Judicial Interpretation on the Application of Law to the Trial of
Trademark Dispute Cases Issued

On October 12, 2002, the Supreme People's Court of China issued a judicial interpretation on several issues relating to application of law to the trademark related dispute cases. The key features of the interpretation are summarized as below:


1. Protection of Well-known Trademark

Under Article 13 of the Trademark Law, well-known trademarks either registered in China or not, should be protected by preventing others from reproducing, imitating and translating registered well-known trademark as a trademark used on unidentical or dissimilar goods, or reproducing, imitating and translating unregistered well-known trademark as a trademark used on identical or similar goods.

According to Article 1 of the interpretation, reproducing, imitating and translating another person's registered well-known trademark or the main part thereof to be used on unidentical or dissimilar goods as a trademark and to mislead the public, which is likely to result in prejudice of the interests of the owner of the well-known trademark, constitutes trademark infringement. According to Article 2 of the interpretation, where the well-known trademark of another person that is not registered in China or the main part thereof is reproduced, imitated or translated to be used as a trademark on identical or similar goods, which is likely to cause confusion, the infringing act should be ceased.


2. Trademark and Trade Name

It has been a headache for trademark owners to find out that their registered trademark were used by others as trade names. Under Article 53 of the Implementing Regulations of the Trademark Law, where a trademark proprietor believes that another person has registered his well-known trademark as an enterprise name, which is likely to deceive or mislead the public, he may request the competent authority for the registration of enterprise names to cancel the registration. Noticeably, the interpretation provides such protection even to all registered trademarks. According to Article 1 of the interpretation, using prominently words identical with or similar to another person's registered trademark as one's own trade name used on identical or similar goods, which is likely to cause confusion among the relevant public, constitutes trademark infringement.


3. Trademark and Domain Name

Although there are debates on the issue of whether domain name should be classified as a kind of intellectual property, unfair use of other's trademark in cyber space is prohibited. According to Article 1 of the interpretation, registering words identical with or similar to another person's registered trademark as a domain name, and conducting, using the domain name, e-commerce in the trade of relevant goods, which is likely to cause confusion among the relevant public, constitutes trademark infringement.


4. Jurisdiction

According to Article 6 of the interpretation, trademark infringement cases shall be under the jurisdiction of the court of the place where the infringing act takes place, where the infringing goods are kept or seized and detained, or where the defendant has its domicile. The place where infringing goods are kept refers to the place where the infringing goods are stored or hidden in large quantities or on regular basis; the place of seizure and detention refers to the place where the Customs or administrative authority for industry and commerce seizes and detains the infringing goods.


5. Similarity of Trademarks

According to Article 6 of the interpretation, the court shall judge if two trademarks are identical or similar in the light of the following principles:

(1) On the basis of average attention of the relevant public;
(2) Comparison of trademarks shall be made both wholly and in respect of the main parts thereof, and the comparison shall be made in separation of the objects under comparison; and
(3) Account shall be taken of the distinctiveness and reputation of the claimant's registered trademark in assessing the similarity of trademarks.


6. Calculation of Damages

According to Article 13 of the interpretation, the damages may be calculated in the way chosen by the trademark owner among the two ways provided by Article 56 of the Trademark Law, i.e., the profits earned by the infringer or the losses suffered by the trademark owner.

The profits earned by the infringer may be calculated on the basis of multiplication of sales of the infringing goods by the unit profit of the goods. Where it is impossible to find out the unit profit of the goods, it is calculated on the basis of the unit profit of the goods of the registered trademark.

The losses suffered by the trademark owner may be calculated on the basis of multiplication of the quantity of reduction suffered by the trademark owner in his sales of the goods because of the infringement or the sales of the infringing goods by the unit profit of goods of the registered trademark.


7. Statutory Time Limit for Action

According to Article 18 of the interpretation, the statutory time limit for initiating court action against a trademark infringer is two years calculated from the date on which the trademark owner or interested party knows, or should have known the infringing act. Where the trademark owner or interested party institutes legal proceedings after the expiration of the two years limitation when the infringing act still continues, the court shall, within the term of validity of the trademark registration, make a judgment to order the infringer to stop the infringing act. However, in determining the damages, only the profits earned by the infringer through the infringement or the losses suffered by the trademark owner within the last two years, counted from the date on which the action is initiated, can be taken into consideration.


8. Recordation of Licensing Contract

Under Rule 43 of the Implementing Regulations of the Trademark Law, trademark license contract shall be recorded with the Trademark Office within three months from the date on which the contract is concluded. But what is the outcome if the contract is not recorded?

Article 19 of the interpretation provides an answer to the question. According to the article, where a trademark license contract is not recorded, the validity of the contract is not affected, unless the parties have agreed otherwise. However, where a trademark license contract is not recorded with the Trademark Office, it cannot be used against a third party in good faith.