Cissy Zhou, Zhang Qiqi, King and Wood Mallesons’ Intellectual Property group

On December 14, 2020, the China National Intellectual Property Administration (CNIPA) released the first batch of intellectual property administrative enforcement guiding cases (Guiding Cases No.1 to No.5), aiming to unify law enforcement standards, improve case handling level, and guide the work of intellectual property administrative enforcement.

The first batch of intellectual property administrative enforcement guiding cases consists of five cases, including three trademark cases. The three cases respectively involve the protection of service trademarks in the Internet environment, the application of clauses on trademark infringement exemption over sellers, and the definition of the acts of purchasing and using infringing goods in contracting projects for labor and materials. We hereby summarize the relevant case details and typical significance of the trademark cases for your reference.

  1. Market Regulation Bureau of Shanghai Chongming District investigated and concluded case on Infringement of Dun&Bradstreet’s Registered Trademark by Shanghai Zhangyuan Information Technology Co., Ltd.

Keywords: Internet Keywords; Service Trademarks

Dun&Bradstreet International, LTD. (hereinafter referred to as the “Dun&Bradstreet”) is a business information service agency. It has registered several trademarks including “邓白氏”（DUNS in Chinese characters）, “邓白氏编码” (DUNS numbering in Chinese characters) and “DUNS” in class 35 and class 36 in China, and authorizes Shanghai Huaxia Dun&Bradstreet Business Information Consulting Co., Ltd. to use the registered trademark “邓白氏” in China to carry out corresponding business in China. Shanghai Zhangyuan Information Technology Co., Ltd. (hereinafter referred to as the “Party Concerned”), as a former franchisee of Dun&Bradstreet, was fully aware that “邓白氏” was the registered trademark of others. In the form of keyword advertisements, the Party Concerned promoted its agent DUNS numbering application service in Baidu search results, presenting the results as “【官】邓百氏编码_国际认可的_全球通用企业编码系统”(【Official】DUNS Numbering _ Internationally Recognized _ Universal Enterprise Numbering System). This act of the Party Concerned led many enterprises, through Baidu Search, mistakenly believe that the Party Concerned had a licensing relationship with Dun&Bradstreet of the United States, and entrusted the Party Concerned to apply for DUNS numbering. In March 2019, Shanghai Huaxia Dun&Bradstreet Business Information Consulting Co., Ltd. complained to the Market Supervision Bureau of Chongming District, Shanghai, reflecting that Shanghai Zhangyuan Information Technology Co., Ltd. infringed on Dun&Bradstreet’s exclusive right to use a registered trademark.

This case involves the protection of service trademarks in the Internet environment. In the Internet environment, trademarks are used in various forms, which brings new challenges to the identification of the use of trademarks. In particular, there are controversies over whether the use of another’s registered trademark in the advertising keyword search constitutes the use of trademarks. By signing a search promotion service contract, the Party Concerned in this case put in keyword advertisements when network users use other people’s registered trademarks as search keywords, and displayed other people’s registered Trademarks in the relevant search results. The kind of act misled the relevant public to believe that there is a license relationship between the Party Concerned and caused confusion among relevant public. The Market Regulation Bureau of Shanghai Chongming District determined that the act of the Party Concerned falls within the scope of the use of trademarks specified in Article 48 of the Trademark Law.

The purpose of a network user inputting a keyword in the search engine is to find the information related to the keyword. When such keyword appears on the search result page, the network user is likely to believe that there is connection between such keyword and specific goods or services. At this point, the keyword advertisement led the user to a third party’s webpage, which made the goods or services on the third party’s webpage connected with the trademark, which constituted use of a trademark in the sense of the Trademark Law.

  1. Former Fengtai Branch of the Beijing Administration for Industry and Commerce Investigated and Concluded Case on the Infringement of the Exclusive Right to Use “Tiger” and Other Registered Trademarks by Beijing Hongyuan Lide Trading Co., Ltd.

