I. Case Brief

Our client is a leading global provider of integrated retail performance and security solutions, whose main products contain hard tags, labels, detachers, etc. In 2020, our client located that a company in Shenzhen City (hereinafter referred as “the target”) sells possible counterfeit anti-theft labels and detachers in its 1688 online store. Through sample purchase and onsite visit, we confirmed that the target indeed sold counterfeits. However, since the target is a dealer and does not prepare regular stock of counterfeits at hand, raid action is not feasible and not a priority option.

After researching “Trademark Law of the People’s Republic of China” and the trademark sessions of “Implementation Standards for the Penalty and Discretion of Certain Administrative Penalties of Shenzhen Administration of Market Regulation” (3rd collection), and other related laws and regulations, to attack the target, we decided to conduct a notarized purchase through the target’s 1688 store for securing evidence first and then complain to local Administration of Market Regulation. With a following successful notarized purchase, we obtained some counterfeit labels at value of CNY1, 062 from the target’s online store. Then we filed a trademark infringement complaint with Shenzhen Longgang Administration of Market Regulation (in short “Shenzhen Longgang AMR”) asking for an official investigation to the target. Shenzhen Longgang AMR accepted our complaint and conducted an onsite inspection into the target. Although Shenzhen Longgang AMR did not detect any counterfeits during onsite inspection, the AMR finally accepted our notarization evidence and confirmed the target sold counterfeits, then issued an administrative punishment, order the target to immediately stop trademark infringement and afford a fine of CNY 10,000;

II. Legal Comments

Administrative investigation action can not only quickly deter trademark infringement but prevent re-infringement Pursuant to the Paragraph 1, Article 60 of “Trademark Law of the People’s Republic of China” “the trademark registrant or an interested party may institute an action in a people's court or request the administrative department for industry and commerce to handle the dispute.” When initiating the administrative investigation action, the AMR will conduct spot check at the infringer’s operation location or warehouses, detain and seize infringing products or related financial materials, as well as inquire the related persons. When the infringement is confirmed, the AMR will accordingly make a punishing decision demanding the infringer to stop infringement and afford fine. With the intervention of AMR, it has a strong deterrent effect on infringers, which also serves the function of stopping infringement and preventing re-infringement. Obviously, administrative investigation action is one of the important tools for trademark registrant or interested parties to enforce trademarks in China.

In practice, some trademark holders are eager to solve infringement once and for all. They desire to seize a large number of infringing products or locate the source of infringement in one piece of legal action or two. However, it is not an easy thing! Infringers are very foxy and cautious. To avoid being raid, they hide warehouses and production sites, and they not stock counterfeits at their offices. Therefore, we rights holders may have to invest much time and money to trace the sources. However, if the rights holders want to invest less time and money to stop infringement or if a spot check to production sites or warehouse is not feasible, the right holders may refer to the above practice, if the infringers sell products online. Securing infringing evidence by online notarized purchase before turning to AMR. Even though the AMR does not detect any counterfeits onsite afterwards, they can still punish the infringers based on the notarized evidence, so as to achieve goals of penalizing the infringer and stopping infringement rapidly.

In addition, according to the Article 60 of “Trademark Law of the People’s Republic of China” “If trademark infringement has been committed twice or more within five years or there are other serious circumstances, a heavier punishment shall be imposed.” Although in the above mentioned case, the infringers was only fined CNY10, 000, if the infringer commits trademark infringement again within five years, the fine for the next time will up to CNY 250,000, pursuant to the regulation upon trademark sessions of “Implementation Standards for the Penalty and Discretion of Certain Administrative Penalties of Shenzhen Administration for Market Regulation” (3rd collection). The aforesaid regulation will apparently play a key role in prevention of re-infringement.

Compared with other legal actions such as civil litigation, administrative investigation action has the following advantages:

Simple Procedure

It is very easy to initiate an administrative investigation action. The right holders are not required to file application on spot, they can directly post the bill of complaint and other evidence materials to local AMR. When the filing is accepted, the right holders only need to follow up in a timely manner.

Low Cost

For civil action, the court will charge the Plaintiff the court fee at the beginning of every case. However, there is no official fee in administrative investigation action.

In light of “Interim Provisions on the Procedures for Administrative Punishments for Market Supervision and Administration”, a market regulatory department shall decide whether or not to undergo the formalities of case-filing within 15 working days of receipt of the materials. It is also articulated that “A decision of handling shall be made for a case applying the general procedures within 90 days of case-filing.” Generally, the local AMR can conclude a case within 4 to 6 months.

On even ground, sending a C&D letter to the infringer or filing a complaint to an e-commerce platform may rely heavily on the infringer and the e-commerce platform’s cooperation, but the administrative investigation action is compulsory, which can efficiently deter infringement and prevent re-infringement.

We notice that AMR in other cities ever punished infringers for selling fake products by accepting non-notarized evidence of online sales records, transaction records, delivery information and appraisal reports. Although it indeed released positive sign to rights holders, to be prudent and avoid the infringer challenge the evidence, we strongly recommend that the right holders secure key evidence via notarization as far as possible.

According to Article 69 of “Civil Procedure Law of the People's Republic of China”, “A people's court shall regard legal facts and documents notarized under statutory procedures as a basis for deciding facts, unless there is any evidence to the contrary which suffices to overturn the notarization.” So the notarized evidence has the strong probative force. In addition, notarized evidence could greatly ease the burden of proof assumed by the right holder in the following legal actions such as ISP complaint and civil action.

III. Conclusion

In conclusion, there are various tools for trademark right holders to enforce trademarks. We believe that the China AMR would adopt more and more effective administrative enforcement. Therefore, for right holders who intend to pursue objectives of stopping infringement in a quick way and the prevention of re-infringement with less investment of money and time, they can chose a combination of notarization and administrative investigation introduced in this article as their protection strategy against trademark infringement. Furthermore, we also suggest the right holder makes good use of laws, because the law regulates different levels of punishment regarding various circumstances of infringement. In other words, right holders can choose the number and cost of fake products when purchasing based on their own requirements, so as to achieve expected results with appropriate inputs.