As one of the principal forms of crime infringing trademark rights, the crime of counterfeiting a registered trademark is subject not only to administrative penalties, but may also give rise to criminal liability. This article focuses on the relevant legal provisions and defense strategies concerning the crime of counterfeiting a registered trademark, and will explore in depth the types of conduct involved, the definition of key monetary thresholds, the criteria for determining “the same kind of goods,” the basis for determining “identical trademarks,” the evidentiary nature of authenticity appraisal opinions, as well as core issues such as “refurbishing used goods” and “fake order brushing,” with a view to providing practical reference for right holders.
On this basis, we have selected the following three popular Q&As from Chapter 9: Practical Essentials and Defense Points of the Crime of Counterfeiting a Registered Trademark of the Q&A Handbook on Cutting-edge Practical Issues in Intellectual Property, which was jointly compiled by us, Wolters Kluwer Xianxing and our strategic partner Rouse International, to share with you.
Selected Practical Q&As
Q1
[Evidentiary Nature of Authenticity Appraisal Opinions] What is the evidentiary nature of authenticity appraisal opinions issued by trademark right holders regarding goods?
Authenticity appraisal or identification opinions on goods issued by trademark right holders constitute important evidence in criminal cases involving infringement of trademark rights. Although such appraisal materials are termed “appraisal,” they should in fact be classified, within the statutory categories of evidence, as “victim statements”, and such appraisal opinions have presumptive probative force, unless there is contrary evidence sufficient to overturn them.
In the reasoning of Judgment No. 860 “Gu Juan and Zhang Lifeng Case on Selling Goods Bearing Counterfeit Registered Trademarks” in the Criminal Trial Reference published by the Supreme People’s Court, it is stated: “In criminal cases involving infringement of trademark rights, the trademark right holder is in the position of a victim. The authenticity identification made by the right holder regarding counterfeit goods or trademarks constitutes a victim statement rather than an expert appraisal opinion, and therefore is not subject to the requirement of appraisal qualifications. Moreover, in determining the authenticity of the goods involved in the case, the appraisal opinion issued by the trademark right holder has presumptive probative force, unless there is contrary evidence to overturn it. The content of the appraisal document shall also be examined in conjunction with other evidence, with a comprehensive grasp of the corroborative relationships among all the evidence in the case, and particular scrutiny shall be given to rebuttal evidence provided by the defense.”
Q2
[Legal Nature of Refurbishing Used Goods] Does “refurbishing used goods” constitute the crime of counterfeiting a registered trademark?
According to legal provisions and judicial practice, in determining whether refurbishing conduct constitutes this crime, it is primarily necessary to assess whether the perpetrator’s “use” of the right holder’s registered trademark affects the realization of the source-identifying function of the trademark.
Generally speaking, where the conduct merely involves simple cleaning of used goods, such as dust removal or polishing, and does not affect the normal performance of the original trademark’s source-identifying function or cause consumer confusion, it usually does not constitute the crime of counterfeiting a registered trademark. Conversely, where the perpetrator, through refurbishing acts such as disassembly, reassembly, replacement of main components, or modification of product performance parameters, has carried out a “substantive modification” of the product, such that the refurbished product is no longer the same product as that of the right holder, such conduct constitutes trademark infringement and may be subject to criminal regulation.
Q3
[Examination of the Defense of Fake Order Brushing] How is the defense of “fake order brushing” examined and determined?
“Fake order brushing” refers to conduct whereby fictitious transactions are created to artificially increase data such as sales volume and ratings of goods, thereby deceiving consumers and e-commerce platforms. On online sales platforms, fake order brushing is particularly prevalent, and such conduct likewise has a direct impact on conviction and sentencing in criminal cases involving infringement of trademark rights.
First, since sales volume generated by order brushing does not constitute genuine sales data, the sales amount generated by order brushing shall be deducted when determining the sales amount of the defendant. Second, the defendant bears the corresponding burden of proof for his or her defense of order brushing. The defendant cannot merely raise a verbal defense of “order brushing,” but must submit relevant evidence, including chat records and transaction vouchers, to substantiate such assertions. Finally, judicial authorities shall conduct a comprehensive and objective review of the evidence, prudently determine and exclude the amount attributable to order brushing.
In Guiding Case No. 87 “Guo Mingsheng, Guo Mingfeng et al. Case on Counterfeiting Registered Trademarks,” included in the 16th batch of guiding cases issued by the Supreme People’s Court in 2017, the key points of the judgment state: “The amount of illegal business operations and the amount of illegal gains in the crime of counterfeiting a registered trademark shall be determined comprehensively on the basis of evidence such as the defendant’s confession, witness testimony, victim statements, electronic data of online sales, transaction records of the defendant’s bank accounts, delivery notes, computer system records of courier companies, and accounting records made by the defendant and others. Where the defendant argues that online sales records contain fictitious transactions for the purpose of boosting credit ratings, but there is no evidence to substantiate such argument, the defense shall not be accepted.”
Other Excellent Q&As Covered in This Chapter:
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[Types of Conduct Constituting Trademark Crimes] What acts infringing the exclusive right to use a registered trademark will give rise to criminal liability?
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[Concept of Key Monetary Thresholds in Trademark Crimes] What are the concepts and distinctions among “amount of illegal business operations,” “sales amount,” and “value of goods” in the crime of counterfeiting a registered trademark?
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[Determination of “the Same Kind of Goods”] How is “the same kind of goods” determined in the crime of counterfeiting a registered trademark?
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[Determination of “Identical Trademarks”] How are “identical trademarks” determined in the crime of counterfeiting a registered trademark?
Authors of This Chapter
Hou Juanjuan Head of Guangzhou Litigation Team
Lusheng Law Firm, Guangzhou
Email: ahou@lushenglawyers.com
Huang Qian Attorney
Lusheng Law Firm, Guangzhou
Email: chuang@lushenglawyers.com
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About the Report:
The Q&A Handbook on Cutting-edge Practical Issues in Intellectual Property was jointly and meticulously prepared by Wolters Kluwer Xianxing, Lusheng Law Firm and its strategic partner Rouse International, and was officially released online in November 2024. The handbook was compiled by more than 30 senior intellectual property experts, and selects 108 intellectual property questions divided into 11 chapters, comprising a total of 100,000 words of detailed analysis. It focuses on the most cutting-edge issues currently attracting attention in the industry, and comprehensively covers key areas such as patents, trademarks, copyrights, trade secrets, unfair competition on the Internet, intellectual property capital contribution, and punitive damages for intellectual property. Adopting a “Q&A” format, it distills the hot topics of concern to intellectual property practitioners and provides readers with the latest legal interpretations, case analyses, and practical guidance.
Since its release, the report has attracted widespread attention and high praise in the industry. In order to better share its excellent content, we will continue to select a number of key Q&As from each chapter and publish them in the form of a series of articles.
