A promise to stop using a brand may leave the practical problem unresolved. Stock can remain at a warehouse, product images can stay with distributors, and production files can remain available for another order. For an overseas rights holder, the settlement should translate the intended outcome into obligations that the actual parties can perform and demonstrate.
The document needs to distinguish an agreed remedy from evidence that the remedy has been completed. Payment, removal of listings, stock disposal and release of claims may require different completion events.
Confirm the parties, rights and signing authority
Identify the rights holder and the relevant rights precisely: the Chinese trademark registration and goods, or the copyright work and ownership materials. If a licensee or group company negotiates, check its authority to settle the identified claims. A broad reference to the brand should not unintentionally release claims owned by another company.
On the other side, name the store operator, manufacturer or other responsible business accurately. Decide which must become a party to achieve the intended result. Under Article 465 of the Civil Code of the People's Republic of China, a lawfully formed contract generally binds its parties. Naming distributors or affiliates in a schedule does not by itself make them parties.
Check the signatory's capacity and any power of attorney. Article 162 addresses acts within an agent's authority. In pending litigation, Article 62 of the Civil Procedure Law, as amended in 2023, requires special authorisation for a litigation representative to settle. An authority to correspond or receive documents should not be treated as equivalent.
Define the conduct that must cease
Attach identifiable products, signs, artwork and account details. Specify the relevant acts, territory and start date of the prohibition. Distinguish stopping manufacture, advertising, sales and supply. Closing one listing should not be the only measurable step if the agreement is intended to stop supply through several named channels.
Address replacement listings and sales arranged through accounts controlled by the settling party, using a workable definition of control. Avoid demanding that a seller guarantee the behaviour of every unrelated reseller. If cooperation with a recall is contemplated, specify the required notices, follow-up and reporting, and distinguish these efforts from guaranteed recovery of all stock.
Deal separately with stock, tooling and production materials
Begin with a signed inventory covering the agreed locations and categories. Distinguish finished goods, unfinished products, packaging, labels, moulds and digital production files. Identify ownership and custody before requiring delivery or destruction; shared equipment and third-party property need separate treatment.
- Inventory: define the reporting date, units of measurement, locations and supporting records, with a process for correcting discrepancies.
- Disposition: state which items must be delivered, destroyed or otherwise handled lawfully, by whom and at whose cost.
- Verification: agree advance notice, an appropriate witness or verifier, photographs, counts and a completion record linking back to the inventory.
- Digital materials: identify the files to be removed from commercial use, the relevant accounts and systems, and any restricted copy that must remain for lawful evidence or record retention.
Preserve necessary samples and records before disposal. If goods or tools are seized or subject to a court or administrative measure, agree a process consistent with the controlling authority's requirements. A private settlement should not direct unilateral disposal of property held under those measures.
Make completion reviewable without an unlimited audit right
For every substantial obligation, specify a deadline, responsible person, completion evidence and a method for raising discrepancies. A screenshot can show that one URL disappeared; it cannot establish that all stock was destroyed. Reconcile the evidence with the particular promise being assessed.
Any agreed inspection should define notice, scope, access and confidentiality. Protect unrelated business information and personal data. The settlement can provide a verification procedure without suggesting that a brand may enter premises or seize records without lawful authority. Article 509 of the Civil Code requires performance of agreed obligations; careful specifications make that performance easier to evaluate.
Connect payment, release and breach consequences
Specify the settlement amount, currency, payment destination, due dates, bank charges and acceptable payment evidence. Decide whether the release takes effect at signing, on cleared payment or only after defined obligations are completed. Describe the products, period, parties and claims covered; address future conduct and breach of the settlement separately.
A breach clause should distinguish missed payment, incomplete disclosure and renewed prohibited conduct. Specify the relevant trigger and evidence rather than inserting one large sum against every possible failure. Under Article 585 of the Civil Code, courts or arbitral institutions may, on request, increase agreed damages below the loss or appropriately reduce damages excessively above it. The stated amount is not an assurance of automatic recovery.
Choose the legal route before withdrawing proceedings
An ordinary private settlement is generally a contract. Describing it as directly enforceable does not itself give it the status of a court enforcement instrument. Assess the governing law, valid dispute forum and available remedies before closing an existing case.
For court mediation, Articles 99 and 100 of the Civil Procedure Law require voluntary, lawful terms and regulate the court mediation statement, which takes effect once both parties have signed for service. Article 247 allows an application for enforcement when an effective mediation statement is not performed. The actual instrument and its effective status matter.
Judicial confirmation is a separate route for qualifying agreements reached through legally established mediation organisations, subject to Articles 205–206 and court review. Article 205 requires both parties to apply jointly to the competent court within 30 days after the mediation agreement takes effect. It is not automatic registration of any private agreement. Enforcement also depends on clear obligations and the available property or conduct remedies; no drafting formula guarantees collection.
Finally, a civil settlement cannot promise termination of a criminal investigation or prosecution. Article 3 of the Criminal Procedure Law allocates those public powers to the competent authorities. Any lawful statement of compensation or forgiveness must be distinguished from the authorities' decisions.
To assess proposed terms against the evidence and procedural position, contact Pan Jianxing with a non-confidential summary of the rights, proposed parties and outstanding obligations.
Official sources & legal review
Legal position checked 2026-09-29. Official Chinese texts govern; the English analysis is a summary.
General information about mainland China. The applicable law, rights, evidence and procedure require review for a specific matter.
Pan Jianxing
China-qualified lawyer · Partner, 北京市长安律师事务所
Beijing & Shenzhen
Discuss a China IP matter →