Explanation by the Supreme People's Court on the Application of Law in Trademark Dispute Cases

(Passed on October 12 at the 1246th meeting of the Judicial Committee of the Supreme People's Court)

For the purpose of correct adjudication of trademark dispute cases, in compliance with the General Principles of Civil Law of the People's Republic of China, the Contract Law of the People's Republic of China, the Trademark Law of the People's Republic of China, and the Civil Procedure Law of the People's Republic of China, this Court issues its explanation on various issues in relation to the application of law in such cases.

1. The following acts constitute "other acts that harm the trademark rights of other people" as provided in Art. 53 (5) of the Trademark Law:
   1) using words identical with our similar to others registered trademark as trade name in relation to the same or similar products, which is likely to cause confusion among the public;
   2) copying, imitating or translating other's well-known mark or the main part of such a mark in relation to similar or non-similar goods, which cause confusion among the public and harms the interest of the owner of the well-known mark;
   3) registering words identical with or similar to other's registered trademark as domain name, and engaging in e-business through the domain name, which is likely to cause confusion among the related public.
2. As stipulated in Art. 13 of the Trademark Law, any one who copies, imitates, or translates other's well-known trademark, or the main part of such a mark, which is not registered in China, and uses it as trademark in relation to the same or similar goods, which is likely to cause confusion, he shall bear the civil liability of ceasing the infringing act.
3. "Trademark license" as provided in Art. 40 of the Trademark Law includes the following three types:
   1) Exclusive license, where the trademark registrant, in the term, territory and manner as agreed by the parties, grants the licensee the exclusive right to use the registered mark, and the trademark registrant agrees not to use the mark himself;
   2) Sole license, where the trademark registrant, in the term, territory and manner as agreed by the parties, grants a sole licensee the right to use the registered mark. The trademark registrant can use the mark himself, but shall not grant another party the right to use the mark;
   3) Ordinary license, where the trademark registrant, in the term, territory and manner as agreed by the parties, grants the licensee the right to use the registered mark. The trademark registrant can use the mark himself, and can grant another party the right to use the mark.
4. "Parties of interest" as provided in Art. 53 of the Trademark Law include the licensee of a trademark license agreement and the inheritor of the property rights in a registered trademark.Where the rights in a registered trademark is infringed, the licensee of an exclusive license agreement can bring up a court action in his own name; the licensee of a sole license agreement can bring up a joint court action with the trademark registrant, or take action independently when the trademark registrant does not take action; the licensee of an ordinary license can take action with the express authorization of the trademark registrant.
5. Where the trademark registrant or a party of interest files an application for renewal in the grace period of the registration, and files a trademark infringement case before the application for renewal is approved, the people's court shall accept the case.
6. The people's court in the place of infringement, or the place where the infringing goods are stored, or where such goods are seized, or where the respondent has premise, has jurisdiction over trademark infringement cases."The place where the infringing goods are stored" as in the preceding paragraph refers to the place where infringing goods are stored in large volume or where infringing goods are regularly stored; "where the infringing goods are seized" refers to the place where the Customs, AIC or other administrative bodies seize the infringing goods.
7. In a joint action against various respondents in different places of infringement, the claimant may choose the people's court in the place where one of the respondents conducts acts of infringement as the court of jurisdiction. Where the action is against only one of the respondent, the people's court in the place where that respondent conducts acts of infringement has jurisdiction.
8. "The related public" as referred in the Trademark Law, refers to the related consumer of certain product or service that a trademark identifies, or an undertaking that is closely related to the marketing of such product or service.
9. "Identical trademarks" as provided in Art. 52 (1) of the Trademark Law, means that, when comparing the alleged infringing mark and the registered mark of the claimant, there is no fundamental visual difference between them."Similar trademarks" as provided in Art. 52 (1) of the Trademark Law, means that, when comparing the alleged infringing mark and the registered mark of the claimant, the form, pronunciation, connotation of the words, or the elements and colour of the design, or the whole structure of the combination of all elements, or the three-dimensional shape, or the combination of colours, are similar and likely to cause confusion among the related public as to the origin of the goods, or cause the public to believe that there is certain association between the origins of the goods.
10. When the people's court makes a judgment on identical or similar marks according to the provisions of Art. 52 (1) of the Trademark Law, the following principles shall be followed:1) the judgment shall be based on the average attention of the related public;2) comparison shall be made not only on the unity of the marks, but also on the main parts of the marks. Comparison shall be made in a situation where the subjects are kept apart;3) in judging whether the marks are similar, the distinctiveness and reputation of the claimant's trademark shall be taken into consideration.
