TM case shows how to choose best rights defence measures

How does one choose the best measure to defend a trademark right when it is infringed? The author uses Sanyou’s involvement in the Ryukakusan case, which involved trademark infringement and unfair competition, as an example for analysis.

Ryukakusan, Sanyou’s client, has exclusive rights to the registered trademark “Ryukakusan” for its goods in Class 30. In 2018, the client found products that infringed its exclusive trademark rights at various physical food retail stores and online shops, and instructed Sanyou’s attorney to handle a series of administrative complaints and subsequent civil litigation for it.

In the case of trademark infringement, the rights holder should conduct evidence preservation and a thorough investigation as soon as possible before issuing a warning, then choose an action to defend the rights.

PRELIMINARY PREPARATION

Before taking legal action, rights holders are strongly suggested to notarise the purchase and fix the evidence in a timely manner to avoid losing the opportunity to preserve evidence. Otherwise, the infringer will likely move the infringing product, or the rights holder’s evidence will be challenged due to defects in form or content resulting from its unprofessional methods of obtaining evidence. Through notarisation on purchase and evidence fixation, it is also possible to obtain information about the infringing product manufacturers involved.

Rights holders are advised to conduct an in-depth field investigation into the infringement to identify the specific parties who produce and sell the allegedly infringing products, determine whether those products infringe the trademark, and obtain information on the products such as the price and inventory.

When the rights holder is clear that products sold by the target are indeed infringing, but the inventory is small, then the desired result may not be achieved by requesting the market regulator to inspect the target directly, even with the infringing products seized. However, once the specific manufacturer and factory address are identified, the rights holder can lodge administrative complaints and civil litigation against the seller and manufacturer.

In the above-mentioned case, after notarising the purchase and fixing the evidence for the infringing products in each shop, respectively, Sanyou’s attorney revealed that the sources of the infringing products were the seller, Hangzhou Hohsi Industrial, and the authorised manufacturer, Fujian Jinjiang Zhenkouwei Food.

COMPLAINTS AND LITIGATION

The rights holder can lodge a complaint with the market regulators where the target is located by providing proof of rights, notarial certificates, appraisal reports and other relevant evidence. After accepting the complaint, the regulator will decide on infringement based on the investigation. Once confirmed, it will confiscate and destroy the infringing goods and the tools used to manufacture them, or create representations of the registered trademark. If the infringer refuses to provide the source of the products, a fine will be imposed.

After evidence preservation, the market regulator, having not found the infringing products through on-site investigation, can ultimately determine that the goods sold by the target constitute trademark infringement based on the notarised evidence submitted by the complainant, thus ordering it to cease the infringement and imposing a fine.

In this case, Sanyou’s attorney lodged an administrative complaint and submitted evidence to the market regulator. The alleged product eventually constituted an infringement of the registered trademark and an order to stop selling immediately was issued. Meanwhile, the attorney also filed civil litigation against Hohsi Industrial, Zhenkouwei Food and the retailer for infringement of trademark rights and unfair competition. The court eventually ordered the three parties to pay a total of more than RMB200,000 (USD27,700) in damages resulting from the trademark infringement.

The advantages of administrative investigation are the low economic cost of initiation, the rapid investigation and handling, and its compulsory and binding nature, which can quickly and effectively cease infringement and prevent recidivism. Through administrative complaints, law enforcement authorities conduct investigations, which can be very helpful for evidence gathering and can also provide a boost to subsequent possible civil litigation. However, through an administrative complaint, the rights holder cannot be awarded damages for the infringement and has to further file a lawsuit in court, which incurs more financial cost and time compared to the administrative complaint.

OTHER MEASURES

Sending a warning letter. If the scale of infringement is small and damage is minor, the rights holder can request the infringer to stop the trademark infringement by sending a warning letter, which is low-cost and fast but not compulsory, therefore achieving the desired effect depends on the co-operation of the target. If the rights holder decides to file an administrative complaint, it is not advisable to send a warning letter to avoid the infringer moving the infringing products.

Complaint to the e-commerce platform’s rights protection centre. For infringing sellers on shopping websites such as Taobao, Tmall and Jingdong, rights holders can complain to the Intellectual Property Right Complaint Centre of the website by submitting proof of rights, a comparative description of genuine and fake products and other relevant evidence, and requesting the removal of specific links of infringing products. The complaint centre will notify the respondent for a response after accepting the complaint and determine whether the infringement occurs based on evidence from both parties, and once the infringement is determined, the link to the infringing product under the complaint will be removed.

IPR customs recordal. As a precautionary measure at the import and export end, rights holders are recommended to record their trademarks in the China customs IPR system as soon as possible after registering trademarks for goods in the commodities class. In this way, customs will immediately notify the rights holder once any suspected infringement of the recorded IPR is found in imported or exported goods. Customs recordal is a crucial and fundamental step of the IPR protective regulatory regime, which helps Customs detect infringing goods and protect IPR owners.

Amy Min is a trademark attorney at Sanyou Intellectual Property Agency