How to Protect Trademark Rights in China

February 18, 2005
How to Protect Trademark Rights in China

By Bradley Yu, Unitalen Attorneys at Law

I. Acquire Trademark Rights in China

1. What kinds of trademarks can be protected in China?

In China, if you want your trademarks to be protected by Chinese laws, you must enjoy exclusive rights to utilize these trademarks. How can you acquire the exclusive rights to use your trademarks? Under the Trademark Law of the People’s Republic of China (hereafter called Chinese Trademark Law), the only condition by which you enjoy exclusive rights to use your trademarks is based on the fact that your trademarks have been registered with the Chinese Trademark Office. So you have to pay close attention to trademark registration because only a Chinese registered trademark can be protected in China. What I need to mention is that the registration must be one that was done with the Chinese Trademark Office or extended to China through the Madrid Protocol and agreed by the Chinese Trademark Office after its substantial examination. This is different from some Common Law countries. For example, in some common law countries, the user of a trademark can acquire the exclusive right to use the trademark by using the trademark in commerce. For the past 10 years, I experienced many cases in which our foreign clients complained that their trademark rights were infringed upon in China. However, the fact was that their trademarks had not been registered with the Chinese Trademark Office. They often argued that their trademarks had been registered or used in their own countries. Unfortunately, the Chinese Trademark Law can provide protection to their trademarks only if they have been registered in China itself.

2. What kinds of signs can be Chinese registered trademarks?
According to Chinese Trademark Law, any visual sign, if it can be used to distinguish the goods or service of one natural person, legal entity or any other organization from that of others, including any word, design, letters of an alphabet, numerals, three-dimensional symbol, combinations of colors, and their actual combination, may be filed for registration. What I want to further mention or emphasize is, before 2002, any three-dimensional symbol or combination of colors cannot be a registered trademark in China. The law has changed since 2002. So far, Chinese Trademark Law does not allow sound marks, smell marks or other kinds of marks to be registered and the Chinese Trademark Office still doesn’t accept these types of trademarks’ registration applications.

3. Application First Principle
This principle is, where two or more applicants apply for the registration of identical or similar trademarks for the same or similar goods, the Trademark Office will grant the trademark right to whichever application is filed first. Where applications are filed on the same day, the trademark right shall be granted to the earliest user, and the other applications shall be rejected and their trademarks shall not be published.

Apparently, where a trademark registration application is identical or similar to the trademark of another person that has, with respect to the same or similar goods, been registered or, after examination, preliminarily approved by the trademark office, the Trademark Office shall reject the application and shall not publish the said trademark.

II. Enforcing your trademark rights through administrative authorities

1. Administration Protection Mechanism
With regards to the enforcement of trademark law, China has adopted a so-called “Dual protection, Parallel Operation” mechanism, which means that both the courts and the administrative authorities are entitled to enforce the trademark law. This mechanism has proved to be very effective over the past 20 years owing to how it “fits” to China’s ever evolving national conditions. How does the administrative protection mechanism work? The administrative protection mechanism, non-judicial procedure, is that the trademark owner can claim a trademark infringement before the government authorities and seek remedies when its trademark rights are infringed. The relevant administration authorities will investigate and handle the complaint by confiscating the infringing goods or by offering other remedies, such as ordering the offender to cease infringement, and impose fines. If the offender or infringer doesn’t agree with the relevant administration authorities’ decision or settlement, he / she can appeal to the higher level of the administration authority for review in 30 days. If the offender still doesn’t agree with the decision made by the higher level of the administration authority, he / she can go to the local court to institute a lawsuit. The administrative protection is an unique and efficient way to deal with any trademark infringement. The administrative procedure has aspects in the following circumstances in settling trademark infringements: The dispute could be resolved quicker than the judicial procedure; the cost is lower than the judicial procedure; disputes can be settled more thoroughly without any side effect, and the interests of the trademark owners can be protected.

