Weekly China Brand Protection News

April 9, 2025

1. CNIPA Launched “International Registration Goods Image Database”

On April 3, 2025, the CNIPA officially launched the “Reference Image Database for Goods in International Trademark Registration” project on its website. Applicants can access the database at https://sbj.cnipa.gov.cn:9443/#/public-search to search for the names and related information of goods and services to be designated under their international registrations.

Users can input keywords related to the goods or services they wish to search for, and the system will retrieve all relevant results. Clicking on a specific entry will open a detailed page displaying the Chinese and English names of the goods or services, their international classification, identification number, descriptive information, and corresponding images or videos. This feature helps applicants accurately fill in the names of goods and services when submitting applications.

2. The Shenzhen Intermediate Court Rules Resale of Sam’s Club Membership Sub-Cards and Proxy Shopping as Unfair Competition, Applying Punitive Damages to Award CNY 2.04 million

Walmart discovered that a Taobao store was selling products such as “Sam’s Club one-time card, Sam’s Club day pass, Sam’s card for single-use, Sam’s online shopping JD.com”, “Sam’s Club membership card, online shopping, order placement, purchasing agent, JD.com home delivery, Sam’s Club nationally valid” and the like. The displayed images used the ”  ” logo and phrases like “officially authorized nationwide,” along with text such as “enjoy Sam’s Club member prices,” “Sam’s Club Store,” and “Sam’s Global Purchase.” Purchasing this product provided access to a mobile app download link from the store. The download page used the “” logo and “Sam’s Club Store in Chinese” text, with a note stating “If needed, you can follow the WeChat public account PutaoHelper, specializing in: single-use cards, online shopping, order placement, annual cards.” After downloading, installing, and opening the said app, the interface displayed the “” logo and the text “Better Life at Sam’s.” The app’s homepage used the “” logo and phrases like “Sam’s Club Store in Chinese” and “Welcome to Sam’s Club Store in Chinese,” with sections such as “Featured Products” and “Quality Home Goods,” but none of the product links on the page were functional.

Walmart filed a lawsuit alleging trademark infringement by the store operator Li for using identical and similar trademarks to Walmart’s registered trademarks in his Taobao store and counterfeit app. Walmart also alleged unfair competition practices including: 1. Li renting and selling Sam’s Club membership cards in his Taobao store, specifically selling Sam’s Club single-use cards through a counterfeit Sam’s Club Store app; providing Sam’s Club membership card online order placement services; and separately selling Sam’s Club primary and secondary membership cards; 2. Li using Walmart’s influential service name “Sam’s in Chinese” in his Taobao store and counterfeit app, and using Walmart’s influential “Sam’s Club Store in Chinese” software interface in the counterfeit app.

The first-instance court held that Li’s trademark usage in the infringing store name, product names, product descriptions, and infringing APP interface violated Walmart’s exclusive rights to its registered trademarks. However, it did not support Walmart’s claims of unfair competition. The court ordered Li to compensate Walmart for economic losses of CNY 1,343,136 (apprx. USD 183,000) (twice the profit from infringement) plus CNY 277,406.01 (apprx. USD 37,797) for reasonable expenses incurred to stop the infringement.

Both Walmart and Li appealed. The Shenzhen Intermediate Court identified the key issues as:

1. Whether Li’s separate sale of Sam’s Club primary and secondary membership cards in his Taobao store infringed on Walmart’s registered trademarks for “,” “Sam’s Club Store in Chinese,” “SAM’S CLUB,” and “Sam’s in Chinese” in Class 35 services and “Sam’s Club Store in Chinese” in Class 36 services.
2. Whether Li’s rental and sale of Sam’s Club single-use cards, separate sale of primary and secondary membership cards, provision of purchasing agent services, use of the “Sam’s in Chinese” name in his Taobao store and infringing app, and use of “Sam’s Club Store in Chinese” in the infringing app constituted unfair competition.
3. Whether the first-instance court’s application of punitive damages for economic losses and reasonable expenses was appropriate.

Regarding the first issue, the second-instance court found that the infringing online store used “Sam’s in Chinese” in its name; its operator avatar used ““; its services in sale included Sam’s Club single-use cards, Sam’s Club annual membership primary cards, Sam’s Club annual membership secondary cards (family cards), and online purchasing agent services. In all these services, the product link names used “Sam’s in Chinese,” product display images used “Sam’s Club Store in Chinese” and “,” and product details and brand introductions used “Sam’s Club Store in Chinese.” For the annual primary and secondary membership cards, the product display used “.” In the infringing app, the download interface and icon used “” with “Sam’s Club Store in Chinese” text, and the homepage’s upper left corner displayed the “” logo. These infringing marks were all used to identify service sources, intended to inform consumers that the products came from Sam’s Club Store. Therefore, the court rejected Li’s claim that these marks served merely indicative functions.

