Getting China’s regulators to stop trademark infringement

CBL’s Introduction

Brands fighting trademark infringement in China should enlist the free help of uniformed regulatory officers to help protect your intellectual property. Under trademark infringement regulations, officers must investigate credible complaints by visiting suspected infringers on site for questioning and inspection. Many professional trademark infringers have sophisticated techniques to evade enforcement, thus proactive involvement from the legitimate trademark owner is necessary to show that the consuming public is indeed confused into purchasing the competing products. The above protections only apply if you have already registered a mark in China for this specific design. However, protection for unregistered marks is also available under China’s famous mark rules, which provide enhanced protection for international brands by allowing you to translate evidence to claim protection.

The below is official government guidance is translated to American English by CBL using the User Centered Translation approach.

Contents

1. Trademark Infringement Criteria
2. Determining the Likelihood of Confusion
3. Famous Protection Status
Sources

1. How Regulators Apply the Trademark Infringement Criteria

China’s Trademark Infringement Criteria are used by regulators to determine instances of trademark infringement. Regulators first step is to see whether the infringing element is being used as a trademark, which can establish whether further action is warranted or whether to reject your complaint. In China’s market, the use of another’s mark is usually merely decorative and not claiming the goods or services came from the trademark owner, which is not infringement. (see Infringement Criteria §3) Officers look at the apparent intent of the usage and how consumers understand its message to determine if the mark is “decorative” and merely drawing on the popular culture landscape of which brands are a part, or if it could mislead consumers about who produced this product. (see Infringement Criteria §7)

Next, we will evaluate your complaint under §12 by looking to see if the consuming public would be confused by the alleged infringement; we do this by looking at the trademark as an integral part of its whole context of the goods/services from the perspective of all parties.  Infringement Criteria §12 requires regulators to determine if the consuming public will be confused, by viewing the trademark as indivisible from goods and services and integrate facts from the parties’ shared context. Traditionally, the goods and services classification was used to evaluate possible if trademarks are confusingly similar, but China’s contemporary approach is more appropriate to business trends in marketing and consumer interaction, or business models evolution in financing, tailored products, and responsive supply chains.

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Investigating deceptive trade practices using trademarks registered in China

China’s regulatory officials will be constantly confronted with alleged trademark infringement and counterfeiting schemes that involve registering marks that only differ slightly from an existing brand, looking for potential criminal violations. Perpetrators will lie to officers saying that the brand is entirely different, but they will collude with printers in order to distort the mark on packaging to be identical to the mark targeted for infringement. (this is subject to penalty under the Trademark Printing Administrative Procedures) The parties then defend against infringement allegations by closely comparing the complainant’s mark to their own mark to reveal the differences.

Regulatory officers must catch such deceptive, illegal practices. Investigate the alleged infringer’s business, past violations, while coordinating with criminal justice officers (police and prosecutors) to put together the complete story on suspects. These regulatory actions are required by Infringement Criteria §§13, 14, and 22.

Chinese sellers will often scapegoat their suppliers then claim they made online purchases using platform that make it impossible to provide real supplier names, addresses, or contact information of the actual perpetrator, or they provide fake info. This tactic can be effective for evading liability because being unaware that infringement occurred is a defense under China Trademark Act §62(b). The regulatory officer must investigate all of the facts, looking at close documentation, to see if the defense is true.

The officer must verify supplier documentation is accurate before concluding that the party was actually aware of the infringement. Regulatory personnel can be personally liable for neglect of duty for failing to check this. This investigatory process is mandated by infringement Criteria §§27-29.

2. Determining the Likelihood of Confusion for Trademark Infringement

The China Trademark Act §57(b) prohibits using trademarks in a way that would cause the consuming public to be confused, defining this conduct as trademark infringement. The rule itself is too vague in itself to be enforceable or allow for judicial and regulatory precedent, thus the Trademark Infringement Criteria §§19, 20, and 21 provide a specific set of rules to allow you to determine whether a likelihood of confusion exists.

