Reverse Passing-off in Trademark Infringement - China



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The author outlines the highlights on China’s first case regarding trademark reverse passing-off.

A typical trademark infringement shall be the use of a trademark which is the same with or similar to the registered trademark on the same or similar products without permission of the holder of the registered trademark. For example, company A owns a registered trademark M and the designated product for the trademark is drainpipe. It is found company B uses the trademark M on its drainpipe product without permission from company A. Therefore, company B infringes the trademark right of company A.

However, there are other types of infringement.

Case:

On May 1994, a dealer of Singapore Crocodile bought some western-style garment with trademark “Maple Leaf” from Beijing Garment Factory with unit price RMB 230. Then it removed the logo of “Maple Leaf” and replaced it with the trademark “Crocodile” and resold to customers with unit price RMB 560 at Beijing Parkson Shopping Center. This was found by Beijing Garment Factory and a lawsuit was filed. The court finally recognized as unfair competition and the defendant was ordered to stop the infringement and liable to pay compensation.

This is the first case in China about trademark reverse passing-off. However, at that time, since China had not listed reverse passing-off as a kind of trademark infringement in its trademark law, the court rendered the award by recognizing as unfair competition. After that, China revised its trademark law in 2001 and reverse passing-off was officially listed as a type of trademark infringement.

Some features of trademark reverse passing-off

Under Articles 52 of Trademark Law, if a person, without permission of the trademark holder, replaces the trademark with another one and resells the product in the market, his behavior may infringe the trademark right of the holder.

To be simple, trademark reverse passing-off means a person buys another one’s goods, removes the trademark on the goods and replaces it with his trademark. And then he resells the goods to customer.

We can see there are following features for trademark reverse passing-off

a. The trademark infringed shall be a registered trademark. That is, the trademark must be registered in the State Trademark Office;
b. The product is acquired in a legal way. It may be manufactured or sold by the trademark holder;
c. The purpose for reverse passing-off is to make use of the good quality reputation of other person’s product and therefore to make illegal profit by disguising the true source of the product.

How to respond to trademark reverse passing-off

Trademark reverse passing-off is a kind of infringement. There are the following two choices for the trademark holder to take if there is any such infringement:

a. Administrative settlement. The trademark holder can file a complaint to the local administration of industry and commerce. After investigation, if the infringement fact is confirmed, the administration of industry and commerce will order stop of infringement and impose a penalty against the infringer. Furthermore, the trademark holder can apply the administration of industry and commerce for mediation of the amount of compensation. If the mediation fails, the holder can file a lawsuit;
b. Judicial settlement. The trademark holder can also file a lawsuit directly without filing the complaint to the administration of industry and commerce. But before the lawsuit is filed, it is advised the trademark holder shall find a lawyer to collect evidence and make preparation for the lawsuit.

Compensation

Upon request of the trademark holder, the court may decide the amount of compensation against the infringer for trademark reverse passing-off. In accordance with the law, the amount of compensation for infringement will be decided as follows:

a. The amount of compensation can be the profit obtained by the infringer during the period of infringement; or
b. The amount of compensation can be the loss suffered by the trademark holder during the period of infringement, including reasonable cost incurred to stop the infringement; or
c. If the above profit or loss cannot be properly calculated, the court will decide maximum RMB 500,000 as the compensation.

It shall be noted that in most trademark infringement cases, since the collection of evidences for profit and loss, especially those accounting material, are difficult, the trademark holder usually cannot be able to prove the exact amount of profit or loss. Under such circumstances, the amount decided by the court will be below RMB 500,000.

ABOUT THE AUTHOR: Erex Chen
V & T Law Firm, with headquarters in Beijing, and two offices in Shenzhen and Shanghai, is a large firm providing comprehensive legal services in mainland China. V & T Law Firm has over two hundred staff members including partners, associates.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.



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