EOPINIONS UPON CERTAIN PROBLEMS CONCERNING ADMINISTRATIVE ENFORCEMENT OF TRADEMARK RIGHTS

AICTM (1999) NO. 331

The Administrations for Industry and Commerce (AIC) of Provinces, Autonomous Regions, Municipalities directly under the Central Government and Separately Arranged Municipalities:

In order to enhance the powerfulness of administrative enactment of trademark, to enforce the trademark management, to improve the quality of carrying out trademark related cases and to more effectively put into practice the Trademark Law and relevant laws, rules and regulations, we hereby forward our opinions in terms of administrative enactment of trademark:

1. Illegal trademark cases investigated and punished by the Trademark Regulating Department of the Administrations for Industry and Commerce mainly include:

1. Infringement and counterfeit of trademark;
2. Illicit use of trademark;
3. Illegal printing or selling and buying trademark reproductions;
4. Illegal use of licensed trademark;
5. Others.

1. The place of infringement in trademark infringement cases means the places, including the production place, transportation place, selling place, warehouse & etc.concerned. When more than two local AICs have the ruling rights over the same trademark infringement case, the one first accepting the case shall carry out such rights.

1. Using the registered trademark upon the same class of merchandise without the permission of the trademark owner;
2. Knowingly selling goods bearing fake registered trademark;
3. Counterfeiting and producing without authorization the reproductions of registered trademark, or selling these reproductions.

4. Criminal Law of the People’s Republic of China, entered into effect on October 1^st, 1997, comprises three categories of illegal conducts involved trademark crime. According to the Rules for Naming the Crimes Concerning the Enforcement of the Criminal Law of the People’s Republic of China promulgated by the Supreme People’s Court, the crimes of trademark illegal conduct are: those of infringing registered trademark, selling goods bearing fake registered trademark and producing and selling illegally the reproductions of registered trademark, among which that of infringing registered trademark is only one sort of the trademark crimes.

   According to the law, trademark infringing conducts discovered by the AICs, if the crimes are concerned, shall be transferred to the police department for further investigation. Before the standards for accepting the trademark crime cases being stipulated by the police department, the Rules of the Standards For Accepting the Trademark Rights Infiringement promulgated by the Supreme People’s Procuratorate No. 1993-12 shall be enforced.

5. Identical trademarks means that there is the same composition or no visual differences, between two trademarks in terms of words, design or the combinations.

   Similar trademarks mean that the similarities between two marks in terms of the shape of the wording, pronunciations, meanings, the design and color of the drawing or the whole structures of the words and design which is likely to lead consumers to confuse the origins of goods or services.

6. To judge whether two trademarks are identical or similar, one shall:

1. to make the approved trademark the yardstick, not the trademark being being de facto used by the register;
2. to make the general attention of common consumers the subjective norm of the judgement, and carry out comprehensive judgement by combining the comparisons in the wholeness and in the main-parts of the trademarks.

4. Similar merchandises are those related in respect of function, usage, target consumer, selling 

   channel and so forth, or those with special connection.

   Similar services are those related in purposes, method, target and so forth, or those with special connection.

   Goods and services using identical or similar trademarks and being prone to mislead consumers in respect of the origin of the goods and services are deemed as similar goods and similar services.

5. To judge whether two goods or services are similar, one could:

1. carry out comprehensive judgement by using common consumers’ objective knowledge toward the goods and services;
2. refer to the International Classifications of Goods and Services for Trademark Registration and the Category List of Similar Goods and Services. But the two lists are not the sole parameter.

4. The following conducts of using identical or similar words, drawing of a registered trademark shall not be categorized into the trademark infringements:

1. to use bona fide his/her own name or address;
2. to explain bona fide the characters or nature of goods or services, particularly in respect of quality, usage, geographic origin, types, value and supplying date.

4. Trademark infringement stipulated in Article 41 of the Detailed Implementing Rules Under the Trademark Law of the PRC is the conducts stipulated in Item 4 Article 38 of the Trademark Law. Other conducts infringing the trademark exclusive rights belong to those stipulated in Item 4 Article 38 of the Trademark Law, too.
5. Using trademarks, which are identical or similar with famous and highly distinctive trademarks, upon non-similar goods or services, therefore unfairly profiting from or infringing the distinctiveness or reputation of the famous trademarks, shall be punished in accordance with the rules stipulated in Item 4 Article 38 of the Trademark Law. But the penalties shall be enforced in compliance with the Supervision Rules for Raiding and Punishing Trademark Infringement Cases by the Administrations for Industry and Commerce.
6. During the extension time for renewing the registered trademarks, the exclusive trademark rights shall continuously exist when the registrant’s renewal application is filed and approved. Any people use identical or similar trademarks during the above period shall be infringement. When the registrant does not file the renewal application of the renewal application is refused, his trademark rights shall not be protected by the law after the expiration date.

