The Judicial protection of trademarks in China

I would like to describe briefly the outline of the judicial protection of trademarks in China.

I shall mention 3 points. Firstly, China have sound legal foundations for the protection of trademarks.

China has placed a great deal of importance on IPR legislation since the implementation of reform and opening-up with a view to protecting fair market competition, safeguarding market economic freedom and order, and promoting economic and cultural development. The General Principles of Civil Law of the People's Republic of China provides for comprehensive protection for exclusive rights to the use of trademarks. Since 1982, China has successively promulgated and implemented as Trademark Law and amended in 1993. Although it started IPR Legislation at a relatively late date, China has learned from and drawn upon the international successful experiences on IPR protection in the course of its IPR legislation according to China's own conditions and the international development trend, and thus formed the Chinese-style legal system for IPR (including trademarks) protection. Some foreign IP experts said, the fast speed of IPR legislation of China, rarely seen in the annals of the history of intellectual property. This system has won praise in the world community of intellectual property.

While setting up and improving the legal system for trademarks protection within the country, China has successively joined the World Intellectual Property Organization, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement for the International Registration of Trademarks, and concluded the reciprocal protection of IPR with the United States and other countries. China has been very active in implementing its international obligations on trademarks protection, and steadily strengthened exchange and cooperation with the rest of the world in this regard. So we could say that the scope and level of trademarks protection in China have had a high starting point and are gradually becoming compatible with the international standards.

For the purpose of better implementation of trademarks laws and further improving trademarks litigation system, the Supreme Court has formulated and implemented nearly 20 judicial interpretations and judicial explanatory documents since 1980s, based on the need arising from the judiciary work. They include the Reply on the Issues of Damage Calculation and Infringement Period Determination in Trademark Infringement Cases (November 1985). These judicial interpretations and relevant documents have played a positive role in guiding the China courts of different levels throughout the country in their trial of trademark cases.

Secondly, China has two systems of channels to protect trademarks. One is the administrative; the other is judicial. At first, I talk about administrative channel. The State Administration for Industry and Commerce Trademark Office is in charge of the job. The function of SAICTO usually divide into two parts. One "gives the right" to applicants for trademark registration. The Trade Mark Law of the PRC is "first-to-file" systems of registration. Thus the first applicant to file a trademark application in China is entitled to registration and exclusive use of the mark in China, provided all other substantive and procedural formalities are met. Prior use of the trademark is not relevant unless two or more applicants have filed applications simultaneously for identical or similar marks.

Let's come to the second part of the function of SAICTO. On the Trademark Law of China, trademark owners may request settlement of infringement by the state or local administrations for industry and commerce. The administrations are empowered to issue cease-and-desist-order-like protection and to order the payment of compensation. However if the person who was administrativly punished and if they thought that it was unfair, they could sue the court and the court would hear the case in public. The judges could affirm or reverse the orders, depend on the situation of the cases.

A total of 148,755 trademarks were registered in 1997, with 118,577 domestic ones, 21,676 foreign country-by-country registration ones, and 8,502 as territory extensions of the Madrid international registration of trademarks. Trademark registrations were reduced from the previous 18-20 months no more than 12 months, which was more efficient than other registration period in some developed countries. In 1997 32,027 cases of trademark violations were investigated and prosecuted by the administrative and management organs for industry and commerce nationwide. For example, a China company and a Hong Kong company set a agreement of producing " YALE" averaging 1.5 million copper locks in which 96,000 locks have produced and sold. Their profits 896,310 yuan RMB. "YALE" trademark was filed by US YALE company in China and it never licensed to the China company and the Hong Kong company. Therefore YALE company requested the administrative to settle. The Administrative and management organ for industry and commerce of SHENZHEN city disposed that: "1, destroy 96,698 infringing packages; 2, remove the illegal trademarks on 72,000 copper locks; 3, destroy 46,200 YALE keys; 4, confiscate five YALE trademark models; 5, fine 40,000 RMB yuan($ 4,705.9); 6, request the company to compensate YALE company of US 50,000 RMB yuan($ 5,882.4).

Another important administrative organization is Chinese Customs. After the State Council issued the order of protection of IP in May 1994, the Chinese customs have the power to protect intellectual property rights including trademarks, patents and copyrights under the IPR Law in China. Recently they strict enforcement of laws and regulations and check the imports and exports of IPR - violated goods effectively. Depend on the law, when the owners require the custom to protect the IPR of their imports and exports goods the custom should input all the file record materials into the web of the custom computer system. The information can reach every custom nationwide in China and the customs enforce the protection of China. Statistics show that in 1997, Chinese customs filed the IPR record 492 cases and investigated and uncovered 175 cases, including 84 trademarks cases, violating more than 7,350,000 RMB yuan( 86,470 US dollars).

Second, it is the judicial channel for protection of trademarks. As IPR cases including trademarks are specialized and technical, in 1996 the Supreme Court of China set up the IPR chamber to strengthen guidance to and supervision on trial of IPR cases in the whole country. The higher courts in Beijing, Shanghai, Tianjin, Guangdong, Fujian, Jiangsu , Hainan, Sichuan and Chongqin, and the intermediate courts in the capital cities of these provinces, municipalities directly under the Central Government and the special economic zones have successively established IPR trial divisions as their actual needs demand. In the IPR Trial Chamber of the Supreme Court there are 5 Justices and assistant judges now.

