As of today (24 April 2025) the rate of tariffs on goods made in China entering America is 145%, subject to some limited exceptions for goods that America needs and can’t get elsewhere, such as smartphones and laptops. Goods flowing in the other direction are generally subject to a 125% tariff.
Such tariffs will of course reduce trade in both directions down to a trickle and are intended to do so. Although the US only now accounts for about 12% of China’s total exports of goods, for the tens of thousands of Chinese manufacturers affected by these tariffs the next few months (and possibly years) are going to be a tough time. Many will have forward purchased substantial quantities of component parts, which will (together with finished products) now be clogging their warehouses, whilst battering their cashflow.
The effects of all this will by no means be limited to the US and China. One of the inevitable effects is that many Chinese manufacturers will now look to dispose of their stocks into the UK and EU markets at substantial discounts. Respect for contracts with distributors and IP generally will also inevitably come under real pressure as it always does when survival is in issue.
Below we set out ten things you can do to help you weather the coming storm.
1. Register your IP
Registering you trade marks, designs and patents can really help protect from competition. Having a registered trade mark gives you access to Amazon’s brand registry, which can greatly help when dealing with counterfeit products. It can allow you, for example, to take over an infringing competitor’s pages for particular ASIN’s, together with their sales histories, which can be like acquiring a shop with incredible footfall for no cost.
Registered designs can be applied for even after you have launched your product on to the market as long as you do so within a year of launch. Again they are a powerful (and cheap) weapon in relation to online disputes.
Patents can be used to protect new products, containing new combinations of elements: if an infringer is on the scene the process leading to the grant of a patent can generally be greatly accelerated.
2. Use the Intellectual Property Enterprise Court
The Intellectual Property Enterprise Court (IPEC) is a lower cost specialist IP court with simplified procedures. Most importantly it has a fixed costs regime, which generally means that even if you lose a claim the amount you will end up having to pay the other (winning) side is just a fraction (and often quite a small fraction) of their total legal costs. For that reason 95% of cases in IPEC settle before trial.
3. Use Customs Seizure Procedures
Once infringing goods come into the UK and are disbursed to multiple retailers it soon becomes prohibitively expensive to stop their continued sale. Far better to stop them getting into the UK in the first place. That can be achieved by requesting Border Force to look out for and detain infringing goods as they clear customs. This can be done by filing out a simple online form. Once Border Force identify the infringing goods, civil infringement proceedings must be quickly brought if the goods are not to be released back into the market by Border Force. This procedure can not be used for overruns or parallel imports but can be a very effective way to deliver a knock-out punch to infringers before they hit the market.
4. Private Criminal Proceedings
IP rights are generally regarded as private property rights and so, if they are infringed, the rights owner must bring a private civil infringement action against the infringer. That can be expensive, even in IPEC.
Often times a cheaper option is to bring a private criminal prosecution against the wrongdoer. This is possible for registered trade marks, registered designs and copyright but not for patents, unregistered designs or confidential information.
The advantages of a private criminal prosecution include (a) that typically it is very much quicker than a civil action (often weeks instead of months to get a determination), (b) that a private criminal prosecution serves as a serious deterrent (being arrested is unpleasant for your average person) and (c) win or lose the private prosecutor can typically recover a significant proportion of their costs of prosecuting the more serious IP offences from Central Funds, under section 17 of The Prosecution of Offences Act 1985.
5. Develop a Reputation as a Tough Guy (or Girl)
Infringers may act unlawfully but usually they are rationale: they do a cost benefit analysis before acquiring the infringing goods. A big cost for them will be risking the wrath of an IP owner with a known reputation for aggressively enforcing their rights against infringers. Going against smaller players first, who are more likely to cave in, can be a great way to build such a reputation. The vast majority of IP disputes settle at the letter before action stage.
6. Patent Thickets
One patent good, multiple patents better.
Having multiple patents that protect minor improvements can make it very difficult for a competitor to be in a given product market. Having a handful of patents each with large numbers of claims can make the risk profile for a competitor unacceptable as the costs of fighting an infringement action with a large number of claims can be prohibitive.
7. Registered Design Thickets
Similar benefits can be obtained by filing a large number of registered designs covering different aspects of a new product. When assessing infringement, a court will look at the whole of the design which has actually been registered: a CAD drawing of a whole chair will be compared against the whole of the defendant’s chair. Registering just the back of the chair can enable a chair with a very similar back (but otherwise having other obvious differences) to still be found to infringe. Registered designs are very cheap and quick to obtain.
8. Keep the Relationships Strong
If you have an exclusive supply agreement with your Chinese factory that you fear they may breach by supplying to your competitors, then proactively deal with the situation by speaking to them about it. Remind them of the future benefits that you may bring to the table. If you owe them money based on standard credit terms, use that as leverage to ensure that they stick to agreed exclusive supply obligations.
As many have discovered to their cost, it will almost never be worth suing the Chinese supplier in China as the costs of doing so will be enormous – often hundreds of thousands of pounds as typically two sets of lawyers will be required, one in the UK and one in China and everything will have to be translated into Chinese.
9. Monitor what Competitors Are Doing Online
Having a registered trade mark allows you to challenge unfair or disparaging competitive advertising, which uses your brand. Many businesses are so focused on what they are doing that they don’t check out what their competitors are saying about them on their websites or in social media posts. Check them out and require damaging content to be removed.
10. Use Patent Box to Remain Profitable Even in a Competitive Market
Another advantage of having a patent is that it can enable the owner (and certain group companies) to claim a deduction against their corporation tax on income derived from the sale of the patented product, which can reduce their effective rate of corporation tax on that income from 25% to 10%. This Patent Box (as the regime is called) reduction can give the patent owner a material advantage in a cost competitive market against infringers who can’t claim the relief.
What Sonder & Clay can do for you?
Sonder & Clay’s accomplished IP solicitors and trade mark attorneys can help you put together the optimum IP strategy to support your business in these difficult and uncertain times. Please get in touch to book a consultation.
