Liability determination of trademark infringement before invalidation of trademark declared

Yan Yonglian and Liu Weiwen,[Trademark]

 

According to the provisions of the Trademark Law on the legal consequences of trademark invalidation and the imputation principle for trademark infringement, the use of the allegedly infringing trademark before invalidation shall be deemed to constitute infringement of the right trademark, but whether to bear the infringement liability such as compensation for damages, the judgment standard should be based on whether the user of the infringing trademark has a subjective fault.

[Abbreviature of Adjudication]

When the allegedly infringing trademark was invalidated because it constituted a similar trademark on the same goods as the right trademark in question and the right trademark registrant claims that the use of the allegedly infringing trademark before the invalidation constitutes infringement and requests the user to bear the infringement liability, according to the provisions of the Trademark Law on the legal consequences of trademark invalidation and the imputation principle for trademark infringement, the use of the allegedly infringing trademark before invalidation shall be deemed to constitute infringement of the right trademark, but whether to bear the infringement liability such as compensation for damages, the judgment standard should be based on whether the user of the infringing trademark has a subjective fault.

[Case Introduction]

Case No. of First Instance: Civil Judgment No. 2009 [2018], First, Civil Division, 0101, Beijing, of Beijing Dongcheng District People's Court

Case No. of Second Instance: Civil Judgment No. 951[2019], Final, Civil Division, 73, Beijing, of Beijing Intellectual Property Court

Appellant (Defendant in first trial): Nanchangxin (Beijing) Food Machinery Technology Development Co., Ltd. (hereinafter: Nanchangxin Company)

Appellee (Plaintiff in first trial): Beijing Nanchang Meat Machinery Co., Ltd. (hereinafter: Nanchang Company)

Nanchang Co., Ltd. registered the Class 7 trademark No. 3298172 "Nanchang and figure" (hereinafter referred to as the right trademark) on May 28, 2004 for Meat choppers [machines] and Food slicer [machines] with the approval of the Trademark Office. Nanchang Co., Ltd. also registered trademarks in Class 8 for Knives , Cutters and Scrapers, and in Class 7 for Food processors and Meat cutters, respectively, on October 30, 1980, with the same appearance as the right trademark. The plaintiff, Nanchang Company, was authorized by Nanchang Co., Ltd. to use the above-mentioned trademarks exclusively in China and was entitled to defend its rights. On December 28, 2006, the legal representative of the defendant Nanchangxin Company, Qiao Fengcai, was approved to register the trademark No. 4215222 "Nanchangxin and figure" in Class 7 for Fleshing machines and Meat choppers [machines], etc. On June 20, 2014, the trademark was found to be similar to the three cited trademarks (including the right trademark) on the same or similar goods, and was cancelled in accordance with the law [1].

In 2017, Nanchang Company purchased a lamb slicer produced by Nanchangxin Company, which was marked with the trademark No. 4215222 "Nanchangxin and figure" and the production date of July 2013. Nanchang Company believed that the above-mentioned lamb slicer infringed its exclusive right to use the registered trademark and requested Nanchangxin Company to bear the civil liability for stopping the infringement and compensating for economic losses. Nanchangxin Company argued that the production of the lamb slicers in question was the use of legally registered trademarks before its trademark No. 4215222 was cancelled, which did not constitute trademark infringement.

Beijing Dongcheng District People's Court found that the Nanchangxin Company infringed the exclusive right of Nanchang Company's trademark and should bear the civil liability of stopping the infringement and compensating for economic losses.

After the judgment of the first instance, Nanchangxin Company filed an appeal. Beijing Intellectual Property Law rejected the appeal in the second instance and upheld the original judgment.

[Case Analysis]

In this case, according to the evidence and statements of the parties, it is easy to find that the trademarks used in the products produced and sold by Nanchangxin Company and the right trademark are similar. The special feature of this case is that the trademark was still legally in existence when the accused trademark was used by Nanchangxin Company, but was later cancelled (invalid). The issue to be resolved in this case is whether the use of the invalid trademark before the invalidation constitutes trademark infringement and shall bear the infringement liability. In this case, the use behavior of Nanchangxin Company exceeded the time when the allegedly infringing trademark was cancelled, and for the convenience of research, the use behavior in the following context refers specifically to the trademark before the cancel ruling came into effect.

