insecurity unworthy of the second-world economic power. Intellectual property rights owners are particularly concerned about the discriminatory application of the law to the detriment of foreign companies (p. 19). They repeatedly highlight a lack of consistency in the application of the law (p. 19), despite the multiple interpretations of the Supreme Court (see spec. p. 17), which, in principle, imposes on the lower courts. The Commission also confirms an expected consequence of the Belt and Road Initiative (BRI), namely the outsourcing of counterfeit manufacturing to countries closer to European markets to reduce the cost of manufacturing further (p. 22). Finally, more specifically, right holders cite difficulties in the fight against counterfeiting resulting from online commerce:
“With regard to online environment, some stakeholders report recent considerable successes in online takedowns, but online enforcement remains challenging, among other things due to complex and differing policies by online services. Another challenge that rightholders are facing is related to collecting evidence, as many procuratorates or courts may not accept digital evidence. Social media is mentioned as a growing area of concern. Stakeholders consider that the measures taken are insufficient and counterfeiters using online platforms sell and deliver small package items in huge volumes while avoiding enforcement measures. Stakeholders consider that China should improve criminal penalties for IPR infringements and foster better collaboration between the different enforcement authorities, as well as adopt enforcement measures to effectively discourage repeat infringers.
Moreover, with regard to means for IPR enforcement in China, differences and inconsistencies between various provinces and cities remain an issue. Stakeholders report that, in general, the standards of administration and courts in cities like Beijing, Shenzhen or Shanghai are more satisfactory and they expect them to improve further. However, lack of expertise continues to be a serious problem in the less developed provinces of China.
Stakeholders also report that different elements affect the efficiency of judicial enforcement, such as burdensome evidentiary requirements and the notarisation requirement. Overall, the stakeholders report that costly and burdensome civil litigation requirements contrasted with low damages awards”.
Thus, questions of proof pose a problem. Requiring the rights holder to quantify the financial gain made by the infringer constitutes impossible proof (probatio diabolica) that only the infringer and the marketplaces concerned are able to provide.
China’s intellectual property system is in place, and with Chinese pragmatism, the culture of intellectual property has spread to business circles and beyond. Twenty years after China’s accession to the World Trade Organization, the time for indulgence has expired, and foreign investors can quite legitimately expect the Chinese authorities to take upright measures to protect intellectual property rights.
