Lexology GTDT Pharmaceutical Trademarks 2023-China (Part two)
date: 2022-12-06 Jane Chen Read by:

Parallel imports

What are the rules governing parallel imports of pharmaceutical goods?

At present, there are no specific and clear laws or provisions relating to the trademark on the parallel import of pharmaceutical goods in China. In practice, the principle of international exhaustion of trademark rights is adopted in the judicial policy of parallel import of trademarks. That is, as long as the trademark owner or the licensed user agrees to put the goods marked with his or her trademark onto the market then the trademark owner and the licensed user lose their control over it and their rights have been exhausted. The trademark owner has no right to interfere in the resale of the commodities legally obtained by any person.

Strategies against parallel imports

What strategies are available to police and enforce against parallel imports?

Based on China's current economic situation and the economic policies implemented, it is suggested that the principle of exhaustion of rights should be adopted in the field of intellectual property rights to allow the parallel import of pharmaceutical goods, which should be adjusted through the corresponding contract law.

Since the parallel imports are legal in China, the strategies to enforce against them are mostly through contractual measures. The brand owners can expressly make it clear in the distribution agreements that their authorised distributors shall not provide goods to certain parallel importers. Another measure is the customs seizure. The brand owners can record their marks in the Customs system and the Customs may detain the unauthorised goods. The brand owners can try to find out the parallel importers information in this way and take internal measures to stop their distributors to provide goods to these importers.

Anti-counterfeiting and enforcement

Types of proceedings

What types of legal or administrative proceedings are available to enforce against infringing products?

Generally, for small enterprises that may only have slight influence, it will be cost efficient to send a cease and desist (C&D) letter before going into any legal proceedings. The C&D letter should clarify the right owner’s intellectual property (IP) rights; the infringer’s activities; and request the infringer to stop the infringing activities immediately. It is suggested that this letter be sent after the notarisations are done for the purchase process and the infringing websites, since, given the relatively weak legal force of a C&D letter in China, the suspected infringer may choose to ignore the C&D letter and continue their infringement more covertly, which will make evidence collection difficult in the future. The C&D letter should be prepared carefully to avoid any unnecessary groundless threat issues.

If the infringer refuses to stop the infringement, the right holders could institute trademark infringement or unfair competition lawsuit against the infringers before the court. Apart from stopping the infringement immediately, a favourable judgment will grant a certain amount of compensation to the right holders.

And the right holders could also file an Administration for Market Regulation (AMR) action based on the evidence obtained. An AMR action is a unique and effective tool in the Chinese trademark enforcement system. If the AMR accepts the complaint, a raid action will be conducted against infringers, whereby all infringing products will be confiscated and destroyed, and the infringers may be issued with a fine. Compared with other enforcement measures, the AMR action is a time- and cost-efficient way to enforce the IP rights against infringing activities.

Where the case is of a nature serious enough to constitute a crime, the case shall be investigated in accordance with Chinese criminal law. Pursuant to article 213 of the Criminal Law, the penalty for use of an identical trademark on identical goods or services without the permission of the registered mark owner is a fine or a term of imprisonment up to a maximum of three years with a fine. However, if the circumstances are extremely serious, a penalty of imprisonment of three to 10 years (with a fine) will apply.

According to an interpretation issued by the Supreme Court and the Supreme Procuratorate, the following circumstances are deemed to be serious enough to be investigated in accordance with criminal law:

the turnover from the illegal conduct is no less than 50,000 yuan, or the amount of illegal profit is no less than 30,000 yuan;

the infringer has counterfeited two or more registered marks, with the turnover from the illegal business operations amounting to no less than 30,000 yuan, or the amount of illegal profit gained is no less than 20,000 yuan; and

other circumstances the consequences of which are serious.


From the above provisions and interpretations, it is clear that only acts of counterfeiting can constitute a criminal offence. Therefore, only when the infringer uses a trademark identical to the registered mark on the same type of goods will a criminal offence be committed. An identical trademark used on similar goods or a similar mark used on the same type of goods are not seen as criminal offences.

In a case where a counterfeiter shall bear criminal liability, the Public Security Bureau (PSB) will be involved in the investigation and the counterfeiter will be prosecuted by public prosecutors before a criminal court.

According to the Supreme Court’s judicial interpretations, a trademark owner cannot initiate civil litigation collateral to criminal proceeding concurrently, but it can initiate civil litigation for damages separately after the criminal judicial reform takes place. The trademark owner is allowed to recover damages through reaching a criminal settlement agreement with the defendant during the criminal trial. If the trademark infringement does not constitute a crime, the PSB will return the case to the AMR, and the AMR will decide on the punishment after investigation.


What are the available remedies for infringement?