The author believes that this issue can be examined from two aspects: the legal effect of trademark invalidation and the imputation principle for trademark infringement.

(1) Legal effect of the registered trademark invalidation

When the Trademark Law was amended in 2013, the scope of causes of trademark cancellation and invalidation was adjusted, and some of the causes of trademark cancellation were incorporated into the scope of causes of trademark invalidation, and the situation of the allegedly infringing trademark being cancelled was included in this category. The legal consequences have been stipulated in Article 36 of the Regulation for the Implementation of the Trademark Law, which came into force in 2002. Article 47 of the Trademark Law, which was amended in 2013, also stipulated the relevant content, which is basically consistent with Article 36 of the Implementing Regulations of the Trademark Law.

Based on the analysis of the above-mentioned legal provisions, where a registered trademark is invalidated by the Trademark Office, the exclusive right to use the said trademark shall be deemed as not existing from the very beginning of authorization, rather than after the invalidation. That is to say the invalidation of the registered trademark has retroactive effect. However, in order to avoid significant changes in the socio-economic order once the registered trademark is declared invalid, the second paragraph of the above-mentioned article provides for several exceptions from retroactive effect: (1) judgments, rulings and mediation letters of trademark infringement cases made and already enforced by the People's Court before the invalidation; (2) decisions of trademark infringement cases made and already enforced by the authority of administration for industry and commerce before the invalidation; (3) trademark assignment contract or trademark license contract already performed before the invalidation. However, in order to fully protect the legitimate rights and interests of the parties concerned, articles of the above-mentioned law also stipulate that "the trademark registrant shall compensate any loss caused to another person due to its ill will." and "the damages for trademark infringement, transfer fees or royalties for trademark rights, in accordance with the provision of the preceding paragraph, shall be refunded in whole or in part." The above-mentioned provisions are the embodiment of the retroactive effect of the invalidation of a registered trademark, and also provide a legal basis for the recourse of the use of the trademark before its invalidation. [2]

In this case, from the objective point of view, even if the allegedly infringing trademark was used before the cancellation, it was no longer a dispute between the exclusive rights of two registered trademarks, but a trademark similar to the right trademark used by Nanchangxin Company on the same goods without permission. However, from the subjective state of the perpetrator, the allegedly infringing trademark was still legally valid when the act was implemented, and it may be based on the trust of the trademark registry and use the relevant trademark in good faith, or it may have fault or even maliciously infringing the right trademark, so whether the trademark is found to be infringing and liable, the imputation principle of trademark infringement should also be examined.

(2) Imputation principle of infringement of exclusive right to use a trademark

Article 47 of the Trademark Law provides that "if any loss has been caused through the ill will of a trademark registrant to any other party, such loss shall be compensated", and the implementation of this provision depends on the determination of liability for trademark infringement.

1. The key element of trademark infringement determination is not based on the subjective fault of the perpetrator

Article 57 of the Trademark Law specifies trademark infringement, and there has been controversy over the understanding and application of this article and whether the determination of trademark infringement should be based on the subjective fault of the perpetrator. The author believes that, no matter from the conceptual meaning of the imputation principle, or from the provisions of the article set, the determination of trademark infringement itself should not based on the subjective fault

(1) From the conceptual meaning of the imputation principle

Imputation of the Tort law, refers to the fact that a person caused damage to others because of its conducts and objects, according to what basis to make it liable. [3] The principle of imputation is the general guideline to determine whether the tortfeasor is liable for tort in this process. From the current theory and practice, the principle of imputation mainly focuses on the examination of the subjective fault of the tortfeasor. It can be seen that the principle of imputation is a concept used in the process of determining liability after the fact of infringement damage has occurred, and has nothing to do with determining the illegal injury act and the fact of damage. From the semantics of Article 57 of the Trademark Law, "any of the following constitutes an infringement of the exclusive right to use a registered trademark", it is the description of the objective performance of the illegal infringement of the trademark, i.e., the objective definition of what kind of conduct belongs to the damage to the exclusive right to use a trademark.

