Opinions on Several Issues Relating to the Administrative Enforcement of Trademarks

The State Administration for Industry and Commerce of the People's Republic of China
No. (Gongshangbiaozi) 331/1999
(29 December 1999)

The Administrations for Industry and Commerce of the Provinces, Autonomous Regions, Municipalities Directly under the Central Government and Cities Directly under the State Planning:

With a view to strengthening the administrative enforcement of trademarks, intensifying trademark administration, improving the quality of adjudication of cases involving trademarks and better implementing the Trademark Law, and the pertinent laws, decrees and regulations, the opinions on the several issues relating to the administrative enforcement of trademarks are hereby set forth as follows:

1.Cases of illegal trademark acts subject to the investigation and handling by the trademark administrative department of the administrative authority for industry and commerce include cases of:

(1)Infringing and passing off trademarks;

(2)Illegally using trademarks;

(3)Illegally printing, selling or buying representations of trademarks;

(4)Illegally licensing trademarks; and

(5)Other cases of contravention of the trademark laws, decrees and regulations.

2.The place of an infringement relating to a case of trademark infringement is the place involved when the infringing act takes place, including, among other things, places of production, transportation, sale and storage of infringing objects. Where more than two administrative authorities for industry and commerce have jurisdiction over a case of trademark infringement, the authority first receiving the case has the jurisdiction.

3.The following three acts of trademark infringement are acts of passing off registered trademarks under the Trademark Law and the Anti-Unfair Competition Law:

(1)To use a trademark that is identical with a registered trademark in respect of the same goods without the authorization of the proprietor of the registered trademark;

(2)To sell goods that he clearly knows bear a counterfeited registered trademark;

(3)To counterfeit, or to make, without authorization, representations of a registered trademark of another person or to sell such representations of a registered trademark as were counterfeited, or made without authorization; and

4.Three crimes of trademark are included in the Criminal Law of the People's Republic of China, which came into effect on 1 October 1997. According to the Provisions on the Determined Crimes in Implementation of the Criminal Law of the People's Republic of China issued by the Supreme People's Court, they are crimes of passing of a registered trademark, of selling goods under a counterfeited registered trademark and of illegally making and selling counterfeit representations of registered trademark.

Of all the crimes, the one of passing off a registered trademark is only one of the crimes in respect of trademark.

Where an act of trademark infringement investigated and handled by the administrative authority for industry and commerce is suspected of constituting a trademark crime, it should be referred to the authority for public security for filing and investigation. Before the authority for public security formulate the pertinent criteria for filing trademark crimes, the Provisions Relating to the Criteria for Filing Crimes of Passing off Registered Trademarks No. (Gaojianfayanzi) 12/1993 issued by the Supreme People's Prosecuratorate are implemented according to the circumstances.

5.Identical trademarks refer to two trademarks that are identical in word, device or the combination of the two or are lack of visual differences when compared with one another.

Similar trademarks refer to two trademarks that are similar in the shape, pronunciation, meaning of the word, or the pattern of the device and color or the whole structure of the word and the device, and liable to cause consumers to confuse the origin of goods or services.

6.Determination of identicalness or similarity of trademarks:

(1)On the basis of trademark of verified registration, but not on one actually used by the trademark registrant; and

(2)Taking the ordinary attention of ordinary consumers as the subjective criteria, and making comprehensive judgment by combining global comparison with that of the obvious parts of the trademarks.

7.Similar goods refer to goods associated or specifically related in function, use, consumers, and channel of marketing, etc.

Similar services refer to services associated or specifically related in purpose, manner, and consumers, etc.

Goods and services that, using identical or similar trademarks, are liable to cause consumers to confuse the origins thereof should be determined as similar goods and services.

8.Determination of similarity of goods or services:

(1)On the basis of the objective cognizance by the ordinary consumers of the goods or services; and

(2)The International Classification of Goods and Services for the Purpose of Registration of Marks and the Distinction of Similar Goods and Services may serve as the norm of reference for determination of similar goods or services, but not the only bases.

9.The following acts of use of words, and devices identical with or similar to registered trademarks are not acts of trademark infringement:

(1)Use of one's own name or address in good faith; and

(2)Indication, in good faith, of special characteristics or properties of goods or services, specially indication of the quality, use, geographic origin, classification, value and date of provision thereof.

10.Acts of trademark infringement defined in Rule 41 of the Implementing Regulations of the Trademark Law are acts as defined in Article 38(4) of the Trademark Law. Other acts impairing the exclusive right to use registered trademarks are also the acts of trademark infringement as defined in Article 38(4) of the Trademark Law.

11.In respect of acts of use of trademarks identical with or similar to trademarks relatively better known and more distinct on non-similar goods or services, acts of unfairly using or impairing the distinction or reputation of the trademark, Article 38(4) of the Trademark Law may apply to in handling individual cases. However, the Provisions on Supervision and Control of the Investigation and Handling by Administrative Authority for Industry and Commerce should be complied with.