2. Administration Protection Authorities
i. The Administration for Industry and Commerce (AIC)
AICs are established at every level of Chinese central and local governments. For the Chinese central government, the State Council set up the State Administration for Industry and Commerce (SAIC). The Chinese Trademark Office and the Chinese Trademark Review and Adjudication Board are under the SAIC. For each level of local government, for example, provincial governments, cities’ governments and counties’ governments, AICs are necessary and important for organizations which are in charge of corporations’ registration, unfair competition, consumers’ protection, market supervision, trademark administration and so on and so forth. The administrative authorities have the right to investigate and handle any acts of infringement they see with regards to any person or organization’s exclusive right to use a registered trademark according to Chinese Trademark Law.

Basically, the SAIC’s duty is to make rules, policies and to guide the work of local AICs. The SAIC doesn’t handle infringement cases. Local AICs handle trademark infringement cases that take place in their own areas. When an infringement act has been carried out , the AIC shall order the infringer to immediately stop the act of infringement, confiscate and destroy the infringing goods and tools specially used for the manufacture of the counterfeit goods and for counterfeiting the representations of the registered trademark, and impose a fine. Where any interested party is dissatisfied with the decision on the matter, it or he / she may file a lawsuit in the people’s court according to the Administrative Procedure Law of the People’s Republic of China.

ii. Chinese Customs
Chinese Customs conduct an important function in intellectual property protection like most countries’ customs organizations around the world. The General Administration of Chinese Customs has set up in its head office as the Section of Customs Protection for Intellectual Property Rights especially responsible for recording intellectual property rights in Customs and lending guidance to Customs departments nationwide in taking protective measures.

Article 2 of the Customs Protection Regulations of Intellectual Property of the People’s Republic of China (hereafter referred as the Regulations) stipulates that the Customs protection of intellectual property in these regulations means the protection methods conducted by Customs with regards to trademark exclusive rights, copyrights and patent rights which are under the protection of the laws and regulations of the People’s Republic of China and related to import and export commodities. Article 2 of the Regulations stipulates that goods infringing intellectual property rights under the protection of the laws and administrative regulations of the PRC are prohibited from both import and export. The Regulations entitle that “the Customs, when carrying out the protection of intellectual property related to inward and outward goods, may exercise the relevant powers defined in the Chinese Customs Law. These powers mainly include the right to check, the right to examine, the right to detain, the right to investigate, the right to punish and the right to dispose the infringing goods”. The Regulations and Chinese Customs Law become the legal basis on which the Customs carry out border protection of intellectual property. In the past several years, Customs played an effective and important role in prohibiting the counterfeit products from being imported or exported. From 1996 to 2003, the Customs had handled up to 3,300 infringement cases valued at up to 540, 000,000 yuan in total.

III.Protection of Trademark Right with Civil Law

In the old days, most trademark infringement litigations were settled with administrative procedures in China mainland. In particular before the Trademark Law was amended in 2001, administrations for industry and commerce(AICs) were authorized to investigate and prosecute any acts that infringed upon the exclusive right to the use of registered trademarks on their own initiatives or under the request of the owners of registered trademarks. Besides, under the request of registered trademark owners, they shall demand infringers to compensate for the economic losses of the owners of registered trademarks. With the amendment of the Trademark Law in 2001, the administrations for industry and commerce no longer have the authority and power to charge trademark infringers to compensate economic losses to the owners of registered trademarks. At present, an increasing number of registered trademark owners prefer to protect their exclusive right to the use of trademarks with civil procedures. We will make a brief account of the related matters in the following paragraphs.

1. Jurisdiction of trademark infringement litigations

i.Court architecture and the “two-instance” judicial systeml in China mainland

In China mainland, a Supreme People’s Court is set up at the Central Government level. Higher People’s Courts are established at the provincial level in provinces, autonomous regions and municipalities directly under the Central Government. Intermediate People’s Courts are arranged for prefectures, autonomous prefectures leagues and cities of the prefecture level. Basic People’s Courts are founded for counties, autonomous counties, banners, districts and cities of county level.