Over the seven years from 1991 to the end of 1997, China courts across the country accepted 23,048 civil cases concerning IPR disputes, and closed 22,314 cases. In a breakdown, 5,312 cases concerned patent, 4,852 of them were tried and closed; 3,447 copyright cases, 3,330 tried and closed; 1,565 trademark cases, 1,420 tried and closed; 8,969 technology contract cases, 9,022 tried and closed; 3,755 miscellaneous cases including trade secret violation, 3,690 tried and closed. The legitimate rights and interests of IPR holders have been protected according to law. For example, In the case of Unilever (Britain) v. a branch store of Shanghai No. 3 Department Store concerning the exclusive right to the use of trademark dispute, Shanghai Yangpu District Court promptly took preservative measures, amassed a large quantity of evidence through investigation, found out the infringement acts of 12 defendants in 4 provinces or municipalities who violated the exclusive right to the use of the trademark (LUX) owned and registered by the plaintiff in China, ascertained the liabilities on the part of the individual defendants for the infringement, and made impartial verdict according to law.

The exclusive rights to the use of trademarks are important civil rights. In civil infringement cases, a China court is empowered to order the infringer to bear civil liability and to impose necessary civil penalty on it. If the infringement of other's rights is so serious and constitutes a crime, a China court shall investigate and affix the infringer's criminal liability according to law. For a criminal act of trademark infringement, a China procuratorate may place it on file for investigation and bring a public prosecution to a court. Similarly the infringed party may bring a private prosecution to a court if he has evidence sufficient to prove the crime of the defendant. Basically the owners may sue the infringers to a court directly and they also may report the infringement of trademarks to the police station. After the police fully collect the evidence of the infringement they transfer the cases to a China procuratorate. The procurators could bring a public prosecution to a court. With a view to effectively cracking down on the criminal activities of IPR infringement, where a case is not accepted or looked into for the criminal liabilities of the defendant by public security organ and China procuratorate, if the infringed party has evidence sufficient to prove that the act of trademarks infringement of the defendant is so serious as to constitute a crime and warrant prosecution for criminal liabilities, the infringed party still may bring a private prosecution to a China court.

From 1991 to 1997, China courts accepted 2,069 criminal cases for counterfeiting registered trademarks, of which 2,057 were tried and 1,687 people were sentenced to criminal imprisonment. For example, Jiang Zhijiang and Yang Xuechun in Zhejing province illegally used the trademark "SANTANA" registered in China by Volkswagen Company of Germany. Shanghai Fengxian County Court sentenced them on the charge of counterfeiting trademark to fixed term imprisonment for six and a half years, and three and a half years respectively, and imposed on them fines of 30,000 RMB yuan and 15,000 RMB yuan respectively. Tang Chuanbin in Sichuan province and Fang Xingshun in Beijing colluded with each other and passed off ordinary liquor as Wuliangye Liquor which was a registered trademark. Beijing Fangshan County Court sentenced the defendants each to 5 year imprisonment and a fine of 5,000 RMB yuan on the charge of counterfeiting trademark.

Thirdly, it is also the last one. I would talk more about judicial channel of the principles, systems and practices followed by China court for trial of IPR cases.

When a China court tries a case arising from trademark dispute involving foreign nationals, it acts in accordance with Chinese laws and relevant international conventions, international treaties (with the exception of the articles that China has reservations on), and bilateral agreements, to which China is a party, and with reference drawn to the international practices. It also strikes to the principle of national treatment and reciprocity on the applicable laws.

In the course of trying a case, if the behavior of one party in the case or other reasons may cause difficulty or inability for the implementation of an award, the court shall make a ruling according to law for property preservative measures depending on the application of the other party; in case of no application from the party concerned, a court may make a ruling for preservative measures according to law when necessary. When taking preservative measures, a court may order the applicant to provide deposit. According to provisions of law, property preservative measures include seal, detention, freeze and other measures stipulated in law. Preservative measures have been proven very effective for trials of trademark cases by China courts.

In case of need arising from emergency situation for prior implementation, a court may make a ruling for prior implementation according to law and order the relevant party to stop infringement act after receiving the application from the other party.

As regards infringement damages, the judicial interpretation of the Supreme Court provides for three methods to calculate damages (plaintiff's loss, defendant's profit and fee of licensing contract as a reference), which are commonly used by courts in most other counties. Where infringement is ascertained, China courts shall apply the principle of sufficient compensation and punitive fine, that is to say, right holders are compensated for whatever amount they lose due to the infringement. For those infringers who knowingly conduct infringing activities with serious consequences, China courts shall confiscate their illegal income according to law and impose civil penalty on them such as fines and criminal detention, in addition to ordering them to take civil liabilities according to law such as stopping infringement, eliminating impact, making apology and compensation.

It ought to say, China has set up a better legal system of protection IPR than before. China is trying to improve the level of the protection. The internationalization of IP infringement should be paid attention to. The situation ask us to exchange more information and more understand each other and stand in the same place to cope with the infringements of IP even criminals. It is also my goal to come to US.

It has been a pleasure having the opportunity to speak today. My talk is not all-inclusive and may raise many additional questions that I would be pleased to discuss again in future. Thank you for your time and attention.