(2) From the perspective of the setting of Article 57 of the Trademark Law

First of all, from the semantics of the article itself, except for the sixth item, all the items do not stipulate that the person needs to have subjective fault, as for the sixth item contains "intentional", the author believes that this provision is an act of assistance in trademark infringement, which essentially belongs to the joint tortious conduct in Tort Law of the People's Republic of China. However, in order to clarify the typical manifestations of infringement as comprehensively as possible, enumeration is used. Generally speaking, joint infringement requires a common intention, so it should be stipulated. On the contrary, the "intentional" specified in this item also reflects that the other items do not require this kind of subjective fault. Secondly, when the trademark infringement was listed in Article 52 of the Trademark Law before the amendment in 2013, "intentional" was stipulated for the seller, and later Article 52 was amended to the current Article 57 with the deletion of "intentional", which also indicates that the legislator’s intent of excluding subjective fault. Again, Article 64(2) of the Trademark Law provides that the seller shall bear no liability if he is "not at fault", which also indicates that no subjective fault is required to determine trademark infringement.

In summary, the determination of trademark infringement is different from the imputation of liability for trademark infringement, as long as the infringer has carried out the injury act stipulated in the Trademark Law, it constitutes trademark infringement. Such determination also facilitates the timely application of "stopping infringement" and other forms of liability to stop trademark infringement.

2. Liability for trademark infringement shall be based on fault as a constituent element

As mentioned above, the imputation principle is the general guideline to determine whether the infringer is liable for infringement, especially the liability for infringement. According to the mainstream view, Tort Law of the People's Republic of China has established a binary system of imputation principles, where the principle of fault liability (including the principle of fault presumption) [4] and the principle of no-fault liability stay side by side. Meanwhile the fairness responsibility is no longer regarded as an independent imputation principle. [5] The principle of fault liability (including the principle of fault presumption) is reflected in the provisions of Article 6 of the Tort Law: "One who is at fault for infringement upon a civil right or interest of another person shall be subject to the tort liability. One who is at fault as construed according to legal provisions and cannot prove otherwise shall be subject to the tort liability." No-fault liability is reflected in the provisions of Article 7 of the Tort Law: "One who shall assume the tort liability for infringing upon a civil right or interest of another person, whether at fault or not, as provided for by law, shall be subject to such legal provisions."

(1) Trademark infringement liability is not appropriate to apply the principle of no-fault liability

The author believes that the determination of the liability for trademark infringement should be applied to the above principles of fault liability, rather than the principle of no-fault liability, for the following reasons: first of all, the principle of no-fault liability is emerging in response to the increasing risks of social production and life in the context of industrialized mass production, and the basis of its imputation is not fault, but mainly danger (risk), which includes: dangerous activities and dangerous objects; [6] while trademark infringement does not belong to the category of dangerous activities that must be carried out in order to engage in social production and life, moreover, it has nothing to do with dangerous objects. Secondly, in China's tort liability theory, no-fault liability is only applicable to special tort liability types explicitly provided by law, while general torts are subject to the principle of fault liability, and Tort Law of the People's Republic of China and General Rules of the Civil Law of the People's Republic of China do not place intellectual property infringement, including trademark infringement, in the application of no-fault liability; and Article 57 of the Trademark Law, as mentioned above, is not a principle of imputation, and there are no other special provisions on the liability for damages for trademark infringement without fault. Again, the second item of Article 64 of the Trademark Law provides that the seller of goods infringing on trademark rights is exempted from liability based on "no fault", which also provides a glimpse of the legislator's legislative spirit of taking fault as a constituent element of trademark infringement liability.