Compensation will be issued to the right holders by the court if the court considers that the activities constitute trademark infringement. The amount of damages for trademark infringement will be determined according to the actual losses suffered by the right holder from the infringement. Where it is difficult to determine the amount of actual losses, the amount of damages may be determined according to the benefits acquired by the infringer from the infringement. Where it is difficult to determine the right holder’s losses or the benefits acquired by the infringer, the amount of damages may be a reasonable multiple of the royalties. If the infringement is committed in bad faith with serious circumstances, the amount of damages shall be the amount, but not more than five times the amount, determined in the aforesaid methods. The amount of damages shall include reasonable expenses of the right holder for stopping the infringement.

Where the right holder has made its best efforts to adduce evidence but the account books and materials related to infringement are mainly in the possession of the infringer, to determine the amount of damages, the court may order the infringer to provide the account books and materials; if the infringer refuses to provide them or provides false ones, the court may determine the amount of damages by reference to the claims of and the evidence provided by the right holder.

Where it is difficult to determine the actual losses suffered by the right holder from the infringement, the profits acquired by the infringer from the infringement, or the royalties of the registered trademark, the court may award damages of not more than 5 million yuan according to the circumstances of the infringement.

If the infringing act causes certain harm to the reputation of the right holders, the court will also consider demanding the infringer to publish a statement to eliminate the impact.

Border enforcement

What border enforcement measures are available to halt the import and export of infringing goods?

According to the Customs Protection Regulations of Intellectual Property Right of the People’s Republic of China, an owner of intellectual property (IP) rights can record his or her registered trademark rights in the Customs IP Recordal System, and then Customs will monitor the goods in transit and investigate whether they infringe the owner’s IP rights recorded before Customs.

After a proprietor records his or her IP rights in the Customs system, there are generally four steps after any suspected infringing goods are discovered:

Customs will notify the proprietor when they discover any suspected goods that may infringe a recorded IP right.

The proprietor then can submit a response to the Customs within three working days to inform Customs whether they wish to detain these goods or not. If the proprietor decides to detain the goods, it must pay the necessary bond requested by Customs at the same time.

Customs will detain these suspected goods after they receive the request and bond.

Customs will investigate whether these goods infringe the proprietor’s IP rights within 60 days, and then make a final decision. When Customs determines that the suspected infringing goods in detention are infringing goods, the goods shall be confiscated. Meanwhile, if an investigation by Customs has eliminated any suspicion of infringement, the proprietor can file trademark infringement litigation before the court; otherwise, the goods will be released.

Online pharmacy regulation

What rules are in place to govern online pharmacies?

Pharmacy distributors shall abide by the relevant provisions of the Pharmaceutical Administration Law on drug marketing when they sell drugs through the internet. Specific administrative measures shall be formulated by the pharmaceutical supervisory and administrative department under the State Council in conjunction with the competent health department under the State Council and other departments. Vaccines, blood products, narcotic drugs, psychotropic drugs, toxic drugs for medical use, radioactive drugs, precursor chemicals in the pharmaceutical category and other drugs under special administration of the state cannot be sold online.

The third-party platform for online drug trading shall be recorded before the relevant governmental drug regulatory department. The third-party platform providers shall, in accordance with the law, examine and verify the qualifications of the drug marketing licence holders and drug distributors that apply to enter the platform to ensure that they meet the statutory requirements, and manage the drug marketing activities occurring on the platform. If a third-party platform provider finds that they have committed any act in violation of the provisions of this law, it shall stop such act without delay and report it to the drug regulatory department of the local people's government at county level; where a serious illegal act is found, the online trading platform shall be stopped immediately. If the third-party platform provider fails to fulfil the above mentioned obligations, it shall be ordered to make corrections, confiscated of illegal gains, and concurrently imposed with a fine of no less than 200,000 yuan but no more than 2 million yuan; if the circumstances are serious, it shall be ordered to suspend business for rectification and concurrently imposed with a fine of no less than 2 million yuan but no more than 5 million yuan.

Regulations for Supervision and Administration of Online Drug Sales issued by AMR will come into force on 1 December 2022.  Regulations for the Supervision and Administration of Drug Trade (exposure draft) issued by AMR are open to public comment and will be officially promulgated and executed in the future.

Recent cases

What are the most notable recent cases regarding the enforcement of pharmaceutical marks?

There was a trademark infringement case involving the sale of counterfeit drugs, and the defendants began selling fake Angong Niuhuang pills from Beijing Tong Ren Tang in early 2013, purchasing them at 35 yuan per pill and selling them at 70 to 80 yuan per pill. In 2014, the defendants were arrested by Guangzhou police during the transaction, and the value of the seized bezoar pills totalled more than 2.07 million yuan. Beijing Tongrentang filed a trademark infringement lawsuit and claimed compensation of 3 million yuan. 

The Guangzhou Intellectual Property Court concluded the case, saying that counterfeiting the Tongrentang trademark not only concerns the economic interests of the company, but also concerns the vital interests of the public and drug safety. Finally, the judge ordered the infringer to compensate Tongrentang 1 million yuan.