12.Where a trademark registrant files an application for renewal and the application is examined and approved during the extension period of the registered trademark, the exclusive right to use the trademark continuously exists. Another person's use of a trademark identical with or similar to it during the period is an act of trademark infringement; where a trademark registrant does not file the renewal application, or the application is filed, but not approved, the exclusive right to use the trademark is not protected by law upon the expiration of the period of validity.

To request for protection of a trademark in the extension period, the complainant should furnish proof of renewal application, or the administrative authority for industry and commerce does not file it for handling; where it is filed, it should be suspended until everything is settled about the renewal.

13.Where the representations of a trademark printed on the request of an entruster infringe the exclusive right of another person to use the registered trademark, the entruster should also be liable for infringement.

14.Where a trademark licensee uses the licensor's registered trademark, such use is deemed the use by the registrant of the same registered trademark.

15.Where a processor makes and sells goods bearing the registered trademark of an entruster during the trademark-appointed processing, both parties should sign a trademark-licensing contract.

16.The trademark-licensing contracts should be submitted to the Trademark Office for recordal. Failing to do so, the interested party should bear corresponding administrative legal liability, but it does not affect the validity of the licensing contract. Where it is expressly agreed that the recordal is the condition for the contract to come into effect therein, the contract that is not submitted for recordal is not effective.

17.Assignment of a registered trademark does not affect the effect of a trademark-licensing contract coming into effect before the assignment, but except that it is agreed otherwise in the licensing contract.

18.The exclusive trademark license refers to the trademark license whereby the trademark registrant licenses the trademark for only one licensee to use in the scope of his exclusive right to use the trademark, and the licensor himself also abandons the exclusive right thereof. The licensee of an exclusive license may file complaint with the administrative authority for industry and commerce in his own name as the rightholder of the trademark in the term of validity of the licensing contract.

19.Where the trademark licensee contravenes the contractual agreement, and the act of exceeding the scope of licensed goods or service, the time limit of use and the quantities of goods is such as to constitute a trademark infringement, the administrative authority for industry and commerce may investigate and handle the matter on the request of the licensor.

Where the licensor and licensee are in dispute over the content of a trademark-licensing contract and it may affect the handling of the matter, the administrative authority for industry and commerce may suspend its handling of the case until the contractual dispute is resolved.

20.In respect of the illegal trademark act of selling what one clearly knows or should know the goods of a passing-off trademark or contravening the pertinent provision of Article 8 of the Trademark Law, the administrative authority for industry and commerce should stop it and require ratification in due course.

21.In investigating and handling a trademark infringement, the administrative authority for industry and commerce may order to seal up the infringement-related objects. The objects so sealed up may be kept by the infringing suspect himself, by the administrative authority for industry and commerce or by any other party entrusted. Where the objects are kept by the infringing suspect himself, a written pledge should be submitted.

22.Where the administrative authority for industry and commerce takes measures to first record, keep or seal up the proofs by request of complainant, it may request the latter to provide corresponding guaranty according to the pertinent laws and regulations as the practical circumstances so require.

23.According to the provisions of Rule 43 of the Interim Provisions for the Administration of Industry and Commerce, the administrative authority for industry and commerce in its investigation and gathering of evidence may impose a fine of not more than three times the illegal income, but not exceeding RMB 30,000 Yuan on those who refuse to carry out the order to stop selling, to wait for inspection of, but not to transfer, conceal and destroy the related objects as required by the circumstances; where no illegal income is made, a fine of not more than RMB 10,000 Yuan is imposed.

24.Where a case of trademark infringement is put on file, for investigation and handling, by the administrative authority for industry and commerce, with no administrative decision made yet thereto, and the complainant applies for withdrawal of his complaint, the administrative authority for industry and commerce does not decide on ordering the compensation, but may impose the administrative legal liability on the infringer according to the practical circumstances.

25.Where the administrative authority for industry and commerce imposes a fine on an act of trademark infringement, it should do so in accordance with the pertinent provisions of the Trademark Law and its Implementing Regulations. The fine imposed on an act of passing off a trademark should not be less than 30 % of the illegal business turnover or three times the profit made from the infringement; in respect of other trademark infringing acts that are of serious circumstances, the fine imposed should not be less than 20% of the illegal business turnover or two times the profit from the infringement.

26.For cases of trademark infringement actively investigated and handled by the administrative authority for industry and commerce according to its function and authority, the authority may decide to order compensation on the request of the trademark rightholder before the administrative decision is made.

27.According to the provision of Article 39 of the Trademark Law, when it requests the administrative authority for industry and commerce to impose compensation, the infringee may choose to calculate the amount of compensation on the basis of the profit made by the infringer from its infringement during the infringement or on the basis of the losses suffered by the infringee during the infringement.

The profit made by the infringer from the infringement during the infringement generally means the amount of sales turnover deducted by the costs and taxes. The sales turnover only relates to the infringer's actual income, namely the income made from the goods sold, excluding the goods in stock.

The losses incurred by the infringee during the infringement refer to the actual losses, including direct and indirect losses. The former is the reduced profit of infringee during the time of his being infringed or the product of multiplication of the infringer's sales turnover with the average profit the infringee would otherwise make from its sales of the normal goods, and the latter refers to the reasonable fees such as that the infringee pays to his attorney and for the investigation of infringing act committed by the infringer.