China

In China, three types of name are associated with drugs: trademarks, generic names and drug product names. The three are related, but have distinct meanings and legal requirements.

A pharmaceutical trademark is a mark registered with the Trademark Office for drug products. A Chinese pharmaceutical trademark can be a newly created mark or the Chinese transliteration of an English trademark. The Chinese authorities used to require that all human drugs be used with registered trademarks, but abolished this requirement a few years ago. Any distinctive sign (eg, Chinese characters, designs, letters, numerals, three-dimensional (3D) symbols, combination of colours and sounds) can be registered as a pharmaceutical trademark (Article 8 of the Trademark Law). A 3D symbol – also known as a non-traditional trademark – is relatively difficult to register, as the Chinese Trademark Office (CTMO) requires the applicant to demonstrate the non-functionality of such mark. A successful example is Pfizer’s registered 3D trademark for Viagra.

A generic name is a standard legal name that the government assigns to a drug product, which is often an abbreviation of the complex compound name. A generic name, including the English version thereof, cannot be registered as a trademark (Article 50 of the Pharmaceutical Administration Law). The generic name is officially called the China-Approved Drug Name, and is generated by the Chinese Pharmacopoeia Commission for a pharmaceutical product using the same active ingredient or formula in China. It is usually the transliteration of an international non-proprietary name (INN) generated by the World Health Organisation for the product. Information regarding generic names can be found in the Pharmacopoeia and Drug Standards issued by the China Food and Drug Administration (CFDA).

Drug product names are a common source of confusion. Drug product names are approved by the CFDA, mostly for originators’ drugs. Drug product names are given to pharmaceutical products with a novel chemical structure, a novel active pharmaceutical ingredient (API) or a product covered by a compound patent. Under the pharmaceutical regulations, approved companies have exclusive rights to use drug product names. In the past, companies failed to register these drug product names as trademarks and found it hard to deal with products registered by others bearing the same name. Now the CFDA will not approve an originator’s use of a specific drug product name unless the product name is registered as a trademark.

For example, the generic name of Viagra is ‘juyuansuan xidinafei pian’ in Chinese, which is the literal translation of its English name, sildenafil citrate tablets. The drug product name of Viagra is ‘wan ai ke’, which is the transliteration of ‘Viagra’ and is registered with the CTMO. Another example is anti-tumour drug Gefitinib: its generic name is gefitinib tablets, and its drug product name is ‘yi rui sha’ in Chinese, which is the transliteration of ‘Iressa’ and is also registered with the CTMO as the trademark.

Selection, clearance and registration

Before approving the commercialisation of a drug, the CFDA requires that a trademark which is to be used on the label and package insert of the drug be registered with the CTMO (Article 27 of the Administrative Provisions on Pharmaceutical Package Insert and Label). In other words, whether a pharmaceutical company can obtain a registered pharmaceutical trademark will significantly affect whether it can sell its pharmaceutical products on the Chinese market.

When companies select pharmaceutical trademarks for registration, various legal grounds under Chinese law and practice must be considered. Article 11 of the Trademark Law lists signs which cannot be registered as trademarks, such as pharmaceutical generic names, terms directly expressing pharmaceutical indications and terms indicating the organs treated by the drug. More specifically, pharmaceutical companies must avoid using characters that:

• suggest or describe a curative effect or an indication of the drug;
• describe human body parts that may be treated by the drug;
• directly indicate the function, quality, raw materials or other characteristics of the drug;
• sound or look like the generic name of the drug;
• are similar to the trade name of a drug owned by a third party;
• are similar to the common name of the drug; or
• are the transliteration of the international non-proprietary name of the drug.

Once a list of proposed pharmaceutical trademarks has been made, a clearance search shall be conducted to avoid any surprises or unnecessary delays in the registration process. Clearance searches can be conducted through the CTMO database or commercial trademark databases.

Some further practical considerations may be helpful to pharmaceutical companies. First, it is highly recommended that pharmaceutical companies register English and Chinese trademarks simultaneously with the CTMO. Failing to register a Chinese trademark will likely cause serious problems. The value of a Chinese trademark is significant, as it is much more likely to be noticed by Chinese consumers. More importantly, the market may develop a nickname or Chinese name for a popular drug before the pharmaceutical company registers it as a trademark. If a third party registers such name, it can cause difficulties. Further, the Chinese transliteration of a registered English trademark may become a generic name through years of sale of a product in China, which will cause the rights holder to lose control over its brand.