Furthermore, in terms of services, Li’s separate sale of Sam’s Club annual primary and secondary (family) membership cards in his store provided discounted membership accounts for consumer use and online marketplace services, which were identical to the approved services of “providing discounts to others at participating institutions through membership cards” and “providing an online marketplace for buyers and sellers of goods and services” under Walmart’s registered trademarks. When providing the foregoing services, Li’s used “” as his store avatar, “Sam’s in Chinese” in the store name, and “Sam’s in Chinese,” “Sam’s Club Store in Chinese,” “” in product names, descriptions, and images, with “” in product displays; all the signs were identical or similar to Walmart’s registered trademarks. This could lead consumers to believe that Li was officially authorized by Walmart to sell these cards separately, or that Li had a business relationship with Walmart, resulting in consumer confusion that his actions were legitimate. This reduced Walmart’s opportunities to sell Sam’s Club annual cards and violated Walmart’s rules for Sam’s Club membership cards, potentially preventing consumers who purchased separated primary or secondary cards from his store from continuously enjoying Sam’s Club membership benefits for a full year after purchase, which could generate negative reviews for Walmart. Li profited from separately selling primary and secondary cards, which exceeded the reasonable use scope of “trademark rights exhaustion.” Therefore, Li’s separate sale of Sam’s Club primary or secondary cards still infringed on Walmart’s exclusive rights to its registered trademarks, and he should bear legal responsibility. The court did not accept Li’s claim of fair use.

Regarding the second issue, according to Article 2 of the Anti-Unfair Competition Law, operators in market transactions should follow principles of voluntariness, equality, fairness, and good faith, and observe recognized business ethics. Whether Li’s actions constituted unfair competition depended on whether they violated these principles, harmed Walmart’s legitimate interests, and disrupted market competition order. First, according to the “Sam’s Club Store Membership Charter,” “Sam’s Club membership cards are for personal use only.” Li’s services of selling Sam’s Club single-use cards through the infringing app and providing online purchasing agent services all violated Walmart’s membership card usage regulations. He essentially exploited Walmart’s “Sam’s in Chinese” and “Sam’s Club Store in Chinese” market influence to gain business opportunities and economic benefits. This behavior confused service sources, potentially leading consumers to mistakenly believe his services were associated with Walmart or authorized by Walmart. This violated the principle of good faith, damaged Walmart’s competitive advantage, and constituted unfair competition. Second, according to the “Sam’s Club Store Membership Charter,” “family cards or company cards are secondary cards linked to the primary card. The primary card cannot be transferred in any form.” Although Walmart allows primary and secondary cards to be linked for use, it does not authorize their separate sale. Li’s separate sale of primary and secondary Sam’s Club membership cards also violated Walmart’s membership card usage regulations, disrupted Walmart’s membership system management, damaged Walmart’s control over membership cards, prevented Walmart from operating normally according to its business model, objectively reduced Walmart’s opportunities to directly sell membership cards, and caused damage to Walmart’s business interests. Li’s behavior violated not only the principle of good faith but also the recognized business ethics, constituting unfair competition. Third, according to Article 6 of the Anti-Unfair Competition Law, operators shall not use another entity’s influential enterprise name (including abbreviations, trade names, etc.) or web pages without authorization, causing confusion that leads others to mistake their goods for another’s or believe there is a specific connection with another entity. The court found that Walmart’s evidence was sufficient to prove that the “Sam’s in Chinese” name and Sam’s Club Store APP software interface were influential names and software interfaces protected by the Anti-Unfair Competition Law. Li’s use of “Sam’s in Chinese” in his Taobao store name and infringing APP, and his use of an interface identical to the Sam’s Club Store APP software interface in his infringing APP, could mislead consumers into believing that his store and infringing APP were associated with Walmart or officially provided by Walmart. This confusing behavior damaged Walmart’s goodwill and disrupted market order, constituting unfair competition. In summary, Li’s above actions violated the principles of good faith and the recognized business ethics, disrupted Walmart’s normal business operations, damaged its legitimate interests, and constituted unfair competition. Therefore, Walmart’s claim that Li engaged in unfair competition was valid and should be supported.

Regarding the third issue, Walmart clarified during the second-instance hearing that the basis for calculating punitive damages should be Li’s profits from time-segment rental and sales of Sam’s Club single-use cards and purchasing agent services. Evidence submitted by Walmart showed that Li’s infringement lasted for a long time with substantial sales volume, and he used a counterfeit APP with an interface identical to Walmart’s Sam’s Club Store APP, demonstrating obvious subjective malice, severe nature of conduct, and serious circumstances, thereby meeting the requirements for punitive damages under Article 63, Paragraph 1 of the Trademark Law. Considering Li’s subjective malice and the severity of the infringement, the court increased the damages to three times Li’s profits from infringement. Additionally, Walmart’s reasonable expenses to stop the infringement, including investigation costs and attorney fees, should also be included in the compensation. The court determined that Li should compensate Walmart for economic losses of CNY 1,762,866 plus reasonable expenses of CNY 277,406.01, totaling CNY 2,040,272.01 (apprx. USD 278,000).

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