Subjective confusion is the central factor under when applying China’s infringement criteria

China Trademark Act §57(2) provides there is infringement when “the use of a trademark similar or identical to a registered trademark for the same or similar goods without a license from the trademark registrant is likely to cause confusion,” comprising three identifiable patterns. Each of these requires causing confusion among the consuming public, but differ as to the similarity of the mark and goods:

(1) Identical goods but a merely similar mark.

(2) Identical mark but merely similar goods.

(3) Merely similar mark and merely similar goods.

Fact pattern #3 with no identical elements is the one most difficult for regulators to adjudicate and would be the easy for infringers to succeed with in China under the Trademark Act alone.  Supplemental rules found in Infringement Criteria §19 provide how to effectively apply the law to determine infringement, by providing uniform enforcement standards across three infringement classifications, aimed at reduced consumer confusion while better protecting trademark rights and consumer rights. There is a higher focus on subjective perception, and whether the mark and goods themselves are “similar enough” plays a less dispositive role.

Under this section, infringement enforcement principally investigates whether Chinese consumers are likely to be confused, and the conclusion depends primarily on this factor.

Likelihood even without proving actual confusion is infringement

Trademark infringement rules do not require finding that the consuming public was actually confused, instead simply collecting evidence to show that they are likely to be confused is sufficient. According to of the Criteria §20, “likelihood of confusion under the Trademark Act comprises either:

(a) Where the public might mistakenly believe that goods or services are produced or provided by the registered trademark owner;

(b) Where the public might mistakenly perceive a connection, such as investment, license, franchise, or collaboration, between the provider of the goods or services in question and the registered trademark owner,” i.e., mere potential for confusion is sufficient for likelihood of confusion.

Regulatory enforcement or penalties imposed based on mere likelihood should be substantiated with factual evidence collected in China. Therefore, consumer confusion investigations should collect and weigh factual evidence, with a major emphasis on consumer responses.

For example:

In Beijing during 2014, Sudao infringed on the China trademark Daoxiangcun, held by another local company having the same name. The market regulator in Dongcheng District, took consumer surveys from Sudao customers and determined that these buyers had mistakenly believed the products purchased from Sudao were produced by Daoxiangcun.
Similarly, in 2018, food delivery service Yage allegedly infringed on the trademark of a popular restaurant chain Quanjude. Officers collected user comments through platforms such as Meituan, revealing that Yage’s use of the Quanjude trademark misled consumers to believe that Yage is a subsidiary of Quanjude.
In a 2019 case, a Beijing company was accused of infringing upon the China trademark Huawei. Officers reviewed third-party websites, customer service numbers, and customer service SMS communications, which revealed that consumers were misled into believing they were dealing with Huawei’s official after-sales centers and receiving services directly from Huawei.

China’s Regulators Weigh Relevant Factors When Determining Likelihood of Confusion

China’s law enforcement agencies look at a half dozen factors to determine whether the consuming public would be confused. The factors include similarities between the trademarks, goods, or services, distinctiveness, nature of the goods, and consumer recognition. (See Infringement Criteria §21) Regulators in practice focus principally on consumer perception and similarities to determine likelihood of confusion.

The more similar two trademarks for similar goods are, the less likely Chinese consumers will notice differences between them, and the higher the likelihood of confusion. In practice, law enforcement officers base their decisions looking at the big picture in the context of goods/services classifications and examination guidelines.

Chinese regulators believe that trademark likelihood of confusion elements should be investigated by working closely with trademark owners to have them produce proof to substantiate infringement. These facts are trademark distinctiveness, recognition, the goods or services themselves, and mark usage. Assessing a trademark’s recognition requires extensive owner documentation, such as documented marketing campaigns and recognition awards. In order to avoid prejudicing owners’ interests, law enforcement should use a balanced approach when weighing the factors contributing to the likelihood of confusion.

3. How to Determine Whether a Trademark is Afforded “Famous” Protection Status

Under the Trademark Examination Guidelines you are entitled to oppose trademarks filed in China even for unregistered marks, if your brand is famous. There are numerous requirements for doing so, described below.

