This article was co-authored by Lusheng and its strategic partner Rouse
Compared with the crime of counterfeiting a registered trademark and the crime of selling commodities bearing a counterfeit registered trademark, there has been relatively little discussion in criminal law theory and practice regarding the crime of illegally manufacturing representations of a registered trademark, and insufficient attention has been paid to the social harmfulness of this offence. This article, in light of the author’s recent representation of a trademark right holder in a case involving a paper-plastic packaging company and Zhu XX and others for illegally manufacturing representations of a registered trademark, analyzes and summarizes the difficult issues in the case, including the subjective intent of the relevant offenders, the classes of goods for which the counterfeited trademark is registered, and the right holder’s rights protection strategies.
Basic Facts of the Case
The right holder is a prestigious, internationally renowned food enterprise whose products are sold worldwide. While the right holder’s products have been selling well and its brand awareness has been increasing, it has also been severely troubled by counterfeit products. Of particular concern is that, in some overseas regions, certain lawbreakers have taken advantage of the right holder’s almost household-name brand reputation to purchase from China, without authorization, packaging bags bearing the right holder’s well-known trademarks and trade dress, ship them overseas, and use them to package food containing prohibited ingredients for sale, thereby causing harm to consumers’ physical and mental health, triggering strong public opinion, and seriously damaging the right holder’s corporate image.
The defendant entity, a certain paper-plastic packaging Co., Ltd., is an enterprise specialized in the production and sale of various food packaging bags. Defendant Zhu A is the legal representative of the company and is responsible for overall management. Zhu B serves as the company’s general manager and is specifically responsible for the company’s production activities. The salespersons of the defendant entity are responsible for product sales and, after receiving orders, submit them to the company for review and production. The public security authorities seized 20,350 packaging bags bearing the illegal marks involved in the case at the premises of the defendant entity. According to the appraisal by the trademark owner, all of these packaging bags were products bearing counterfeit marks.
From March 2021 to March 2023, the sales staff of the defendant entity established contact with three U.S. customers. Without the other party providing trademark registration certificates or powers of attorney, the defendant entity accepted their orders for processing and producing packaging bags bearing the brands involved in the case. Without reviewing the relevant authorization documents, defendants Zhu A and Zhu B arranged for the defendant entity to process and produce more than 400,000 packaging bags bearing the trademarks involved in the case (valued at RMB 53,708), and sold them to the U.S. customers via logistics.
In November 2024, the Longcheng District People’s Court of Chaoyang City imposed a fine on the defendant entity for the crime of illegally manufacturing representations of a registered trademark, and lawfully imposed criminal penalties on defendants Zhu A and Zhu B, among others.
Key Points of the Case
I. Sharing of the Agent’s Experience in Trademark Rights Protection
In North America, the trademark right holder in this case mostly adopts civil litigation as a means of rights protection in such cases. The drawbacks are lengthy procedures, high costs, and low deterrent effect. In this case, the agent’s adoption of criminal enforcement measures within China on behalf of the right holder constitutes a bold and groundbreaking attempt:
1. Overcoming the “difficulty in criminal investigation and evidence collection”. For this type of infringement model, after fully understanding the client’s pain points and demands, the agent, through meticulous early-stage planning and investigation and evidence collection, reported the case simultaneously to the public security authorities and the Administration for Market Regulation, and fully coordinated to achieve flexibility in case filing. In addition, the agent was supported by an expert team with extensive case-handling experience, which actively assisted the relevant law enforcement authorities in effectively collecting evidence, thereby laying an evidentiary foundation for the subsequent smooth filing of the case and prosecution.
2. Overcoming the “difficulty in criminal case filing”. After the quantity of seized goods preliminarily met the criminal case-filing threshold, the agent, representing the trademark right holder, actively followed up and promoted the case throughout the process, ultimately successfully facilitating the public security authorities’ filing of a criminal case.
3. Overcoming the “difficulty in examination for prosecution”. At the stage of transfer to the procuratorate for examination for prosecution, the agent assisted the client in overcoming multiple concerns of the prosecutor in charge of the case, including issues such as non-prosecution on the grounds of corporate compliance, insufficient evidence of subjective intent, and determination of the trademarks involved. The agent issued professional opinions to demonstrate and address these concerns.
4. Multi-channel rights protection. In designing a global rights protection strategy for this type of infringement model, based on the agent’s professional advice, in addition to adopting criminal measures against the Chinese printing factory, the right holder in this case also simultaneously adopted online rights protection measures on multiple cross-border e-commerce platforms, thereby striking at the supply chain of overseas counterfeiters and improving the cleanliness of the market.
II. Overcoming Difficult Issues in the Case and Successfully Securing Conviction and Accountability of the Defendant Entity and Defendants
1. The Issue of the Defendants’ Subjective Intent
Pursuant to Article 215 of the Criminal Law[1], the offender must possess intent subjectively, namely, knowing that he has not obtained the entrustment or permission of the registered trademark owner, yet still illegally manufactures and sells representations of another’s registered trademark.
