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Supreme Court Interpretation on the Application of Law in Trademark Civil Actions

Contents

Supreme Court Interpretation on the Application of Law in Trademark Civil Actions

(Adopted by the Supreme Court Judicial Committee during the 1246th session on October 12, 2002, and amended by the Supreme Court Decision to Amend 18 Intellectual Property Interpretations Concerning the Application of Law in Patent Infringement Cases (2), adopted during the 1823rd session of the Supreme Court Judicial Committee on December 23, 2020)

The purpose of these interpretations is to guide the adjudication of trademark civil actions under the Civil Code of the People’s Republic of China (hereafter the “Civil Code”), the Trademark Act of the People’s Republic of China (hereafter the “China Trademark Act”), and the Civil Procedure Act of the People’s Republic of China (hereafter the “Civil Procedure Act”).

Section 1 The following acts constitute infringement of the exclusive rights to a registered trademark under § 57(g) of the China Trademark Act:

(a) The use of a business name that is identical or confusingly similar to an existing registered trademark for identical or similar goods such as to mislead the consuming public;

(b) The copying, reproduction, or translation of a famous trademark or a major component thereof for use in a trademark for different goods in a manner that misleads the consuming public and harms the interests of the trademark registrant;

(c) The registration of a domain name that reproduces or resembles an existing registered trademark and its use in e-commerce transactions for goods bearing the mark in a manner that is likely to mislead the consuming public.

Section 2 Copying, reproducing, or translating a famous trademark, or any significant element of such mark, not registered in China for use on identical or similar goods in a manner that is likely to cause confusion shall give rise to civil liability to cease such infringement under § 13(b) of the China Trademark Act.

Section 3 Trademark licenses are categorized under § 43 of the China Trademark Act as follows:

(a) Exclusive Licensing: Grants the licensee the exclusive right to use the registered trademark within a specified territory, duration, or manner under a license contract that restricts the trademark registrant from using the mark in the same territory, duration, or manner;

(b) Sole Licensing: Provides the licensee with the sole right to use the registered trademark within a specified territory, duration, or manner, while permitting the registrant to retain the right to use the mark within the same territory, duration, or manner;

(c) Non-exclusive licensing: Allows multiple licensees to use the registered trademark within a specified territory, duration, or manner, while permitting the registrant to retain the right to use and license the mark.

Section 4 “Interested parties” under § 60(a) of the China Trademark Act include the licensees named in the license contract for a registered trademark and any successors in interest to the trademark.

An exclusive licensee may file suit for infringement of the exclusive rights to a licensed trademark in a jurisdictional court. A sole licensee may join the registrant in infringement litigation or file suit independently if the registrant does not initiate litigation. A non-exclusive licensee may only initiate litigation for infringement if expressly authorized by the trademark registrant.

Section 5 Courts must accept lawsuits for infringement of the exclusive rights to a registered trademark filed by trademark registrants or interested parties within the renewal grace period.

Section 6 Civil actions for infringement of the exclusive rights to a registered trademark fall under the jurisdiction of the court in the location where the infringement occurred, where the infringing goods are stored or seized, or where the defendant is domiciled pursuant to §§ 13 and 57 of the China Trademark Act.

“Where the infringing goods are stored” means the location in which infringing goods are regularly stored or concealed or where large quantities of the infringing goods are stored or concealed. “Where the infringing goods are seized” means the location where administrative agencies, such as customs agencies, lawfully seize the infringing goods.

Section 7 Plaintiffs in civil actions involving multiple defendants in different locations may file suit in any location where a defendant committed the infringement, and this court shall have jurisdiction over the litigation. Jurisdiction for cases involving a single defendant shall lie in the court where the infringement occurred.

Section 8 The term “consuming public” under the China Trademark Act includes consumers who purchase goods or services bearing the trademark and businesses closely involved in marketing such goods or services.

Section 9 Under § 57(a) and (b) of the China Trademark Act, an alleged infringing mark shall be deemed identical to the plaintiff’s registered trademark if it is visually indistinguishable from the registered trademark.

An alleged infringing mark is considered similar under § 57(b) when it bears a resemblance to the plaintiff’s registered trademark in textual composition, pronunciation, meaning, design, color, overall combination of elements, three-dimensional shape, or color scheme, and causes the consuming public to misidentify the source of the goods or assume an association between the goods bearing the infringing mark and the plaintiff’s registered trademark.

