The fourth and swift amendment to China’s Trademark Law in 2019 is seen as a prelude to the systematic overhaul of the nation’s IP regime. In June 2020, apart from the latest draft amendment of the Patent Law, China published a series of draft judicial interpretations and opinions to seek public comments. All these efforts reflect the commitment Chinese government made in the “US-China Economic and Trade Agreement” (“Agreement”) signed in January 2020.

Article 63 of the revised Trademark Law provides that the court may order destruction of fake goods, materials and implements mainly for producing fake goods, and that fake goods shall not flow into commercial channels again after the mere removal of fake labels. The Office of the National Leading Group on Fight against IPR Infringement and Counterfeiting under the State Council released in June the draft “Opinions on Strengthening Destruction of Pirated and Counterfeit Goods” (“Opinions”), seeking public comments until August 5, 2020. The draft “Opinions” is believed to be a direct response to Article 1.20 of the “Agreement”.

The draft “Opinions” underline the following aspects:

1)       Scope of goods for destruction should include counterfeits, packaging materials, raw materials and implements mainly for production of pirated goods or counterfeits.

2)      Timeline for destruction: within six months since the entry-into-force of the administrative penalty decision or the criminal judgment.

3)       Goods are to be sorted to ensure proper destruction and compliance with environment protection requirements.

4)      Prevention of environment pollution in the destruction process.

5)       Storage of the goods: all measures should be taken to ensure no illegal disposal.

6)      Strict supervision of the whole procedure.

Article 1.20 of the “Agreement” further raises an array of requirement on destruction of goods with respect to border measures, civil judicial procedures and criminal procedures. By addressing the aforesaid aspects, the “Opinions”, if fully implemented, is expected to greatly improve the status quo. The only regret is, with no clause on “public supervision”, the “Opinions” seem to leave little leeway to IP owners that are keen to engage with the authorities in this regard. As the key stakeholders of the destruction process, IP owners, who are best positioned to advise on the approach of destruction and should be entitled to learn when and how the counterfeits are to be destroyed and even to witness the destruction process, may be disappointed. Some may argue that government destruction of counterfeits should fall into “public information” as defined in the “Regulations on Government Information Disclosure”. Unfortunately, in practice, local authorities may dissent.

Contributed by: Shuhua Zhang