Famous mark status is only evaluated in China when strictly necessary and when the request is made in good faith

A famous mark determination is only made if necessary to resolve a trademark dispute. Under the China Trademark Act, this means that the adjudicator will make a case-by-case determination to see whether coming to an appropriate conclusion in infringement could be made without a famous mark determination, and even then, only when explicitly requested by a party.  (See Supreme Court Famous Trademarks Judicial Interpretation (2009) No.3 see §2(a); Trademark Examination Guidelines §3; Famous Trademarks Rules §4)

The Trademark Examination Guidelines further require, “A famous mark determination when the disputed mark or goods/services differs substantially from others, and the trademark registration application will not mislead or confuse consumers, nor harm famous mark owner.”  “Mislead” means the same thing as “confuse” under the guidelines. The same rules apply in judicial precedents.

The Examination Guidelines focus on achieving the goals of famous trademark law, not on a mechanical process. The rule is applied to prioritize protection’s final effect, and only when other avenues have been exhausted. The Trademark Office cannot look at fame if remedies are already available under the China Trademark Act, or if the disputed mark is unlikely to cause confusion among the consuming public; or where the trademark registrant is already otherwise protected.

You must act in absolute good faith when making a claim related to the fame of a trademark. In the administrative process, this means parties requesting a famous trademark determination must submit genuine affidavits and documentation to show famousness and risk of confusion, misleading the public, or harm to the party’s interest. Under the foundational Chinese ethical and civil law good faith principle, market participants are restrained from harming on the public interest or the rights of others. “Requests for a determination of a mark’s fame and whether it classifies as a famous mark must comport with the doctrine of good faith, and parties are liable for the authenticity of submissions.” (See Famous Marks Rules §8)

Therefore, if you do not ensure the authenticity, accuracy, and integrity of submissions, the Trademark Office shall reject these an untruthful famous mark determination on grounds of lacking good faith, and beyond the administrative penalty, you may be penalized under the China social credit system for dishonesty.

Fame can be established by most business documentation, including translations

Numerous types of evidence are accepted under the Examination Guidelines, including for non-traditional business and digital documentation, with discretion to allow alternative documentation. For example, online sales records can prove a mark, alongside conventional documents like contracts, receipts, bills of lading, bank deposit receipts, and import/export licenses.

Evidence from both conventional and innovative business models are be taken into consideration by the China Trademark Office when assessing the extent, locations, channels, and methods of sales. Additionally, both traditional and digital media will be considered when reviewing marketing materials such as comments, reviews, reports, and rankings. Notarized printouts of electronic tax clearance certificates can now be submitted during reviews of tax documents, in addition to original hard copy tax clearance certificates issued by tax agencies and their notarized copies.

Owners must document how their trademark’s fame extends to its current use. If dissatisfied, a trademark registrant may request a second assessment. Translations are acceptable; multilingual content with famous marks are translations under §13(b) of the China Trademark Act if the public recognizes it as a famous mark, or may mislead the public to think there is a connection between the translation and famous mark.

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FURTHER READING.

Read How Trademark Infringement Litigation in China Actually Works, to learn about how to protect your trademark in the courts. Infringement litigation in China is extremely complex, requiring businesses to jump through hoops created by rules that make no logical sense.

Sources

Official government sources are often disorganized and difficult to navigate, so we consolidate them based on subject matter to make finding information easier.

Translated from the Chinese Intellectual Property Association’s website, using the User Centered Translation approach:

Guidance 1: “关于《商标侵权判断标准》部分条款的适用理解” (https://www.cnipa.gov.cn/art/2020/8/26/art_2092_151206.html)

Guidance 2: 国家知识产权局商标局: “商标侵权判断中“容易导致混淆”的界定” (https://www.cnipa.gov.cn/art/2020/8/21/art_2092_151145.html)

Guidance 3:《商标审查审理指南》重点问题一问一答——驰名商标的审查审理 (https://www.cnipa.gov.cn/art/2022/2/8/art_66_173096.html)