One Higher People’s Court is set up for each province, autonomous region and municipality directly under the Central Government in China mainland. So far, China has 29 Higher People’s Courts (Hong Kong and Macao special administrative regions have their own independent judicial systems, and Taiwan has not yet returned to the motherland.) Each Higher People’s Court has a number of intermediate people’s courts under it. And each intermediate people’s court exercises jurisdiction over a number of basic people’s courts.

The “two-instance” judicial system whereby the second hearing is final is applied in China mainland, disregarding civil cases, criminal cases, or administrative cases that are concerned. In other words, a case is concluded after experiencing trials at two levels of people’s courts. If a case is appealed to the people’s court at the higher level after judgment is made at the court of first instance, the ruling of the people’s court at the higher level is the final verdict with legal validity. Any party shall not make an appeal.
ii.Jurisdiction of trademark infringement litigation
a.Grade jurisdiction of trademark infringement litigation
Grade jurisdiction means to divide the work and authority amongst people’s courts at the higher and lower levels in the hearing of trademark infringement cases of first instance in accordance with certain standards. In other words, it is on the system of deciding which levels of people’s courts shall serve as courts of first instance. For the sake of ensuring unified trademark judicial standards, accumulating trial experiences, and properly protecting the exclusive right to the use of registered trademarks of trademark owners and legitimate rights of other parties concerned, the Supreme People’s Court on January 21, 2002 placed in force the Interpretation by the Supreme People's Court of the issues relating to jurisdiction over and scope of the application of law to the hearing of trademark cases. The third and fourth paragraphs of Article 2 stipulate that people’s courts at or above the intermediate level shall have the authority to try civil cases on the exclusive right to the use of registered trademarks as courts of first instance. With approval of the Supreme People’s Court, Higher People’s Courts may designate one or two basic people’s courts in big cities to try trademark civil cases as a court of the first instance according to actual conditions in the areas under their jurisdiction. Due to explicit stipulations on grade jurisdiction, there shall not be any disputes in practice over jurisdiction by different levels.

b.Territorial Jurisdiction of Trademark Infringement Litigation
Civil litigations instituted for acts of infringing the exclusive right to the use of registered trademark shall be put under the jurisdiction of the people’s courts at the places where the infringement acts happen. People’s courts at the places where infringement commodities are stored up, or local Customs and administrations of industry and commerce seal up and detain infringement commodities according to the law shall also have the jurisdiction. Naturally, people’s courts at the place of domicile of the defendants enjoy jurisdiction as well.

2. Preliminary injunction and evidence attachment before litigation
In accordance with Article 50 of the TRIPS on the enforcement of law relating to intellectual property rights, China amended Article 57 and Article 58 of the Trademark Law, stipulating that the owner of a registered trademark or any interested party may, before filing a lawsuit, apply to the People’s Court for ordering the stopping of the act and for adopting measures to attach and preserve the evidence. The newly added clauses belong to the category of “temporary relief” and “interim measures’, which are effective legal means for practical protection of legitimate rights of trademark owners and determent of infringing acts in due course of time. The stipulation on evidence attachment before litigation means a breakthrough over the existing system on the evidence for civil action. They are beneficial to the protection of trademark rights. According to the stipulation of Article 57 and Article 58 of the Trademark Law, the “application to the People’s Court for ordering the stopping of an act before filing a lawsuit” means that the owner of a registered trademark or any interested party has evidence proving that another party is committing or will soon commit an act that infringes upon his exclusive right to the use of its registered trademark and that, unless it is promptly stopped, will cause irreparable harm to his legitimate rights and interests, he / she may, before filing a lawsuit, apply to the People’s Court to order the stopping of the act. The “evidence attachment before litigation”(preliminary evidence attachment) means that in order to put a stop to an infringement, the owner of a registered trademark or the interested party may, under conditions where evidence might be missing or become unobtainable in the future and prior to filing a lawsuit, apply to the People’s Court to attach and preserve the evidence.

