Impact on Trademark Infringement Determination from the Items 1 and 2 of Article 57 of the Amended Trademark Law
According to items 1 and 2 of Article 57 of the amended Trademark Law which was passed in 2013 and took effect from May 1, 2014, any of the following acts shall be an infringement of the exclusive right to use a registered trademark:
(1) to use a trademark that is identical with a registered trademark in respect of the identical goods without the authorization from the trademark registrant;
(2) to use a trademark that is similar to a registered trademark in respect of the identical goods or use a trademark that is identical with or similar to a
registered trademark in respect of the similar goods, which is likely to cause confusion, without the authorization from the trademark registrant.
While Article 52 of the Trademark Law 2001 stipulated as follows:
Article 52 Any of the following acts shall be an infringement of the exclusive right to use a registered trademark:
(1) to use a trademark that is identical with or similar to a registered trademark in respect of the identical or similar goods without the authorization from the trademark registrant.
The act prescribed in the above article is the most basic form of trademark infringing act in practice. Comparing the above two articles of the law 2013 and the law 2001, the new law defined the infringing act of the old law clearer and stipulated it as two items. Such amendment has significant impact on trademark infringement determination, mainly in the following three aspects:
I. On determination of trademark infringement
According to the Trademark Law 2001, the use of a trademark that is identical with or similar to a registered trademark in respect of the identical or similar goods without the authorization from the trademark registrant constitutes infringement against the exclusive right of the registered trademark. That is to say, the old law in its provision did not make difference from identical or similar trademark, and identical or similar goods in respect of such trademark infringing act. From the provision of the old law, it seemed trademark infringement is constituted as long as the trademark and the goods meet any of the conditions as identical or similar trademark on identical or similar goods.
However, the new law stipulated the infringing act differently according to different situations as identical trademark on identical goods (hereafter referred to as “double identical situation”), similar trademark on identical goods, and identical or similar trademark on similar goods (hereafter referred to as “similar situation”). Under the “double identical situation”, the new law directly stipulated it as infringement. But under the “similar situation”, the new law introduced the condition of “likely to cause confusion and misunderstanding”. This was for the first time the Trademark Law expressly stipulated “likely to cause confusion and misunderstanding” as one of the conditions of trademark infringement under “similar situation”.
According to the provision of the new law, the Trademark Law no longer requires the possibility of confusion under the “double identical situation”, which is basically in line with the presumption of confusion under the “double identical situation” stipulated in TRIPS agreement, and the absolute protection according to the European and US trademark law and practice under the “double identical situation”. The new Trademark Law strengthened protection to registered trademarks.
Although there is no explicit provision of “confusion and misunderstanding” under the “similar situation” according to the above stipulation of Trademark Law 2001, the Trademark Office and courts usually took “confusion and misunderstanding” into consideration when determining trademark infringement under the “similar situation” from the trademark practice in the past years. Usually, trademark infringement is to be determined only when the similarity of trademark reaches a certain level that is likely to cause confusion and misunderstanding on the source of the goods among the public. The primary function of a trademark is to distinguish and indicate the source of the goods. The use of a trademark should not cause confusion and misunderstanding on the source of the goods among the consumers. Under “similar situation”, it is worthy of discussion whether confusion and misunderstanding is likely to be caused based on the difference of the trademark per se, specialty of the goods, and the difference on the consumers and sales channels, etc. So to speak, the introduction of “confusion and misunderstanding” in the new Trademark Law provides more discretion for the judicial organs, and meanwhile provides more space for the involved party to adduce proof.
The new Trademark Law makes clear the determination of trademark infringement under the “double identical situation” and the “similar situation”. Under the “double identical situation”, it provides stronger protection to the trademark. And the introduction of “confusion and misunderstanding” as one of the element when determining trademark infringement under the “similar situation” makes it more aligned with the fundamental function of trademark and the requirement of business activities, which is more reasonable in practice.
II. On determination of trademark infringement which constitutes “crime of counterfeiting the registered trademark”
Article 213 of the Criminal Law of China stipulates:
Whoever, without permission from the owner of a registered trademark, uses a trademark which is identical with the registered trademark on the same kind of commodities shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; if the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.
According to the provision of the above Criminal Law, one of the conditions of “crime of counterfeiting the registered trademark” is “uses a trademark which is identical with the registered trademark on the same kind of commodities”, that is, only counterfeiting the registered trademark under the “double identical situation” is possible to constitute a crime regulated by the Criminal Law. According to the principle of legality of the Criminal Law, it can be presumed that counterfeiting the registered trademark under the “similar situation” is only possible to constitute violation, instead of a crime.