Second, it is recommended to file applications for preferred Chinese trademarks along with alternative marks, in order to ensure that a registered Chinese trademark is available for the product regardless of possible rejection by the CTMO or third-party opposition in the registration process. The newly amended Trademark Law, effective as of May 1 2014, also sets down rules to expedite the registration process, including limiting the trademark examination period to nine months and restricting oppositions raised on certain grounds to interested parties.

Finally, pharmaceutical companies should ensure that the registration of a pharmaceutical trademark covers the necessary classes and sub-classes for protective and defensive purposes. Although the Supreme People’s Court has held that the International Classification Table serves as a reference only in judging whether goods are similar (Article 15 of Opinions on Several Issues Concerning the Trial of Administrative Cases Involving the Authorisation and Determination of Trademark Rights), in practice goods in different sub-classes or groups may still be considered dissimilar.

Notably, the new Trademark Law allows one application to include multiple classes, which reduces some of the work of managing trademark registrations for pharmaceutical companies.

The Supreme People’s Court recently released a judicial interpretation draft on trademark registration for public comment, which proposed rules including recognition of the secondary meaning of a 3D trademark and prevention of bad-faith trademark registrations. Pharmaceutical companies should monitor the development of the judicial interpretation.

Parallel imports and repackaging

Parallel imports and repackaging are not a significant concern for pharmaceutical companies. Although the recently amended Trademark Law does not expressly address the legitimacy of parallel imports, the CFDA strictly regulates the import and repackaging of pharmaceutical products due to public safety concerns. In order to obtain CFDA approval for the import or repackaging of a pharmaceutical product, an importer must obtain a licence for a pharmaceutical trademark from the rights holder. Unauthorised import or repackaging will result in the drug being treated as counterfeit in China, which has serious legal consequences.

Anti-counterfeiting and enforcement

Counterfeit drugs have become an increasing challenge for government authorities and pharmaceutical companies to tackle. In recent years drug counterfeiting crime has become increasingly organised. Industrialised chains, from the manufacture of raw materials to the production of packaging materials to distribution and sale, are often found across the country, and criminals become specialised in each segment of the chain. With increased use of e-commerce, the Internet has become a major battlefield for pharmaceutical anti-counterfeiting. The sale of counterfeit drugs is facilitated through online shopping platforms, social networks and instant communication media. Several types of counterfeiting activity are present on the market, including smuggling generic anti-tumour drugs, synthesising small molecular APIs without approval, mixing insufficient amounts of APIs with excipients, using only excipients such as starch and normal saline, and using fake or recycled packaging materials.

To combat these counterfeiting activities, pharmaceutical companies may use registered trademarks on their products, holographic labels and one-off-use packaging materials for their products. In order to improve the security of the drug supply chain in China, the CFDA has also adopted the Electronic Drug Monitoring Code (EDMC) for product serialisation and product tracing. The EMDC is a series of bars printed on the packaging of pharmaceutical product drugs to identify the drug and provide information along the supply chain from the manufacturer to the pharmacy. At present, the CFDA requires that all national essential drugs carry the EDMC and all other drugs will have to have the EDMC before entering the market by the end of 2015.

The Trademark Law, the Drug Management Law, the Tort Law and the Criminal Law all include measures to combat counterfeit drugs. Administrative penalties include a fine of up to five times the profit made and cancellation of the CFDA certificate; civil penalties include damages and punitive damages; and criminal penalties include fines, imprisonment and the death penalty.

The CFDA, the police and the Administration for Industry and Commerce have jointly launched several national campaigns to crack down on counterfeit drugs, with both positive results and positive public feedback. In addition, pharmaceutical companies and various government authorities have made significant efforts to educate the public and healthcare providers.

Advertising

The CFDA increasingly regulates pharmaceutical advertising. Certain drugs – including narcotics, psychotropics, medicinal toxics and radioactive drugs – cannot be publicly advertised. Prescription drugs can be advertised only in professional medical or pharmaceutical publications jointly designated by the CFDA and the Ministry of Health. A list of such publications can be found on the CFDA website. The name or registered trademark of a prescription drug cannot be used for any public activity.

All drug advertising materials, except those that merely advertise the trade name of an over-the-counter (OTC) drug or a prescription drug in a designated publication, must first be approved by the provincial or municipal FDA and recorded with the CFDA and the local Administration for Industry and Commerce. Approved advertising materials are searchable via the CFDA website. In order to obtain such approval, pharmaceutical companies must submit proof of trademark registration for the pharmaceutical product to be advertised.

