January 10, 2018 China Intellectual Property News Page 09: Right Protection Weekly Fan Jingbo [Case Number] (2017) Hu-0115-Min-Chu No.29805 (2017) Hu-73-Min-Zhong No.244 [Judicial Highlight] In the promotion and advertisement of products, sellers use trademarks to identify the source of products. Such behavior constitutes the use of trademarks. Offering for sale is not an independent infringement. In order to decide if a seller’s offering for sale constitutes a trademark infringement, we should first determine whether the products sold are genuine; if they are genuine, we should further determine whether the use constitutes reasonable use; if they are infringing products, the seller’s offering for sale constitutes a trademark infringement. As for whether the products sold by the seller are genuine, the right holder should bear the burden of proof, and this should be determined based on a proof standard of high degree of probability in individual cases. [Basic Facts] Lemo is the exclusive licensee of the two trademarks, “LEMO” and “雷莫” (hereinafter referred to as “trademarks involved”), which are approved to be used on commodities in Class 9 “junction boxes, electric appliance connectors, optical fiber connectors, plugs, electrical connectors, etc.”. F1 Technology writes in an online store opened on the third party platform “Made-In-China.com” that it sells Lemo connectors. The page also says “Chinese manufacturer / supplier of Lemo connectors and ODU connectors;provide Lemo/ODU spo2 sensor connectors”, etc. Lemo believed that F1 Technology, which sells products not produced by itself bearing “Lemo” trademark in above online store, constituted a trademark infringement, thus bringing a lawsuit to the court. In this case, Lemo failed to buy a product of F1 Technology sold on the third party platform. F1 Technology argued that the accused infringement is offering for sale rather than any behavior under the regulation of China’s trademark law, and that the products sold are genuine, so the use of the trademarks involved is reasonable. The first-instance court held F1 Technology’s sales of products bearing trademark “LEMO” which are not produced by Lemo could mislead the public on the source of the products, and hence constitutes a trademark infringement. The second-instance court held that Lemo failed to buy an alleged-infringing product, but we need to first decide whether the products sold are genuine before determining F1 Technology’s use of the trademarks involved in the promotion constitutes an infringement. F1 Technology claimed it’s the Chinese manufacturer and supplier of the Lemo connectors and the Lemo connectors it sells are manufactured and supplied by it, but it failed to produce any evidence to prove it. According to the proof standard of high degree of probability in civil proceedings, the evidence provided by Lemo is enough to prove the products sold by F1 Technology are infringing products. Accordingly, the second-instance court rejected the appeal and affirmed the original judgment. [Judicial Opinions] The determination of a seller’s use of others’ trademark in promotion and advertisement involves the interpretation and application of a series of theories including “offering for sale”, “the use of trademark”, “exhaustion of trademark right” and “reasonable use”. 1. Whether offering for sale is an independent trademark infringement Offering for sale is a concept in China’s patent law. It means the expression of the intention to sell commodities by means of advertising, displaying in shop windows or on trade shows, etc. However, there is no provision in this respect in China’s trademark law. There is no need for our trademark law to provide for offering for sale, because trademark and patent are fundamentally different in terms of protection targets. According to our patent law, patents essentially protect new technical solutions or designs. However, offering for sale of patented products is actually not using technical solutions or designs under the protection of patent right. So offering for sale is not included in the manufacture and use of patented products, or the actual sales of patented products. It's an independent infringement. Unlike patent, a trademark is a symbol. If any seller uses others’ trademark to identify the source of products in advertisements or promotion, such behavior is trademark use and is covered in Paragraph 1 and 2 of Article 57, Trademark Law of the People’s Republic of China. Specifically, Article 48 of our Trademark Law provides that the use of trademarks refers to the affixation of trademarks to commodities, commodity packaging or containers, as well as commodity exchange documents or the use of trademarks in advertisements, exhibitions, and for other commercial activities, in order to identify the source of the goods. As stipulated above, the use of trademarks on same or similar commodities not only includes the affixation of trademarks to commodities or commodity packaging, but also includes the use of trademarks in advertisements, exhibitions, and for other commercial activities. This provision doesn’t discriminate the use of trademarks by right holders from the use by infringers. Right holders’ use of trademarks in advertisement and promotion belongs to the use of trademarks, so does the use of others’ trademarks by infringers in advertisement and promotion. This interpretation is consistent with the scope determination of trademark use by right holders. When we determine whether any right holder has used a trademark on a kind of commodities, the right holder’s use of the trademark in the advertisement and promotion of the kind of commodities is also included. In the meanwhile, the provision doesn’t differentiate the use of others’ trademark by the producers and sellers of the infringing products either. China's trademark law has no special provision on sellers’ use of trademarks in product advertisement and promotion either. So logically Paragraph 1 and 2 of Article 57, Trademark Law should apply. Some hold that sellers’ offering forsale in trademark infringement cases should be regulated as sales, and Paragraph 3, Article 57 of Trademark Law should apply. The author holds that this view is debatable. If sellers’ so-called offering for sale is included in sales, this means as long as the seller can prove the products sold are produced by the right owner or a duly authorized company, the use of others’ trademark in the advertisement and promotion doesn't constitute infringement. This obviously neglects the fact that a seller can also infringe a trademark by using others’ trademark beyond the certain limit. 2. Whether a seller using others’ trademark in the advertisement or promotion constitutes a trademark infringement In order to determine whether a seller’s use of others’ trademark in advertisement or promotion constitutes a trademark infringement, we need to first determine whether the products sold are produced by the right holder or a duly authorized company, that is, whether the products are genuine. If the products sold are genuine, according to the principle of the exhaustion of trademark right, the seller’s sales doesn’t constitute a trademark infringement. Accordingly, the seller’s use of the trademark in good faith and within a reasonable scope to indicate the products sold constitutes indicative use of the trademark rather than trademark infringement. Nevertheless, if the seller uses the trademark beyond a reasonable scope, which causes public confusion on the relation between the seller and the trademark owner, the seller’s use may constitute a trademark infringement. In most cases a trademark infringement case involves offering for sale because the right holder fails to provide the infringing product, and the seller argues that the products sold are genuine, while there is controversy on how to assign the burden of proof. Some hold that when the right holder has proved the seller uses the trademarks involved in sales, the seller should bear the burden of proof to prove the products sold are genuine. The author believes in such case the burden of proof should still be borne by the right holder to prove the products sold are infringing products, and the proof standard shall not be lowered in principle. First, the assignment of burden of proof is clearly stipulated in substantive law. We should not make any exception in judicial practices. Second, when the right holder can’t provide the infringing products and there is no other evidence to prove the products sold by seller are infringing products, the promotion information of relevant products alone is not enough to prove it’s highly possible that the products sold by the seller are infringing products. Third, for products sold publicly, generally there is no obstacle for the right holder to buy the infringing products. Unless under special circumstances in individual cases, in reality it’s not necessary to request the seller to prove the products sold by it are genuine. It should be noted that the right holder's failure to provide infringing products doesn’t necessarily mean it has to bear the liability of losing the suit. As for whether the products sold by the seller are genuine which needs further proof, the proof standard of high degree of possibility in civil actions can apply. In this case F1 Technology introduces on its online store that it’s the manufacturer and supplier of Lemo products. This means the products involved should be manufactured as authorized by Lemo or provided by Lemo, but F1 Technology failed to produce evidence on this. Therefore, it's highly possible that the products sold by F1 Technology are infringing products. If F1 Technology didn’t make above introduction, Lemo had to provide further proof to prove the products sold by F1 Technology are infringing products. (By Shanghai Intellectual Property Court)