Section 10 Courts must consider the following when determining whether a trademark is identical or similar under § 57(a) and (b) of the China Trademark Act:

(a) An assessment of overall consumer perception;

(b) A comparison of both marks as a whole and of their main components, carried out separately without placing the marks side-by-side;

(c) The distinctiveness and degree of commercial recognition of the plaintiff’s registered trademark.

Section 11 Similar goods under § 57(b) of the China Trademark Act are those identical in function, intended use, industry, sales channels, and customer bases, and those likely to confuse consumers as to an affiliation between the owners of the marks.

Similar services are those that share the same purpose, type, distribution channels, or target consumers, and those likely to confuse consumers as to an affiliation between the owners of the marks.

Goods and services are similar when their degree of association among the consuming public creates a likelihood of confusion regarding their source.

Section 12 Courts shall assess consumer perception and reference the International Classification of Goods and Services and Similar Goods and Services Classification Table when determining whether goods or services are similar under § 57(b) of the China Trademark Act.

Section 13 When determining damages in trademark infringement cases, the court shall apply the method chosen by the trademark registrant pursuant to § 63(a) of the China Trademark Act.

Section 14 Profits gained from the infringement may be calculated by multiplying the number of infringing goods sold by the profit per unit. If the infringer’s actual profits cannot be determined, the court may base the calculation on the profit per unit of goods bearing the registered trademark.

Section 15 The trademark registrant’s actual damages under § 63(a) may be determined by calculating lost sales attributable to the infringement or by multiplying the number of infringing goods sold by the profit per unit of goods sold under the registered trademark.

Section 16 Courts may determine actual damages pursuant to § 63(c) of the China Trademark Act at their discretion or upon request by a party if precise calculation of actual damages, profits from the infringement, or license fees for the use of the registered trademark is not feasible.

In applying § 63(c), a court must consider factors such as the infringer’s intent, the duration and extent of the infringement, the degree of culpability, the goodwill associated with the trademark, and reasonable enforcement costs incurred.

Moreover, parties’ stipulated agreements on the amount of damages made pursuant to the first paragraph of this Section are enforceable.

Section 17 Reasonable enforcement costs under § 63(a) of the China Trademark Act include costs incurred by the trademark registrant or an authorized agent for investigating and collecting evidence of infringement.

If requested by a party to the litigation, the court may include attorney’s fees in compliance with applicable agency regulations as necessary when ruling on what constitutes damages.

Section 18 The statutory deadline for filing a trademark infringement lawsuit is three years, commencing on the date the trademark registrant or an interested party knew or should have known of the infringement. If a trademark registrant or interested party files suit for alleged infringement persisting for more than three years, the court shall order the defendant to stop the infringement. In calculating compensatory damages, the court shall only consider losses incurred during the three years preceding the filing date.

Section 19 Unless otherwise agreed by the parties, the failure to file a trademark license contract with the regulatory agency shall not invalidate the license contract.

Section 20 The assignment of a registered trademark shall not affect the validity of any pre-existing license contracts, unless otherwise provided in such contracts.

Section 21 In adjudicating a trademark infringement civil action, courts may impose civil liability upon the infringer, including without limitation holding them liable to cease and desist the infringing activities, eliminate consumer confusion or harm by removing or destroying the infringing goods, pay damages, or issue corrective advertising. Based on the severity of the infringement, a court may also impose additional administrative penalties, including fines, and order the confiscation of counterfeit trademarks, infringing goods, and the materials, tools, or equipment used to manufacture the infringing goods pursuant to § 179 of the Civil Code and § 69 of the China Trademark Act. Fines shall be calculated pursuant to § 62(b) of the China Trademark Act.

The court may not impose civil sanctions for any act of infringement upon the exclusive rights to a registered trademark for which the regulatory agency has already imposed an administrative penalty.

Section 22 Courts may determine a trademark’s fame during a trademark infringement proceeding as necessary and as requested by a party.

Rulings on a trademark’s fame shall apply § 14 of the China Trademark Act.

A court shall not reassess a trademark’s fame if a regulatory agency or court has previously recognized the trademark as famous, unless the opposing party challenges the determination. If a challenge is raised, the court will reassess the trademark’s fame pursuant to § 14 of the China Trademark Act.

Section 23 The Interpretations apply to both trademarks for goods and service marks.

Section 24 The Interpretation shall control in the event of a conflict between this Interpretation and any prior applicable judicial interpretations.

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