Regulatory bodies

Which bodies are responsible for oversight of pharmaceutical advertising in your jurisdiction (and what are their powers)?

According to the Pharmaceutical Administration Law, the content of an advertisement for a drug shall be approved by an advertisement examination department appointed by the people's government of the province, autonomous region or municipality directly under the central government where the advertiser is located. It shall not be published without approval.

After the publication of the advertising, the AMR is responsible for the oversight of pharmaceutical advertising. According to article 49 of the Advertising Law, the AMR may exercise the following functions and powers when performing its duties of supervision and administration of advertising:

conduct on-site inspections of places suspected of engaging in illegal advertising activities;

question the parties concerned or their legal representatives, main person-in-charge and other relevant personnel suspected of violating the law, and to make investigations into the units or individuals concerned;

require the parties suspected of violating the law to provide relevant supporting documents within a time limit;

consult and duplicate contracts, bills, account books, advertising works and other relevant materials related to suspected illegal advertisements;

seal up and detain the advertising articles, business tools, equipment and other property directly related to the suspected illegal advertisements;

order suspension of the publication of suspected illegal advertisements that may cause serious consequences; and

conduct other duties regulated by laws and regulations.


The AMR shall establish and improve the advertising monitoring system, improve the monitoring measures and promptly discover and punish illegal advertising acts in accordance with the law.

Advertising rules

What specific rules are in place regarding the advertising of pharmaceutical products?

According to the Advertisement Law, an advertisement for medicine should not in any way contain the following: (1) any assertions or assurances in terms of efficiency or safety; (2) treatment efficiency or curative rate; (3) comparisons with other medicines in efficiency and safety; (4) use of advertising spokespersons for recommendation and certification; and (5) other contents prohibited by laws and administrative regulations.

The contents of drug advertisements shall not be inconsistent with the specifications approved by the drug regulatory department under the State Council and shall clearly indicate contraindications and adverse reactions. Advertisements for prescription drugs should clearly indicate that ‘this advertisement is for medical and pharmaceutical professionals only' and advertisements for non-prescription drugs should clearly state 'please purchase and use the drugs according to the drug instructions or under the guidance of a pharmacist'.

Advertisements for medical devices recommended for personal use should clearly state that 'please read the product instructions carefully or purchase and use them under the guidance of medical personnel'. If the registration certificate of medical devices contains contraindications contents and matters needing attention, the advertisement shall clearly indicate 'see the specification for the contraindications contents or matters needing attention'.

Special drugs such as narcotic drugs, psychotropic drugs, toxic drugs for medical use, radioactive drugs, pharmaceutical precursor chemicals, as well as drugs, medical devices and treatment methods for drug rehabilitation shall not be advertised. The prescription drugs not covered in the above-mentioned special drugs shall only be advertised in the professional publications of medical science and pharmacy jointly designated by the health administrative department of the State Council and the drug supervision and administration department of the State Council.

It is prohibited to publish in advertisements for medical treatment, pharmaceuticals, dietary supplement, and medical devices targeted at minors in mass media.

According to the Pharmaceutical Administration Law, drug advertisements shall not be recommended or certified in the names or images of state organs, scientific research units, academic institutions, trade associations or experts, scholars, doctors, pharmacists or patients.

Non-drug advertisements must not involve the publicity of drugs.

Generic substitution


Is generic substitution permitted in your jurisdiction?

The Office of the State Council of the People’s Republic of China issued the Opinions on Reforming and Improving the Supply Guarantee and Use Policy of Generic Drugs in 2018, which clearly stated that it would promote the alternative use of generic drugs. Promoting the substitution of generic drugs is of great significance in reducing the cost of medicines and ensuring their supply.


Which regulations govern generic substitution by pharmacists of brand-name drugs?

The regulations include the Opinions on Reforming and Improving the Supply Guarantee and Use Policy of Generic Drugs issued by the Office of the State Council and the Opinions on Consistency Evaluation of the Quality and Curative Effect of the Generic Drugs issued by the Office of the State Council, among others.

Health and other departments are responsible for strengthening drug administration, formulating policies and creating incentives to encourage the use of generic drugs and strengthening supervision of clinical drug use. The requirements for prescribing drugs according to the common name shall be strictly implemented. Except in special cases, the name of the product shall not appear on the prescription, which shall be specifically stipulated by the health department.

Update and trends

Key developments and future prospectsWhat were the key judicial, legislative, regulatory and policy developments of the past year in relation to the protection and enforcement of pharmaceutical trademarks? What are the prospects for future developments?

Pharmaceutical trademarks are governed by the Trademark Law. The articles related to pharmaceutical trademarks have not been changed. As drugs and drug safety are in the vital interest of the public, both legislation and the judiciary related to pharmaceutical trademarks are cautious and strict and the trend is not set to change in the future.

This article is published at https://www.lexology.com/gtdt/tool/workareas/report/pharmaceutical-trademarks/chapter/china