11. "Similar goods" as provided in Art. 52 (1) of the Trademark Law refers to goods that have the same function, use, manufacturing department, sales channel, targeted consumer, or believed by the related public to have certain association and likely to cause confusion."Similar services" refers to services that have the same purpose, contents, manner or customers, or believed by the related public to have certain association and likely to cause confusion."Similarity between goods and services" refers to the circumstance where there is certain association between the goods and services, and it is likely to cause confusion among the related public.
12. When, according to Art. 52 (1) of the Trademark Law, the people's court makes judgment on whether certain goods or services are similar, it shall be based on the average knowledge of the related public on the subject goods or services. The International Classification of Goods and Services for Trademark Registration and the List of Similar Goods and Services could be used as references for such judgment.
13. In deciding the infringing party's liability for compensation according to Art. 56 (1) of the Trade Mark Law, the people's court can calculate the amount of compensation in the way chosen by the proprietor.
14. "Profit made by the infringement", as provided in paragraph 1 of Art. 56 of the Trademark Law, can be calculated as the volume of sale of the infringing goods, multiplied by the unit profit of the goods. Where the unit profit of the infringing goods cannot be found, the unit profit of the proprietor's goods shall apply.
15. "Damage caused by the infringement", as provided in paragraph 1 of Art. 56 of the Trademark Law, can be calculated as the lost sales volume suffered by the proprietor, or the sales volume of the infringing goods, multiplied by the unit profit of the proprietor's goods.
16. Where it is difficult to affirm the profit made by the infringing or the damage suffered by the proprietor party by the infringement, the people's court may decide on the amount of compensation according to the claim of the parties or the provision of Art. 56, paragraph 2, of the Trademark Law.When making such a decision, the court shall take into consideration the nature, duration, and result of the infringement, the reputation of the trademark, the royalty, nature, term, territory of the trademark license, and the reasonable costs in stopping the infringement.When the parties, according to the provisions of the first paragraph of this article, reach an agreement on the amount of compensation, it shall be allowed.
17. "Reasonable costs in stopping the infringement" as provided in Art. 56, paragraph 1, of the Trademark Law, include the reasonable costs of the proprietor and his representative in investigating or obtaining evidences of the infringement.The court may, according to the claims of the parties and the circumstance of the case, include the reasonable attorney fee, which is in compliance with relevant regulations, in the compensation.
18. The limitation for litigation against trademark infringement is two years, starting from the date when the trademark registrant or the party interest becomes aware of the infringement. Where the trademark registrant or the party of interest brings court action after the two-year limitation, and the infringement is still going on, and the trademark is still within the registration term, the court shall order the respondent to stop the infringement. The damages for the infringement shall be calculated within the two years before the date of that the proprietor files the court action.
19. Where a trademark license agreement is not recorded, it shall not affect the force of the agreement, unless the parties have agreed otherwise.Where a trademark license agreement is not recorded with the Trade Mark Office, it has no force against a good-willed third party.
20. The assignment of a registered trademark shall not affect the force of the license agreement concerning such a mark which came into force before the assignment, unless in the license agreement the parties have agreed otherwise.
21. In examination of trademark dispute cases, the court may, according to Art. 134 of the General Principles of Civil Law, Art. 53 of the Trademark Law, and the circumstance of the case, order the infringing party to bear the civil liability of ceasing the acts of infringement, eliminating the obstruction, eliminating the dangers, making compensation for losses, and eliminating the effects of the act. The court may also make punitive decisions to fine the infringing party, to confiscate the infringing goods, the counterfeited labels of the trademark, and the materials, tools and equipment which are used to manufacture the infringing goods. The amount of the fine can be decided according to the provisions of the implementing regulations of the Trademark Law.Where the administrative department for industry and commerce has already imposed administrative punishment on an act of trademark infringement, the court shall not impose punishment on the same act.
22. In its examination of trademark dispute cases, the court may, at the requests of the parties or according to the circumstance of the case, make a decision on whether the related trademark is well-known.In recognizing a well-known trademark, the provisions in Art. 14 of the Trademark Law shall be followed.Where a party requests protection of a well-known trademark which is recognized by the administrative body or the court, when the other party has no objection to the well-known status of the trademark, the court makes no further examination on such a status. When the other party raised an objection, the court shall make examination according to Art. 14 of the Trademark Law.
23. The provisions of this explanation are also applicable to service marks.
24. Where there are discrepancies between this explanation and previous regulations, this explanation shall prevail.