Limited Budget vs Unlimited Infringement: Pyramid Management For Efficient Anti-counterfeiting

Trademark squatting, proliferation of counterfeits, and frequent imitation—methods of infringement are endlessly emerging, while enterprises’ enforcement resources are always limited. Excessive投入 leads to uncontrollable costs, whereas insufficient measures make it difficult to achieve effective deterrence. How can a balance be struck between these conflicting factors? This article proposes a tiered response management system—the Anti-Counterfeiting Pyramid—designed to maximize enforcement effectiveness under resource constraints through hierarchical management, with a view to providing brand owners with useful guidance.

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Tiered Governance and Targeted Enforcement—The Anti-Counterfeiting Pyramid Model

I. Laying the Foundation: Establishing a Routine Barrier Against Routine Infringement Through Standardized and Automated Measures

Keywords: direct infringement, large volume, high repetitiveness

Core strategies: online monitoring, customs recordal, standardized cease-and-desist letters

Online Monitoring – “Digital Sentinels” on 24/7 Patrol

E-commerce channels are the primary route through which counterfeits reach consumers. A normalized monitoring mechanism should be established on major e-commerce platforms to enable early detection and rapid takedown of infringing links.

Keyword database building: Incorporate into the database the brand name, core trademarks and their similar variants, product names, model numbers, and other common descriptive terms, to serve as the keyword base for automated system scanning.

Abnormal price alerts: Set a price threshold; when the system detects that the sale price of a product falls below a certain proportion of the genuine product price, an automatic alert is triggered and the product is brought within the scope of review.

Automated complaint settings: For high-frequency counterfeit products with obvious infringing characteristics (such as unofficial designs or improper use of trademarks), the system may be authorized to automatically initiate complaints, thereby reducing repetitive review procedures and improving overall handling efficiency.

Customs Recordal – The First Line of Defense in Cross-Border Trade

Customs is a critical checkpoint for intercepting counterfeit imports and exports. The recordal mechanism leverages low-cost filings to prompt proactive customs enforcement, intercepting infringing goods at the border.

Customs recordal: Register the right holder’s entity information, intellectual property rights information, and licensees’ authorization information. In practice, the list of licensees is referred to as a “white list”, the function of which is to shift from ex post verification to ex ante confirmation. By pre-entering authorized enterprises into the customs system, ownership is effectively confirmed before the goods arrive at port. During inspection, customs officers can verify against the white list with one click and grant expedited clearance to registered enterprises.

Customs training: Recordal is only the basic qualification for obtaining customs protection. Brand owners must also proactively and regularly participate in training activities organized by customs. Through detailed explanations on how to distinguish genuine from counterfeit products, they can deepen frontline officers’ impressions of brand characteristics, enhance attention to the brand, and improve on-site identification of counterfeit products.

Customs interception: When customs seizes suspected infringing goods, it will immediately notify the right holder in writing, requiring it to authenticate the goods within the statutory period and decide whether to request detention. Once the goods are successfully detained, customs will usually arrange centralized destruction. For major cases that meet the threshold for criminal filing, customs will activate the “administrative-to-criminal linkage” mechanism and transfer the case to the public security authorities to pursue criminal liability.

Standardized Cease-and-Desist Letters – Rapid Market Clean-Up

For simple and straightforward infringements, standardized letter templates should be established to handle similar cases in bulk. Such letters generally do not aim at seeking damages, but focus on rapid market clean-up. In practice, many micro and small businesses will voluntarily delist infringing products upon receipt of such notices, thereby efficiently achieving the goal of stopping infringement.

II. Strengthening the Body: Targeted Elimination and Precision Strikes Against Complex Infringement

Keywords: disregard of warnings, continuous infringement, certain scale

Core strategies: evidence collection, administrative enforcement, trade fair enforcement

Evidence Collection – Upgraded Targeting of Infringement

When routine warnings and complaints can no longer effectively stop infringement, upgraded measures may be adopted to identify the business entity for the purpose of pursuing liability. In practice, methods such as test purchases of samples, on-site inquiries, and factory visits are commonly used to identify target business premises and storage locations and to collect information on infringing acts. Where necessary, these processes may be notarized to lay a solid foundation for subsequent administrative enforcement or litigation.

Administrative Enforcement – Intervention by Public Authority

Compared with civil litigation and criminal prosecution, the threshold for initiating administrative enforcement is relatively low. The right holder only needs to provide basic infringement clues to file a complaint with the market regulation authorities. Its core value lies in:

① Rapidly cutting off the infringement chain: Enforcement authorities may seal and seize infringing goods and production tools on site, directly paralyzing the infringer’s business operations.

② Low-cost evidence acquisition: During enforcement, administrative authorities will prepare official documents such as on-site inspection records, seizure lists, and interview transcripts, which can serve as powerful evidence in subsequent civil litigation or criminal proceedings.