Generic substitution

The CFDA will accept an application to manufacture a generic drug in the two years before the expiry date of a patent for an innovative drug, as the application must undergo a series of examinations. The CFDA may issue a production approval after the expiry of the patent. The manufacturer of a generic drug can also use for its product registered trademarks and a different trade name from that of the brand name drug. Although there is no additional requirement for trademark registration of a generic drug, the manufacturer of the generic drug should be careful to distinguish the trade name and trademarks of the generic drug from those of the brand name drug, in order to obtain CFDA approval for production without unnecessary delay.

Online issues

E-pharmacies

E-pharmacies are strictly regulated by the CFDA. At present, only pharmaceutical retail chain stores are allowed to open online stores to sell drugs to individual customers. An e-pharmacy must have a qualification certificate for internet drug trading services from a provincial or municipal FDA; the process to obtain such certificate usually takes about two months. An additional restriction is that only OTC drugs can be sold by e-pharmacies. Other requirements include that an FDA statement appear on the website and that retail chain pharmacies use their own delivery system instead of a third-party delivery service. Failure to meet these requirements has negative consequences, from an administrative warning to cancellation of the qualification certificate and closure of the website. A list of approved e-pharmacies can be found on the CFDA website.

In May 2014 the CFDA released a proposal to amend its regulations and further relax the restrictions on e-pharmacies. In the proposal, the CFDA opens the door for any pharmacy – not merely drug manufacturers and wholesalers – to sell OTC and prescription drugs to the public online. Further, the qualification certificate for internet drug trading services is no longer required. The proposal also further specifies the roles and obligations of enterprises in the e-pharmacy industry, including e-pharmacy stores, third-party trading platform providers and internet pharmacy information providers. Companies interested in e-pharmacy business should monitor the development of CFDA regulations.

However, the illegal online trade of drugs, including controlled drugs, remains a significant threat in China. The CFDA, the Administration for Industry and Commerce, the Ministry of Industry and Information Technology and the police have jointly taken action to combat the online illegal sale of drugs, but ongoing efforts are needed.

Domain names

Cybersquatting remains a crucial barrier to registering domain names for pharmaceutical brands. Several channels are available to pharmaceutical mark owners wishing to resolve domain name disputes. A rights holder can apply to the Internet Corporation for Assigned Names and Numbers to cancel or transfer cybersquatted domain names. Alternatively, it can apply to the China International Economic and Trade Arbitration Commission (CIETAC) to cancel or transfer a generic top-level domain or a country-code top-level domain (ccTLD) registered with the China Internet Network Information Centre (CNNIC). CNNIC recently released new rules on ccTLD dispute resolution, which still require that a complaint be filed within two years of registration of a contested ccTLD. A complaint can be filed online with CIETAC and it usually takes about two months for it to issue a decision. To recover a cybersquatted domain name successfully, the rights holder must prove that the pharmaceutical company has a legitimate interest (eg, a trademark) and that the domain name was registered in bad faith.

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Jing He

Attorney

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Jing He is a founder of Anjie Law Firm. He has been advising well-known international brands, leading technology companies and international associations on IP, regulatory and policy matters for nearly 14 years. His practice covers a wide range of IP and regulatory matters, including policy consultation trademark and brand enforcement, and IP commercialisation.

Mr He is a member of George Washington University Law School IP Advisory Board and an expert member of the Ministry of Commerce Overseas IP Enforcement Assistance Centre.

Mr He has been admitted to the California Bar and the Chinese Patent Bar. He holds a JD from the University of Notre Dame and an LLB and a BSc in physics from Peking University.

Binxin Li

Attorney

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Binxin Li, attorney at AnJie Law Firm, is an experienced practitioner in the IP field, especially in the area of pharmaceuticals. He graduated with an LLM from the University of California at Berkeley (Boalt Hall), an MSc in chemistry from the University of Toronto and a Bsc in chemistry from Peking University. Combined with his solid legal training and advanced scientific education, Mr Li has developed diverse practices including IP litigation, patent invalidation and re-examination, patent prosecution, IP transaction, due diligence and strategy counselling. He has represented many multinational and domestic companies to enforce their IP rights in China. He mainly focuses on the areas of pharmaceuticals, biotechnology and chemicals.

Jinwen Han

Attorney

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Jinwen Han is an attorney at AnJie Law Firm and a core member of the IP team. Mr Han has more than seven years’ experience in the areas of trademarks, copyright and domain names.

Mr Han has assisted several famous Fortune 500 companies and major domestic enterprises in obtaining well-known trademark registrations and several national companies in trademark prosecutions. He has also represented major international and domestic companies in trademark infringement, assignment negotiation and domain name arbitration. He frequently advises domestic clients on global trademark protection strategies.