Q&A: China’s Anti-Unfair Competition Law with an IP Lens
date: 2020-08-10 Brandy E. Baker Read by:

What is the Anti-Unfair Competition Law (AUCL) and can you use it to protect your IP in China?


Yes. Often, where intellectual property laws cannot be applied in your case or where you merely need to strengthen a case against a party, you should look at the AUCL. Claims under the AUCL are not based on intellectual property rights, but rather on how actions by others damage your business.


What is is considered “unfair competition” under the AUCL?


The AUCL can be applied in a variety of ways. However, the areas particularly useful in IP cases include:


  • False Advertising where unfair or untrue statements are made about a product/service, misleading consumers.

  • Confusion where certain acts are seen to mislead the public as to the source of the goods/services.

  • Trade secret infringement where a party obtains, uses, or discloses trade secrets without authorization.

  • Defamation where a party uses false information to damage the goodwill of a competitor.

  • Online unfair competition where a party interferes with a competitors' legitimate business online.


How can you file action against a party for unfair competition?


Administrative action- You can file a complaint with the Market Supervision and Administration but should first collect evidence of the unfair competition. After you’ve filed your complaint, authorities may investigate potential acts of unfair competition by questioning suspects, investigating premises (raids), and looking into bank records before making a decision. Authorities may require the infringing party to stop or rectify its behavior and/or order the party to pay fines.


Civil Litigation - A lawsuit may be filed claiming unfair competition through the appropriate people’s court. While damages are generally based on actual losses or gains and generally will be in the tens to hundreds of thousands RMB, damages could go up to the millions and statutory damages can be as high as 3 million RMB. Damages will depend on the facts of the case, such as the fame of the product/services at issues and circumstances of infringement.


What kind of evidence should you prepare for an AUCL case?


The type of evidence needed will differ for the type of unfair competition involved.

However, in general you will want to collect evidence from your own side of (1) prior use of product/business activity (such as documentation of advertisements, sales, publications, promotions, contracts) (2) the original design or creation of the product/business activity, and (3) certain reputation or fame (such as rankings, articles, awards, studies).


Can an AUCL case be brought together with a patent/TM/copyright claim?


Generally cases in China will deal with a single claim. However, it is possible to bring multiple claims in one case though it is common for a court to reject this, requiring you to split the claims.


What are some recent interesting cases relating to the AUCL?


*Confusion with Similar Packaging and Names- Yili and Mengniu are two famous Chinese dairy-product companies. Yili claimed that Mengniu's Future Star products used similar product packaging, decoration and product names to its QQ Star products. (You can read more about this case here)


*Bad Faith Online Complaints Against a Competitor - this case relates to sales of Under Armour branded goods. An individual filed false complaints through Ecommerce sites and the court found the individual to be maliciously destroying the regular market competition order and such constituted obvious illicit and unfair competition. The defendant was ordered to pay 2.1 million RMB.(You can read more about this case here)


Copyright with a Second Claim of Unfair Competition - This case involves video games and copyright but is particularly interesting because the court allowed for a copyright claim with a backup of claim under the AUCL should copyright fail. The parties involved were Ming Ho Publications and Excellent World Software program Co. who prevailed over Firevale Web Know-how Co., Kunlun Lexiang Community Know-how Co., and Beijing Kunlun Tech Co.


Trademark and Confusion - this case involves New Balance and Niu Ba Lun who have a long history of disputes. In this case, the Niu Ba Lun was using a logo similar to New Balance’s “N” logo and the court held that such violated good faith and caused confusion as to the source of the goods. New Balance was awarded more than USD 1.5 million.


Design Patent and Market Confusion - this case involved Jaguar Land Rover and Jiangling Lvfang where Jiangling copied several design features of Jaguar Land Rover’s Evoque. The court ordered Jiangling to issue a public announcement, cease its behavior, and pay damages.