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Trademark Litigation in China

 

 

1.     The jurisdiction for trademark infringement
 

Under China current judicial system, intermediate courts of each city are courts of first instance for trademark infringement cases. With the approval of the Supreme People's Court, the High People's courts of different province, autonomous and municipality can assign courts at lower levels to handle first hearings of cases involving trademark disputes.  

The statute also stipulates the territorial jurisdiction that civil litigations instituted for acts of infringing the registered trademark shall be put under the jurisdiction of the courts at the places where the infringement acts happen, or people’s courts at the places where infringement products are stored up, or local Customs and administrations of industry and commerce seal up and detain infringement products according to the law shall also have the jurisdiction. Naturally, courts at the place of domicile of the defendants enjoy jurisdiction as well.  
 

2.     Acts of Trademark Infringements

 

In accordance with the Article 52 of the Trademark Law, as supplemented by Article 50 of the Trademark Law’s Implementing Regulations, the following acts are considered trademark infringement:

1-     Using a mark which is the same as or similar to a registered trademark on the same or similar goods without the authorization of the registered trademark owner;

2-     Selling the products that violate the exclusive right to use a registered trademark without the authorization;

3-     Counterfeiting or fabricating without authorization a mark or a symbol that is part of a registered trademark of another person, or selling marks or symbols that have been made or fabricated without authorization;

4-     Changing a registered trademark without the authorization of the registered owner and putting into the market with the modified mark;

5-     Use of identical or similar of a registered trademark in or on connection with identical or similar goods as products name of trade dress to mislead others;

6-     Causing harm in other respects to the registered trademark holder’s right to exclusive use

7-     Providing transport, storage, mailing, hiding or other conveniences in order to facilitate others in the infringement of the exclusive rights of a registered trademark holder
 
3. Pre-trial preliminary Injunction
 

When the trademark owner or any relative party files a trademark infringement litigation in the relevant  Court, if the trademark owner or an party finds that due to emergency circumstances any delay to stop the infringing act may cause irreparable damages to his legitimate rights, he may, before instituting legal proceedings, request the court to freeze the assets of the infringer or stop infringing.  It is called “pre-trial” injunction and preservation of evidence.  

In order to get a preliminary injunction, the applicant should provide sufficient evidence that is likely to cause irreparable harm, such as harm of reputation, erosion of market share, etc. The applicant also must provide a deposit for guaranty or assets at a value sufficient to cover the possible damage suffered by the defendant. If the preliminary injunction will not harm the public interest, the  Court will grant the preliminary injunction. When the respondent is facing greater damages than that originally contemplated by court in granting the preliminary injunction, the court can increase the deposit amount. If the applicant fail to file a litigation or lose the case and such injunction injure the  defendant, applicant should use the deposit or assets to compensate also the injury that the respondent suffered including direct damages and indirect damages, such as lost sale revenues, warehouse charges incurred, consequential damages for breaching contracts, etc. If the applicant fails to post sufficient amount of deposit as ordered by the court, the application for injunction should be rejected. Any party not satisfied with any order in relation to the grant or denial of an injunction may move for reconsideration within ten days of the order.  

According to Interpretation by the Supreme People's Court of the Issues Relating to Application of Law to Pre-trial Suspension of Acts of Infringement of Exclusive Right to Use Trademarks and to Evidence Preservation, the  Court accepting an application for pre-litigation injunction should make a ruling in writing within 48 hours and that once an orders is entered, it must be executed without delay. The court must also promptly notify the party against whom the application is filed within 5 days after the order is entered.

Some issues should be paid attention here:

 1) there is no hearing during the injunction procedure;

2) This procedure is not limited to pre-trail injunction applications. It can also be used for injunctions applications filed after the litigation commences or during the litigation,  

3) once the injunction is issued, the applicant must commence the litigation within 15 days; or the injunction shall be dismissed.  
 

4. Pre-litigation Evidence preservation

If the plaintiff found that the evidence will possibly be destroyed or lost or difficult to be obtained again in the future, plaintiff can file an application with the Court for preservation of the evidence before instituting legal proceedings. The applications for evidence preservation shall submit in written form including the requirement information and the sufficient evidence.  

When an applicant's application for pre-trial evidence preservation is likely to involve property loss to the respondent, the Court may order the applicant to provide guaranty accordingly. Once the applicant does not provide the guaranty, the application shall be rejected. If a trademark registrant or any interested party does not institute legal proceedings within fifteen days after the People's Court adopts the measure to suspend the relevant act or to preserve evidence, the   Court shall cancel the measure adopted pursuant to the adjudication.
 