   To ask for protection for trademark in extension time, the complaint shall provide a copy of the renewal application. Otherwise, the AIC offices shall not accept the complaint. It shall be ceased if having been accepted by the AIC, and pending for the confirmation of the renewal status.

7. The party giving the mandate for printing the reproductions of trademarks, which infringe the exclusive rights of other trademarks, shall take the infringement responsibilities.
8. Licensees using the licensor’s trademarks shall be deemed as the use of trademark by the registrant.
9. In processing of brand named goods, the processing party producing and selling goods with the consignor’s registered trademarks shall sign the trademark license agreement.
10. Trademark License Agreement shall be recorded with the Trademark Office. If not the parties involved shall take proportional administrative legal responsibilities, but the validity of the agreement shall remain unaffected. The unrecorded license agreement shall be invalid if it is explicitly stipulated that recordal is the precondition upon which the agreement is taken into effect.
11. The validity of the trademark license agreement, which has previously been carried out, shall not be affected by the assignment of the registered trademark, except that there are other rules in the agreement.
12. The exclusive license of use of trademark means that, the registrant licenses the use of the trademark only to one licensee and renounces his own use rights over the trademark. The exclusive licensee are able to file the complaint with the AIC within the validity period of the license agreement as the trademark registrant.
13. The AICs are able to raid the licensees, with the approval of the licensor, who breaching the license agreement, using trademark for the goods or services exceeding the licensed scopes or/and exceeding the license period or/and the quantity of the goods, which has constituted the trademark infringement.

    If the disputes exist in regard of the license agreement which are likely to influence the settlement of the case, the AIC can suspend the case and resume it after the disputes are resolved between the licensor and the licensee.

14. For trademark infringing conducts like knowingly or should-have-knownly selling goods with passing-off trademarks or violating the regulations stipulated in Article 8 of Trademark Law, the AIC shall stope and check and rectify them within certain time limit.
15. The AIC could seal up the goods related to the infringement when raiding the trademark infringement case. The sealed goods can be kept either by the suspect infringer or by the AIC or other people entrusted. In case that the goods is kept by the suspect, a letter of guarantee (declaration) shall be written. 
16. The AIC upon the request of the complaint recording, keeping or sealing the evidences in advance can ask for the guarantee from the complaint in accordance with the laws and rules according to the actual circumstances.
17. According to Article 43 of the Temporary Rules for the Administrations of Industry and Commerce, during the investigation by the AIC, the parties refusing to stop the sales, to wait for check, not to transfer, hide or/and destroy the properties or/and etc. shall be punished according to the circumstances a fine no more than three times of the illegal revenue but the maximum is not more than 30,000 yuan (about US$3,615 LIULCH). Those without any illegal income can be fined less than 10,000 yuan (about US$1,205 LIULCH).
18. For trademark infringement cases being accepted but not settled by the AIC, if the complaint revokes it, the AIC shall not issue the order for making damages to the infringer but can lawful ask the infringer to take administrative legal responsibilities according to the actual circumstances.
19. The AIC shall make fines for conducts of trademark infringement according to Trademark Law and the Detailed Implementing Regulations Under the Trademark Law. For counterfeiting the registered trademark, the fine shall be no less than 30% of the illegal revenue or three times of the illegal profit; for other serious trademark infringement, the fine shall be no less than 20% of the illegal revenue or twice of the illegal profit.
20. The AICs when taking the initiative action against the trademark infringement cases, before making the decision, can enjoin the infringer to compensate for the infringement upon the request of the trademark registrant.
21. According to Article 39 of the Trademark Law, when the infringed asked for the compensations complaining with the AICs, he may calculate the damages based on the profits that the infringer has earned in the period of infringement or the losses he has suffered because of the infringement.

The losses that the infringed suffered from the infringement refer to the actual losses including direct and indirect ones. The direct losses are the profits lost in such period or the infringer’s sales multiply the normal sales profit percentage by the infringed. The indirect losses are the reasonable fees and costs including the attorney fees, investigation fees & etc. taken by the infringed for investigating the infringement.

STATE ADMINISTRATION FOR INDUSTRYA ND COMMERCE OF CHINA
DECEMBER 29, 1999