3. Property attachment and evidence attachment in registered trademark infringement litigation

i.Property Preservation
According to stipulations of Article 92 and Article 94 of the Civil Procedure Law of the People’s Republic of China, in the cases where the execution of a judgment may become impossible or difficult because of the acts of either party or for other reasons, the People’s Court may, at the application of the other party, order the adoption of measures for property attachment. In the absence of such application, the People’s Court may by itself, when necessary, order the adoption of measures for property preservation. Property preservation shall be effected by sealing up, freezing or the use of other methods as prescribed by the law. Property attachment measures in registered trademark infringement litigation also follow the above prescriptions in conditions and methods. Thus we will not make any elaboration here.

iiEvidence Preservation
The evidence attachment system is highly evaluated because it prevents any pieces of evidence from becoming missing or becoming unobtainable in the future and contributes to the acts of finding out facts from the case in an objective and veritable way in the lawsuit. In the litigation of intellectual property infringement; the main evidences of infringement are generally reflected in goods which represent an infringement upon another person’s exclusive right to the use of a registered trademark, financial account books, and production tools. What the plaintiff is normally able to deduce as evidence are the infringement goods produced and sold by the defendant on the market. It is hard to produce evidence with properties under the control of the defendant such as means of production and tools of production. Accordingly, the court is unable to have a clear investigation of the overall production of the defendant, and finds it hard to accurately calculate illegitimate profits. As a result, the owner of a registered trademark or any interested party may follow the general provisions of the civil litigation system on any given evidence and consider the actual situations of the case to apply to the People’s Court for attaching the evidence. In terms of time limits, evidence preservation may happen prior to filing a lawsuit or in the process of filing a lawsuit.


4. Hearing, ruling and execution of trademark infringement litigation

Normally, People’s Courts at and above the intermediate level set up special intellectual property judicial tribunals to try intellectual property cases, which naturally include trademark infringement cases. In some developed areas, i.e., Beijing, intermediate People’s Courts like Beijing No.1 Intermediate People’s Court and Beijing No.2 Intermediate People’s Court, have special judicial tribunals for the hearing of intellectual property cases, including trademark infringement cases. Basic People’s Courts, such as Haidian District People’s Court and Chaoyang District People’s Court, are also authorized to try trademark and other intellectual property cases.

Similar to other civil cases and criminal cases, the hearing of trademark infringement cases applies to the system whereby the second hearing is final. It implies that if the interested parties do not make an appeal after a trial at the court of first instance, the verdict of the court of first instance comes into force. If any of the parties concerned are not satisfied with the order, they may appeal to the People’s Court at the higher level, which is the court of second instance. The verdict with the court of second instance is the final judgment that has any real legal validity. The parties concerned shall not appeal. Parties concerned must execute the judgment with legal validity. If they refuse judgment, any of the parties concerned may apply to the People’s Court for coercive execution.

IV. Protection of Trademark Right with Criminal Law

In comparison with the means of administrative enforcement of law and civil procedures, the appeal to criminal procedure for the protection of the exclusive right to the use of a registered trademark is the channel with greatest force and most obvious effect.

Article 213 of the Criminal Code of the People’s Republic of China stipulates that “Where any person, without authorization of the owner of a registered trademark, uses a trademark which is identical with the registered trademark in respect of the same goods shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; if the circumstances are especially serious, he / she shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.”

Article 214 of the Law regulates that “Where any person knowingly sells goods bearing a counterfeited registered trademark shall, if the amount of sales is relatively large, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only be fined; if the amount of sales is huge, he / she shall be sentenced to a fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.” Article 215 of the Law provides that “Where any person fasifies or without authorization of another makes representations of the person’s registered trademarks or sells such representations shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also, or shall only, be fined; if the circumstances are particularly serious, he / she shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.”

