Weekly China Trademark News Updates

May 8, 2021

1. Selected typical IP cases from the Supreme People’s Court’s 2020 Annual Report

Aldi GmbH & CO.KG and the CNIPA petitioned to the Supreme People’s Court (“SPC”) regarding a trademark rejection appeal case involving the disputed mark “ALMAT” with reg. no. 26585561. The SPC reasoned that although trademark right is a private right, but trademark right cannot be arbitrarily disposed like other property rights. If two marks are highly similar and designate on similar goods, there is still a possibility that the relevant public would be confused regarding the source of goods. Thus, allowing the two marks to coexist would likely to damage the trademark’s identification function, the consumers’ interests, and the public interests. The SPC found that the disputed mark “ALMAT” was highly similar to the cited mark “ALMAY” with reg. no. 3117097 and the two marks were designated and approved on similar goods. Consider the similarity between the two marks and the goods, there was a high possibility the relevant public would be confused. Merely providing a coexistence agreement from the cited mark’s owner could not eliminate the possibility of confusion. Accordingly, the effectiveness of such coexistence agreement shall not be recognized.

The case number is 2020 Zui Gao Fa Xin Shen No. 8163.

2. Selected Top 10 typical IP cases from the Supreme People’s Procuratorate

From 2017 to November 2018, defendants used “PHILIPS” and “Oral-B” trademarks without authorization on electric toothbrush heads, including laser imprint of the “PHILIPS” mark on the toothbrush heads, “PHILIPS” and “Oral-B” packaging. Defendants sold counterfeit electric toothbrush totaled RMB 19 million (USD 2.9 million). During the raid to one of the defendant’s rental apartment, the police confiscated counterfeit toothbrush heads worth RMB 160,000 (USD 24,700). The police also confiscated large numbers of counterfeit toothbrush heads, production tools and produced labels of the said registered trademarks.

On October 19, 2018, the Jiangsu Province Dongtai City People’s Procuratorate (“DCPP”) timely involved in the police’s investigation on the defendant’s activities. The DCPP obtained evidence regarding the defendant’s web store sales records, money flow, evidence, account books, WeChat records and other electronic records. On May 9, 2019, the DCPP transfer this case to the Jiangsu Yancheng City People’s Procuratorate (“YCPP”).

YCPP found that every infringement case that used the infringing trademark shall be cumulated when calculating damages. Regarding the actual unjustified profits obtained by the defendants, the YCPP reasoned that such unjustified profits shall be calculated based on the duration, production number, and the product’s actual price of the infringing products, namely, such calculation should be based on the principle to favor the plaintiff when determining unjustified profits. Regarding the actual use of the registered trademarks, the YCPP reasoned that the defendants used the registered trademarks on toothbrush heads that did not have labels, which constituted as actual use and shall be found constituting crime of counterfeiting registered trademark. Based on the facts and circumstances of the case, the YCPP put forward reasonable sentencing suggestions. It is suggested that the three principal offenders for the crime of counterfeiting registered trademarks, selling goods with counterfeiting registered trademarks and received large profits, illegally produced registered trademarks, and selling illegally produced registered trademarks shall be sentenced to substantial punishment. Probation should be given to the six other defendants whose offenses were accessories and involved only with smaller amount of unjustified profit. On April 24, 2020, the Yancheng Intermediate Court held that the nine defendants were sentenced to imprisonment ranging from 9 months to 4 years and 3 months with a punishment of RMB 30,000 to RMB 3.25 million (USD 4,600 to USD 503,000).

3. Selected typical IP enforcement cases from the State Administration for Market Regulation

a. The Tianjin Administration for Market Regulation investigated and handled masks labeling 3M registered trademark

In February 2020, Duan, the party involved, purchased infringing masks with model number 3M9001 from Hebei through self-purchasing and proxy purchasing. Duan abused his position as the legal representative and official of a pharmaceutical company and arranged various employees sell the said masks. After investigation, a total of 270,000 masks were sold, with a sales amount of RMB 810,000 (USD 124,000). Duan knew that he purchased the masks through improper channels with prices far lower than the wholesale prices of genuine products, and there were no legal purchase receipts and related procedures, but still insisted on purchasing the infringing masks for sale. Duan’s activities were obviously in bad faith. In this case, the Tianjin Administration for Market Regulation collected numerous bank account information, on-site documentary evidence, physical evidence, and related electronic information evidence, etc., traced hundreds of units and individuals involved in the flow of the masks involved in this case. Based on the foregoing factfinding, Duan and the rest of the defendants were punished for five times the amount of illegal business operating income, RMB 4.05 million (USD 628,000). This case was sent to the police for further handling.

b. The Changshu Administration for Market Regulation investigated and handled bad faith trademark application filed without an intent to use by Jiangsu Bainian Trademark Agency

On August 31, 2020, law enforcement officers of the Changshu Administration for Market Regulation of Jiangsu Province (“CAMR”) conducted a law enforcement inspection on Jiangsu Bainian Trademark Agency. The CAMR found that the agency has applied for 880 registered trademarks for 3 apparel design companies in Changshu since 2017. After investigation, none of the above three companies has carried out actual business activities since its establishment, and the legal representatives of the three companies are the same person, an individual, Liu, whom is also the legal representative of Jiangsu Bainian Trademark Agency. Liu copied or imitated a large number of trademarks of others that had expired but had not been renewed, or trademarks that others had registered and used, and preemptively registered the same mark or similar or identical goods. Since November 2019, 91 applications have been rejected. Liu’s action of filing a large number of trademark applications in bad faith and not for the purpose of use had violated Paragraph 3, Article 19 of the Chinese Trademark law. The CAMR imposed a punishment of RMB 60,000 (USD9,295) on trademark agency, and a punishment of RMB 30,000 (USD 4,648) on Lieu, the legal representative of the trademark agency. This case acted as a deterrent and warning to other trademark agency to not violate the 2019 Chinese Trademark Law that added a new article to punish applicant who filed applications in bad faith and without the intent to use.

4. Selected 2020 typical IP cases from the China Customs

On September 30, 2020, the Beijing Customs arrested a company in Linyi’s that declared for export of 9 categories of goods, including “storage bags”, “switch boxes,” and “women’s jackets,” through a special deployment control order. After open-box inspection, it was found that the actual goods were glasses labeled with “GUCCI” and “Ray Ban” logos, leather bags labeled with “LV” and “CHANEL” logos, and sneakers labeled with “PRADA” and “Air Jordan design” logos. More than 60,000 pieces, involving 18 registered trademarks from more than ten rightsholders were recovered. All goods were confirmed as counterfeit goods by the rightsholders.

On the basis of this case, the Beijing Customs further conducted an in-depth analysis of Customs clearance data, historical case data, and extensively collected rightsholders information, implemented precise control of goods and articles on key routes between China and the United States, which found that in 2020, a total of 547 batches of infringing goods were seized, that is, almost 70,000 pieces of infringing goods, worth more than RMB 1.5 million (USD 232,424).

During the same period, the Fuzhou Customs intensified risk analysis, precise deployment and control, and increased open-box inspection in response to a substantial increase in goods shipped out to the United States through postal channel. A total of 1,379 batches of various infringing goods mailed out to the United States were seized, and 1,612 infringing items such as earphones, sunglasses, bracelets, watches, backpacks, and thermos cups were seized, valued at RMB 146,000 (USD22,625). These infringing goods used multiple marks such as “Beats,” “BOSE,” “Cartier,” “ROLEX,” “LV,” and “GUCCI,” which infringed the trademark rights of the respective rightsholders.

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