At the beginning, defendants Zhu A and Zhu B argued that they were unaware of the defendant entity’s and sales personnel’s illegal manufacture and sale of the packaging bags bearing the illegally manufactured registered trademarks involved in the case, and that they were also unaware that such packaging bags were used to package food containing prohibited ingredients. Based on the facts and evidence of the case, the agent analyzed for the procuratorate that such arguments were contrary to common sense: First, the packaging bags involved in the case were produced by the defendant entity in 2019. The defendants claimed that the plate cylinders for the packaging bags involved in the case and the forged power of attorney were provided by an American they met at an exhibition in 2019, and that after the packaging bags involved in the case were produced, that customer defaulted on the contract and absconded. Second, in 2021 the defendant entity participated in an exhibition in the United States, where it displayed physical samples of the packaging bags involved in the case, and some foreign customers took several samples and business cards. After the sales staff received orders for the packaging bags involved in the case, they sent pictures to the company for instructions, and the company replied that there was stock on hand. The defendant entity then sold the packaging bags manufactured in 2019 to the new customers in 2021. Third, defendants Zhu A and Zhu B had been engaged in the printing industry and related businesses for many years and were very familiar with the administrative measures governing the printing industry. The defendants went abroad to exhibitions to display the packaging bags involved in the case to solicit customers, directly sold packaging bags printed many years earlier to new customers, and the packaging bags involved in the case were specifically used to package food containing prohibited ingredients. The right holder considered that they clearly knew that the packaging bags involved in the case that they produced and sold had not been licensed by the right holder, which met the criteria for finding direct intent in the crime.
The professional opinion issued by the author on behalf of the right holder was adopted by the procuratorate. Defendants Zhu A and Zhu B also had no choice but to admit guilt and accept punishment, and at the trial stage argued that the defendant entity had a weak awareness of the law, that their review of customer orders was not strict enough, and that they had failed to personally participate in daily sales and packaging orders, resulting in deficiencies in supervision. Ultimately, the court, on this basis, found that Zhu A and Zhu B had committed the crime of illegally manufacturing representations of a registered trademark.
2. On the Issue of “the Same Kind of Goods” in the Crime of Illegally Manufacturing Representations of a Registered Trademark
At the stages of case filing and examination for prosecution, the right holder was requested by the relevant judicial authorities to provide registration certificates for trademarks in Class 16 covering packaging bags and other related goods to prove the trademark rights infringed by the offenders. However, the agent argued on solid grounds that the trademark rights infringed upon should be the right holder’s trademarks in Class 30 covering goods such as candies, sugar, and confectionery. The reasons are that the right holder is a food enterprise rather than an enterprise engaged in the printing industry, and that the packaging bags involved in the case are specifically used for packaging candy-type goods.
First, trademark representations themselves cannot circulate as goods in the market; they need to be affixed to goods in order to realize their value. According to the Reply on the Meaning of Trademark Representations issued by the Trademark Office of the State Administration for Industry and Commerce in 1987[2], the Reply on the Issue of the Meaning of Trademark Representations issued by the Trademark Office of the State Administration for Industry and Commerce in 1988[3], and Article 15 of the Measures for the Administration of Trademark Printing promulgated in 2004[4], trademark representations, as tangible carriers of trademarks, enter the circulation field together with the goods as supporting items. In light of the specific circumstances of this case, the packaging bags illegally printed and sold by the defendant entity and the defendants are identical to the packaging bags for candy-type goods produced and sold by the trademark right holder. These packaging bags will be used downstream to package candy-type related goods for sale.
Second, in China’s criminal law system, criminal offences of trademark infringement mainly include three crimes: the crime of counterfeiting a registered trademark (Article 213 of the Criminal Law), the crime of selling commodities bearing a counterfeit registered trademark (Article 214 of the Criminal Law), and the crime of illegally manufacturing and selling illegally manufactured representations of a registered trademark (Article 215 of the Criminal Law), all of which fall under Chapter III of the Criminal Law, “Crimes of Undermining the Socialist Market Economic Order”. There is an upstream-downstream relationship in the criminal chain of manufacturing and selling counterfeit goods among these three trademark-related offences, and from the perspective of legislative history, the crime of illegally manufacturing and selling illegally manufactured representations of a registered trademark was separated from the crime of counterfeiting a registered trademark. The crime of illegally manufacturing and selling illegally manufactured representations of a registered trademark involves only the forging of trademark representations without applying them to specific goods; the crime of counterfeiting a registered trademark refers to manufacturing counterfeit products and using forged representations; and the crime of selling commodities bearing a counterfeit registered trademark covers the sale of such counterfeit goods. For example, in the Criminal Ruling (2019) Yun Xing Zhong No. 120, the Higher People’s Court of Yunnan Province held that the trademark involved in the case was approved for use in Class 31, with specific approved goods including fresh fruits, fresh citrus, etc. The defendants illegally manufactured the face paper of packaging boxes bearing the trademark involved in the case for use on packaging boxes for “Chu Orange” goods, which fell within the scope of protection of the registered trademark, and their conduct violated Article 57(4) of the Trademark Law and constituted infringement. For the constitution of the crime of illegally manufacturing representations of a registered trademark as stipulated in Article 215 of the Criminal Law, in addition to the requirement of “the same kind of goods”, the requirement of “the same trademark” must also be satisfied. This is the “two identities” standard that should be followed in determining various crimes of infringement of a registered trademark. Based on the logical relationship among Articles 213, 214, and 215 of the Criminal Law and in view of the legislative objectives, the criteria for determining “the same kind of goods” and “the same trademark” in these three provisions should be consistent and compatible.
The above-mentioned opinion issued by the agent on this issue was adopted by the procuratorate, and ultimately the indictment was based on the trademark registration certificates for candy-type goods provided by the right holder and was upheld by the court.
Conclusion
With the development of the Internet and international trade, crimes involving registered trademarks not only present various complex and difficult legal issues but also involve cross-border transactions. In the face of such offences, it is more difficult for right holders to protect their rights, and it is necessary to advance rights protection through multiple channels and by multiple means. In this case, through the author’s professional legal services, the difficult legal issues relating to offences involving trademark representations were overcome, and the ultimate goal of protecting the right holder’s rights was achieved, providing useful reference and guidance for the handling of international intellectual property crime cases.
Rouse Authors:
Sophie Li：Senior Consultant
Aria Tian：China Head of Research Unit