Article 61 of the new Trademark Law stipulated that “
the administrative authority for industry and commerce has the power to investigate and handle any act of infringement of the exclusive right to use a registered trademark according to law; where the case is so serious as to constitute a crime, it shall be transferred to the judicial authority for handling.” The amendment of trademark infringement determination of the new Trademark Law is helpful to the administrations of industry and commerce to more accurately decide in their investigation of illegal trademark activities whether a violation is likely to constitute a crime and whether the case is needed to be transferred to judicial organs.
III. On determination of whether the use of a trademark in OEM production constitutes trademark infringement
OEM refers to Original Equipment Manufacturer (herewith we only discuss the form of OEM that all the products are exported outside China). Whether the use of an identical or similar trademark on identical or similar goods in OEM production constitutes trademark infringement? Both the Trademark Law 2001 and the Trademark Law 2013 provide no expression provision.
The Trademark Law 2001 did not expressly stipulate “confusion and misunderstanding” in article of trademark infringement. From the literal stipulation, it seems that the use of an identical or similar trademark on identical or similar goods in OEM production indeed constitutes trademark infringement. However, from the fundamental function and the
territoriality of the trademark, the OEM products do no enter into the circulation of Chinese market and the consumers in China have no access to such products which are all exported outside China. From this perspective, the use of the mark in OEM production does not belong to the use of a trademark in Trademark Law sense.
From practice, the issue of whether the use of a mark in OEM production constitutes trademark infringement has been disputable either from the legal experts’ opinions or from the judicial proceedings by courts and the administrative investigations by the Customs in recent years.
The chief judge Mr. Kong Xiangjun of the Supreme Court recently published an article
Several Issues concerning the Application of the Amended Trademark Law which expressed his main opinion on this issue:
The precondition of application of “double identical situation” is still the use constitutes trademark use. The non-trademark use does not fall into the scope of protection. “The use of a trademark which is identical with a registered trademark on identical goods” (item 1 of Article 57 of the Amended Trademark Law) in the first place constitutes trademark use from trademark law sense. If the accused infringing act is not trademark use, certainly it would not constitute trademark infringement. For example, the legitimate use prescribed in Article 59 is not trademark use. And the other non-identification use (not for indicating the source of the goods) is not trademark use, including “the use of a mark” in OEM production in which all the goods are exported outside China, and the mark is not entered into circulation in Chinese market. The mark does not function as to identify the source of the goods, therefore it s not trademark use. There is no condition to apply the item 1 of Article 57 of the Amended Trademark Law when the use of a mark is not to identify the source of the goods, which should not fall into the scope of protection of the trademark law and should not apply the absolute protection principle. In another word, it should be determined in the first place whether the use is trademark use. When the situation of non-trademark use is excluded, then it comes to determine whether the trademark used is identical or similar to a registered trademark.
As for trademark infringement involved in OEM production, the main reason to support the claim of infringement is that if such use is not to be determined as infringement, China would become the international “counterfeit center”, that is, the mark used on the OEM products would infringe the trademark right in the importing country. No doubt, this is to determine whether the use of mark in OEM production in China constitutes infringement based on the trademark law and trademark right in the importing country. But according to the territoriality of trademark right, the trademark law and trademark right in foreign country should not be a basis to determine whether the use of a mark in OEM production in China constitutes infringement. Whether the use of a mark on the OEM products manufactured in China constitutes infringement is raised only when the products enter into the market of the importing country. At this time, it is under the jurisdiction of the foreign judicial organs to deal with the issue and whether China is the source of the products is not involved in that case.
From the above article of Mr. Kong, we may see that Mr. Kong personally considered the use of a mark in OEM production does not belong to trademark use. Even under the “double identical situation”, it does not constitute infringement. Though the Trademark Law has no express provision on whether the use of a mark on OEM products belongs to trademark use and whether it constitutes trademark infringement, the amended Trademark Law introduced “confusion” element under the “similar situation”. Since all the OEM products are exported outside China, confusion and misunderstanding would not be caused. We think the provision of the new Trademark Law is helpful to provide a more assured way to deal with whether such use constitutes infringement from the level of law.
The new Trademark Law took effect from May 1, 2014. Until now, we have not seen a judgment or decision made by courts or administrative organs whether the use of a mark on OEM products under the “double identical situation” constitutes infringement. But from the important amendment of the new Trademark Law as above mentioned, we may expect more reasonable trademark judicial and administrative practice which comply with the fundamental function of the trademark and the spirit of the Trademark Law.
References:
1. Trademark Law 2001
2. Trademark Law 2013
3. Criminal Law
4.
Several Issues concerning the Application of the Amended Trademark Law, Kong Xiangjun
