China: Supreme People’s Court’s Interpretation on Application of Law on Trade Mark Disputes

Following the implementation of the Trade Mark Law and its Implementing Regulations on 1^st December 2001 and 15^th September 2002 respectively, the Supreme People’s Court of China has issued the Interpretation on Several Issues Relating to the Application of Law in Adjudicating Civil Trademark Dispute Cases which came into force on 16^th October 2002.

According to the Interpretation, although non-recordal of a trade mark license agreement as is required under the PRC Trade Mark Law does not make the license void, the license is not enforceable against a "bona fide third party". The Interpretation however does not explain what it means.

Under the Interpretation, an exclusive licensee duly registered may in his own rights without consulting the registered proprietor commence trade mark infringement proceedings against an infringer. Where the proprietor does not, under the terms of the license, retain the right to use the mark within the licensed territory, the registered licensee may commence action in his sole name but where the proprietor does retain such rights, unless the proprietor will not sue, the registered licensee must join the proprietor as co-plaintiff. In an non-exclusive license situation, the licensee may only sue when express approval has been obtained from the registered proprietor.

Legal proceedings for trade mark infringement may be commenced at the place where infringement takes place, or where the infringing goods are stored or sealed off or detained by the enforcement agency, or the place of residence of the infringer. The trade mark proprietor has the liberty to choose any one of these places to commence action.

The limitation period for instituting legal proceedings for trade mark infringement is two years calculated from the date the registered proprietor knew or ought to have known of the infringement. As infringing acts are continuous acts, even if the initial infringement took place more than two years ago, the court can nevertheless order cessation of these acts if they are still continuing, but damages will only be assessed for the two years period counting back from the date of commencement of the proceedings.

Article 52 of the Trade Mark Law defines what acts constitute trade mark infringement. Sub-article 5 is a catch-all provision because "other circumstances which damage the exclusive rights of the registered proprietor" also amount to infringement. The Interpretation explains Sub-article 5 as referring to the following situations:-

1. using an enterprise name which incorporates another’s registered trade mark for the same or similar goods/services, thus causing confusion amongst the relevant consumers;
2. using a mark which is copied, imitated or translated from a famous trade mark on dissimilar goods/services, thus misleading the public and causing damage to the owner of the famous mark;
3. using a name which is the same as or similar to another’s registered trade mark as a domain name for carrying on his electronic commerce business, thus causing confusion amongst the relevant consumers.

The Interpretation also confirms that the damages awarded to a successful plaintiff include the reasonable fees incurred in investigations and collection of evidence, as well as the prescribed attorneys’ fees, although such fees are generally low.

In deciding whether or not goods are similar, the Court will consider their function, use, sales channel, consumer target, manufacturing unit. As regards services, the Court will consider the purpose, content, manner of provision and target of the services.