Keywords: Exemption of Infringement Liability of the Seller; Infringement Defense; Knowing and Should Have Known

On January 9, 2018, the law enforcement officers of the former Fengtai Branch of the Beijing Administration for Industry and Commerce (now called Beijing Administration for Market Regulation) found that the sports shoes sold by business outlets set up by Beijing Muxiyuan Special Trading Co., Ltd. were suspected of infringing the exclusive rights to use such trademarks as “Tiger” of Asics Corporation and the seller was Beijing Hongyuan Lide Trading Co., Ltd. (hereinafter referred to as the “Party Concerned”). Upon investigation, the Party Concerned signed a franchise contract with Quanzhou Ashkeshi Sports Goods Co., Ltd. (hereinafter referred to as the “Supplier”) to act as an agent for the sale of Asics Tiger sports shoes. During the investigation, the Party Concerned claimed that he did not know that the branded shoes involved were infringing goods, so he shall be exempted from liability in accordance with Paragraph 2, Article 60 of the Trademark Law. Through the comparison of the enterprise registration information, the law enforcement officers found that the Party Concerned and the Supplier have a significant relationship with the shareholders holding cross-employments at the same time, and that the Supplier had applied for registration of a trademark similar to the trademark of the right holder, and thus the act of the Party Concerned shall be determined as sales infringement.

This case involves the application of the trademark infringement disclaimer clause of the seller. Pursuant to Paragraph 2, Article 64 of the Trademark Law, the following three criteria shall be satisfied for exemption of infringement liability of the seller: first, the seller was not aware that the product being sold infringed upon the exclusive right of a trademark; second, the seller could prove that he obtained the product legitimately; and third, the seller could explain the supplier of the product. In this case, if the Party Concerned (seller) and the Supplier have a significant affiliation of holding posts at the same time as shareholders, and the supplier has applied to the trademark authority for a trademark similar to the trademark of the right holder and such application has been rejected, the Party Concerned(seller) still uses a mark similar to the trademark of the right holder on the same products, the Party Concerned should be aware that the aforesaid use of the product is suspected of trademark infringement. Therefore, the administrative authority believe that at this time, it can be presumed that the seller knows and should have known subjectively, which does not meet the statutory exemption conditions for selling goods without knowing that they infringe upon the exclusive right to use a registered trademark and constitutes trademark infringement.

  1. New Technological Development Zone of Wuhan Donghu Market Regulation Bureau Investigated and Concluded case on the Infringement of the Exclusive Right to Use the Registered Trademark of “CKS 科顺” by Wuhan Keshun Joint Waterproofing Engineering Co., Ltd.

Keywords: Sales infringement; Contracted for Labor and Materials; Works for Processing

The infringing party in this case is a contractor in the contracting project. As the purchaser of the infringing goods, he purchased the infringing “CKS 科顺” products. Even though the infringing party did not put the infringing goods into use, his behavior was recognized as a trademark infringement which was different from the purchase behavior of general consumers. The law enforcement authorities made an administrative penalty decision, ordering the party to immediately stop the infringement, confiscate and destroy the infringing goods, and impose a fine of 200,000 Yuan.

Firstly, in the business activities of contracting for labor and materials, especially in the field of construction as well as decoration and fitment construction, the contractor is responsible for both the purchase and use of materials and the use of the infringing products has the purpose of business, so it does not belong to an ordinary consumer; secondly, in the business activities of contracting for labor and materials, the contractor uses the infringing products it purchased for construction and delivers them to the client as part of the final results, and the price obtained by the contractor contains the consideration for the infringing products, and the ownership of the infringing products is transferred onerously along with the delivery of the engineering results. The client and the contractor are essentially a legal relationship of sales, and their behavior meets the characteristics of sales. Therefore, in the contracting for labor and materials, the act of purchase and use by the contractor which infringes upon others’ exclusive right to use a registered trademark falls within the trademark sales infringement as stipulated in Paragraph 3, Article 57 of the Trademark Law.

This case involves the definition of the act of purchase and use of infringing products in contracting for labor and materials, which has reference significance for the application of “sales infringement” in trademark infringement.