China has prescribed criminal acts and penalties for the infringement of the exclusive right to the use of a registered trademark in the Criminal Code. However, they have not received sufficient attention with judicial authorities at various levels. The standards are set too high for the prosecution of criminal acts violating the exclusive right to the use of a registered trademark. Furthermore, there are not exercisable detailed provisions. Due to these elements, people and units are seldom prosecuted by public prosecution organs and convicted and sentenced by People’s Courts really for the infringement of the exclusive right to the use of a registered trademark. In the rare cases they do, penalties are weighed very low.

For the sake of practically strengthening the protection of intellectual property rights and severely cracking down upon acts of infringing intellectual property rights, including infringements of trademark rights, the Supreme People’s Court and the Supreme People’s Procuratorate promulgated the Interpretation on several issues regarding the Application of Laws in Handling Criminal Cases of Infringement on Intellectual Property Rights, which came into effect on December 21, 2004. According to the Chinese law, judicial interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate are in possession of legal validity.

The promulgation of the interpretation is a significant measure for the protection of intellectual property rights in the country. It furnishes an explicit exercisable legal basis for public security organs, procuratorial organizations and People’s Courts to handle criminal cases infringing upon intellectual property rights. It is believed to greatly strengthen the tally of crimes infringing upon intellectual property rights and effectively promote the protection of domestic and foreign intellectual property rights with the Criminal Law.

In the following paragraphs, we will make a brief account of the composition and penalties of crimes infringing upon the exclusive right to the use of a registered trademark with the Criminal Code and the Interpretation.

1. Trademark right infringement crimes
i.Crime of counterfeiting registered trademarks
Article 213 of the Criminal Code of the People’s Republic of China provides that “Where any person, without authorization of the owner of a registered trademark, uses a trademark which is identical with the registered trademark in respect of the same goods shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; if the circumstances are especially serious, he / she shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.”

According to stipulation of the Interpretation, where any person, without authorization of the owner of a registered trademark, uses a trademark which is identical or basically the same in vision with the registered trademark in respect of the same goods, sufficient to mislead the public, shall,if the amount of illegal business value is over 50,000 yuan, or the amount of illegal income is over 30,000 yuan, if he/she counterfeits two or more registered trademarks with an illegal business value of over 30,000 or an illegal income of over 20,000 yuan, or if there are other especially serious circumstances, constitute the crime of counterfeiting registered trademark, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined. Where any person uses a registered trademark without authorization of the owner of the registered trademark at the mount of illegal business value of or above 250,000 yuan or the amount of illegal income of or above 150,000 yuan or uses two or more trademarks without authorization of the owner of the registered trademark valued at over 150,000 yuan in terms of business operation or over 100,000 yuan in terms of illegal gains, or if there are other especially serious circumstances, shall be sentenced to fixed-term imprisonment of no less than three years but not more than seven years and shall also be fined.

ii.The crime of selling goods bearing a counterfeited registered trademark
Article 214 of the Criminal Code of the People’s Republic of China provides that, “Where any person knowingly sells goods bearing a counterfeited registered trademark shall, if the amount of sales is relatively large, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only be fined; if the amount of sales is large, he / she shall be sentenced to a fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.”

According to the stipulation of the Interpretation, where any person knowingly sells goods bearing a counterfeited registered trademark shall, if the sales value is over 50,000 yuan, be concluded under Article 214 of the Criminal Code with “the amount of sales relatively large”, and shall be convicted as committing the crime of selling commodities bearing counterfeit registered trademark and sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined. Where any person knowingly sells goods bearing a counterfeited registered trademark shall, if the sales value is over 250,000 yuan, be concluded under Article 214 of the Criminal Code with “the amount of sales being huge ”, and shall be convicted as committing the crime of selling goods bearing a counterfeited registered trademark and sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined. Among the leading components for the composition of the crime, “knowingly” is a necessity for the conviction of the crime.

iii.Crime of falsifying, or making representations of another person’s registered trademarks without authorization, or selling such representations

Article 215 of the Criminal Code of the People’s Republic of China provides that “Where any person falsifies, or making representations of another person’s registered trademarks without authorization, or selling such representations shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also, or shall only, be fined; if the circumstances are particularly serious, he / she shall be sentenced to a fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.”