(2) Scientifically set fault determination standards and methods can realize the balance of interests

Some people are opposed to the application of the principle of fault liability for trademark infringement, and their main concerns are: on the one hand, due to the intangible nature of intellectual property, the possibility of the exclusive rights of the right holder being intruded by others unintentionally and without fault is more common than that of property rights and other rights [7]; on the other hand, they are worried about the difficulty of proving the subjective fault of the infringers of intellectual property infringement, including trademark infringement. Regarding the former, the author believes that the registered trademark and other intellectual property rights have public nature and people are obliged to pay attention to them. Moreover, with the increasing convenience of the network and other means of inquiry, it is increasingly easy for well-intentioned people to avoid the scope of the prior registered trademark rights, and the above-mentioned particularity of intellectual property rights are increasingly insignificant compared with other rights. If people have done their duty of care and is indeed well-intentioned, it would be unfair to require them to bear the liability for infringement. For the latter, the author believes that the subjective fault of the tortfeasor is generally difficult to prove directly, often through the external behavior to determine, and intellectual property infringement is no exception; in addition, the modern tort law adopts the objective fault standard, to determine whether a person is at fault, is measured by a rational person's standard, rather than completely depending on the person's idea, making the fault determination relatively easy.

It can be seen that the obstacles faced by the application of the principle of fault liability in the determination of trademark infringement liability are not insurmountable, and the key lies in the setting of fault determination standards and methods.

(3)Thoughts on the determination of civil tort liability before trademark invalidation

1. Objective review: examine whether the infringement is stipulated in Article 57 of the Trademark Law

As mentioned above, the determination of trademark infringement itself is not conditional on the subjective fault of the perpetrator, but depends on whether it belongs to the circumstances stipulated in Article 57 of the Trademark Law. For example, in this case, based on the retroactive effect of the trademark invalidation (including the cause of the cancellation in question), the use of the allegedly infringing trademark by Nanchangxin Company in this case before the cancellation ruling of the Trademark Office took effect on June 20, 2014, objectively could not be recognized as the authorized and legitimate use of the registered trademark. As the trademark and the right trademark constitute a similarity, the behavior has been in line with the provisions of Article 57 item 2 of the Trademark Law, belongs to the use of a trademark that is similar to a registered trademark in connection with the same goods, without the authorization of the owner of the registered trademark, which may cause public confusion, so it can be found that such actions of Nanchangxin Company constitutes an infringement of the exclusive right of the registered trademark of Nanchang Company.

2. Subjective examination: examine whether the perpetrator has subjective fault

Regarding whether Nanchangxin Company should bear the infringement liability, according to the above two aspects of analysis, it is necessary to examine whether Nanchangxin Company has subjective fault, which should be combined with the subjective state of the trademark application registration stage and the actual use stage after the approval of registration for comprehensive judgment. Combined with the reasons for trademark cancellation, the examination procedure and the facts identified in the subsequent administrative litigation process, to determine whether Nanchangxin Company has actually known the existence of the right trademark of Nanchang Company, or should have been avoided for knowing the existence of the right trademark based on its market popularity. For example, in this case, according to the facts, before the registration of the allegedly infringing trademark, Nanchang Company and its Japanese parent company had already registered and used several "Nanchang and figure" trademarks in the same or related goods for a long time, under this circumstance, Nanchangxin Company still used similar trademarks, with malicious intent of "free-riding", which is hardly justified from the subjective point of view, and therefore should be liable for compensation.

 

Reference:

1. According to the Trademark Law amended in 2013, the subject matter already belongs to the subject matter of trademark invalidation. In order to be more in line with the relevant provisions of the current Trademark Law and the use of terminology, therefore, in this article, except for the quotation from the original document, the trademark No. 4215222 "Nanchangxin and Figure" (and the allegedly infringing trademark) is expressed as declared invalidation trademark or invalid trademark.

2. Interpretation of the Trademark Law of the People's Republic of China, 2013, 1st edition, China Legal Publishing House.

3 Wang Liming, 1992. Research on the Imputation Principles of Tort Law, China University of Political Science and Law Press. p. 18.

4 It is generally believed that the principle of presumption of fault is subordinate to the principle of fault liability, and does not constitute a principle of imputation in parallel with it.

5 Yang Lixin, 2003. Lectures on Concise Types of Tort Law, Higher Education Press. p. 95.

6 Wang Liming, 2016. Research on Tort Law (Second Edition). People's University of China Press.

7 Zheng Sicheng, 1997. Copyright Law, People's University of China Press. p. 218.

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