5. Pre-trail property preservation
 
Where a trademark owner or any relative party who has evidence to show that infringer is committing or will commit an infringement of the right to use its or his registered trademark, and that failure to promptly stop the infringement will cause irreparable damages to its or his legitimate rights and interests, he or she may, before instituting legal proceedings, apply to the people's court for measures to preserve the infringer’s assets. The applicant should provide sufficient evidence that the infringer will transfer the assets. The applicant must provide deposit for guaranty, if he or she fails to do so, the application shall be rejected. Property preservation shall be limited to the scope of the claims or to the property relevant to the case. After receiving an application, the people's court must make an order within 48 hours; if the court orders the adoption of property preservation measures, the execution will effect immediately. If the applicant fails to pursue an action within 15 days after the people's court has adopted the preservation measures, the people's court shall dismiss the property preservation. If an application for property preservation is wrongfully made, the applicant shall compensate the person against whom the application is made for any damages incurred from property preservation. If the party concerned is not satisfied with the order made on property preservation or execution, he or she may apply for reconsideration. Enforcement of the order shall not be suspended during the time of reconsideration.  
 
6. Evidences should be submitted 
 

During the litigation, the plaintiff should provide sufficient evidences, such as the legitimate rights evidences, the evidences for the infringement actions, the compensation evidences. Since there is no discovery procedure in the trail in China, so it is very important for plaintiff to collect enough evidences before processing the litigation.

1). The following evidences that can prove that authority of trademark right or the right of using trademark by license, should be submitted by the plaintiff, such as trademark registered certificate, licensing contract;

2). The plaintiff shall also submit the evidences of infringement to prove that the defendant has implemented the acts of infringing trademark right or is in process of implementing the infringing acts, such as the infringement goods, advertisement, testimony, punishment decision made by AIC or Custom, etc.

3) The plaintiff shall also submit the evidence for compensation, such as the profit that the infringer, the injury that the plaintiff has suffered from the infringement, the cost and attorney’s fee.

According to Article 56 of Trademark Law of the People's Republic of China, the amount of damages shall be the profit that the infringer has earned  during the period of the infringement or the injury that the plaintiff has suffered from the infringement during the period of the infringement, including the appropriate expenses of the plaintiff for stopping the infringement. Where it is difficult to determine the profit that the infringer has earned  or the injury that the plaintiff has suffered, the Court shall impose an amount of damages of no more than RMB 500, 000 Yuan (about $ 70.000) according to the circumstances of the infringement.  

When a  Court is determining the measure of damages, it should make an overall determination having considered factors such as the nature, the period and the consequences of the infringement, the reputation of the trademark, the amount of trademark licensing royalties, the types, periods and scope of trademark licenses for the mark, the reasonable expenses incurred in stopping the infringement, etc.

All the evidences should be original or notarized by the Notary and only copied documents might not be accepted by the people’s court. If the evidences are formed outside of Mainland, the evidence should be notarized and legalized up to the local Embassy or Consulate of the People’s Republic of China. If the material is foreign languages and it should be translated into Chinese by verified translation agencies.  
 
6.Statutory limitation of the trademark cases
 

If a trademark owner or any relative party brings a suit after more than 2 years of the infringing action, if the infringing act is still continuing at the time the suit is brought and the exclusive rights to use the registered trademark are still in the period of validity, then the Court should accept the litigation and make decision for the plaintiff. The measure of damages for the infringement should be calculated back 2 years from the date when the plaintiff brings the lawsuit.  

Anyone who sells the infringing goods with innocence and he or she can prove that the accused goods are delivered by legitimate channel and indicates the supplier, he or she will not be liable for damages, but should cease to sell the infringing products immediately.
 
7. The duration and execution of the trademark cases
 

Normally, the first-instance of trademark litigation will last around 6 months, but for some complex cases, it might be longer. If the interested parties do not make an appeal after a trial at the court of first instance, the verdict will come into force.

If any of the parties concerned are not satisfied with the judgment, they may appeal to the higher-level  Court, that is the court of second-instance and it normally lasts 3 months. The parties could not appeal after this trial. Only few of the cases, the Supreme Court can grant certiorari for re-trial. The frustrated party must execute the judgment with legal validity. If he or she refuses to do so, the prevailed parties may apply to the Court for compulsory enforcement.

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