According to the stipulation of the Interpretation, where any person falsifies, or makes representations of another person’s registered trademarks without authorization, or selling such representations shall, if he / she satisfies one of the following situations, be taken as belonging to the category of “the circumstances are serious” as prescribed in Article 215 of the Criminal Code, and be convicted as committing the crime of falsifying, or making representations of another person’s registered trademarks without authorization, or selling such representations and sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also, or shall only, be fined:

(1) Where any person falsifies, or makes representations of another person’s registered trademarks without authorization or sells such representations, if the amount is over 20,000 pieces, or the value is over 50,000 yuan in terms of business operation or over 30,000 yuan in terms of illegal gains,

(2) Where any person falsifies, or makes without authorization, over 10,000 pieces of representations of two or more registered trademarks of another person or sells such representations, if the amount of a total illegal business value is over 30,000 yuan or the amount of a total illegal income is over 20,000 yuan,

(3) Other serious circumstances.
Where any person satisfies one of the following circumstances shall be termed as committing crimes with “circumstances especially serious” as stipulated in Article 215 of the Criminal Code, be convicted of the crime of making representations of another person’s registered trademarks without authorization or selling such representations, and sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined:

(1) Where any person fasifies or without authorization of another makes representations of the person’s registered trademark or sells such representations, if the amount is over 100,000 pieces, or the value is over 250,000 yuan in terms of business operation or over 150,000 yuan in terms of illegal gains;
(2) Where any person fasifies or without authorization of another makes representations of more than two of the person’s registered trademarks or sells such representations, if the amount is over 50,000 pieces, or the value is over 150,000 yuan in terms of business operation or over 100,000 yuan in terms of illegal gains;
(3) Other serious circumstances.

2. Accomplice of trademark infringement

The Criminal Code of the People’s Republic of China makes stipulations of joint commission of a crime. For the purpose of effectively protecting intellectual property rights and severely cracking down upon criminal acts of intellectual property infringement including trademark and copyright, Article 16 of the Interpretation provides that one is an accomplice if he/she knowingly, or should have known, furnishes loans, funds, account number, invoice, certificate, license, or provides sites for production and management, or provides various conveniences of transportation and storage, or acts as an importing/exporting agent for someone who carries out the crime of trademark infringement. The stipulation is drawn mainly because that the crime of trademark infringement has shown the features of a family-based operation, big scale operations and well organized in many places. Many big-scale counterfeit trademark crimes have developed into a full-range chain production from raw material purchase, equipment procurement, capital support, transportation, warehousing, and marketing, with especially great harm.


Many people come out to commit the crime of providing various conveniences and assisting acts to those directly engaged in infringement of intellectual property rights. Although they are not directly involved in trademark infringement crimes, the assisting parties shall, if they satisfy the “knowingly” element, be taken as accomplices of trademark infringement crime, as they have the intention of committing joint infringement crime subjectively and implement the acts of furnishing various conveniences and assistance objectively, and convicted as accomplice in accordance with stipulations of the Criminal Code on accomplice. The Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate will naturally contribute to a more forceful strike of criminal acts of trademark infringement.

3. The principle that criminal liability and civil liability don’t repulse each other

In addition to criminal liability, civil liability may be found out to the person committing the crime of infringing the exclusive right to the use of a registered trademark. The owner of a registered trademark may still demand for compensation for civil damages. In a similar manner, in cases with civil liability having been looked into, judicial authorities may go on to investigate the criminal liability if they constitute crimes. Civil liability shall not cover for criminal liability and vice versa.

　

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