③ Tracing upstream and digging downstream: Administrative enforcement is not limited to cracking down on a single site. In some cases, account books and sales documents seized on site can reveal a larger infringement network, providing leads for expanding the scope of enforcement.

Trade fairs are important platforms for enterprises to showcase new products and expand markets. A large number of industry fairs are held domestically each year (such as the Canton Fair, the China International Import Expo, and the Hong Kong Electronics Fair), and some medium- and large-scale infringers also take the opportunity to display counterfeit products.

Right holders may conduct patrols at trade fairs to identify infringing products on site and collect information on infringers—including company name, contact details, infringing content, factory address, etc. Based on the circumstances of infringement, they may submit materials to the intellectual property complaint station at the fair, requesting the removal of infringing exhibits. For serious cases, administrative enforcement or civil litigation may be initiated after the fair to continue pursuing liability.

III. Focusing on the Apex: Concentrated Resources and Special Campaigns Against Major Infringement

Keywords: sources of counterfeiting, criminal syndicates, large-scale infringers

Core strategies: criminal enforcement, civil litigation

Criminal Enforcement – Achieving “One-Off Elimination” of Infringers

As the most deterrent “hard-core sword” in the intellectual property protection system, criminal enforcement employs a combined set of sanctions comprising imprisonment + heavy fines + confiscation and destruction + criminal records, which plays an irreplaceable and critical role in deterring malicious infringement of intellectual property rights and curbing large-scale, professional, and repeated infringement.

Given the scarcity of criminal enforcement resources, this measure is usually reserved for targets where the facts of infringement are clear, the evidentiary chain is complete, and the value involved is relatively high. Before initiation, a prudent multi-dimensional assessment is required:

Does the amount involved meet the criminal filing threshold?

Is the evidence of manufacturing and selling infringing goods solid and sufficient?

Can the right holder fully cooperate in providing key leads and authentication materials?

The core value of criminal enforcement lies in completely destroying the infringer’s production and business capabilities by sealing factories, seizing equipment, and confiscating molds, and in lawfully pursuing criminal liability to achieve “one-off elimination” of the infringement chain. At the same time, publicly available criminal judgments and typical cases can generate a strong deterrent effect of “individual punishment, industry-wide warning”, sending a clear signal to the entire industry of the brand’s firm stance on anti-counterfeiting and accountability.

Civil Litigation – From Recovering Losses to Elevating the Level of Rights

Civil litigation not only allows recovery of economic losses, but is also a strategic tool for clarifying legal boundaries and elevating the level of rights. Its main functions are reflected in:

① Recovering economic losses and increasing the cost of infringement: Civil litigation is the primary avenue for right holders to obtain monetary compensation. For malicious and serious infringements, right holders may also claim punitive damages, thereby substantially increasing the infringer’s cost of infringement.

② Applying for behavioral preservation to promptly stop urgent infringement: In urgent scenarios such as trade fairs or new product launches, right holders may apply to the court for pre-suit or in-suit preliminary injunctions. The court may issue a ruling within 48 hours, ordering the infringer to immediately cease the infringing acts and preventing further damage.

③ Settling disputes and providing guidance for subsequent enforcement: For disputed legal issues such as similarity of trademarks or interpretation of the scope of rights, court judgments can play a role in “settling disputes and clarifying boundaries”. Authoritative reasoning in judgments regarding the determination of infringement and the boundaries of rights can serve as legal guidance for subsequent enforcement, significantly reducing the burden of proof.

④ Protecting unregistered assets and building a brand moat: For unregistered but distinctive product names, packaging, and trade dress, protection may be obtained under the Anti-Unfair Competition Law through civil litigation. The court’s recognition of “packaging or trade dress with a certain influence” can transform the brand’s market reputation into exclusive legal rights, effectively curbing “free-riding” behavior.

⑤ Seeking well-known mark recognition and obtaining cross-class protection: Civil litigation is one of the important avenues for obtaining recognition of a well-known trademark. Once recognized, the scope of protection of the trademark will extend from similar goods to dissimilar goods and enjoy anti-dilution protection, significantly enhancing the brand’s legal defense capability.

The model is in place; how can it be implemented? The key lies in resource allocation and data management.

The following proportions are for reference only. Brands may flexibly adjust them based on their own budgets and actual needs.

Use data to drive decision-making: establish a data dashboard, track case indicators, and support scientific management through quantitative analysis.

The core logic of the “pyramid” model is tiered governance of infringement under resource constraints—deploying limited resources precisely where they are most needed so that each unit of投入 yields its due marginal benefit. Automation at the foundation, precision at the body, and concentration at the apex together form a complete governance closed loop: from detecting leads to precision strikes, and from handling individual cases to achieving industry-wide deterrence. Of course, this model is not static; as the market environment changes and infringement methods evolve, the shape of the pyramid must also be dynamically adjusted.

Moving from passive response to proactive governance, and from case-by-case enforcement to system building, this model will continue to iterate and evolve in practice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.