China’s National Intellectual Property Administration Releases Second Batch of Guiding Cases of Administrative Enforcement

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On March 31, 2022, the China National Intellectual Property Administration (CNIPA) issued the Second Batch of Guiding Cases for Administrative Enforcement of Intellectual Property Rights (第二批知识产权行政执法指导案例).  Administrative enforcement provides for a second avenue for enforcement of intellectual property rights in China in addition to civil litigation.  The Guiding Cases include 3 cases covering patent infringement, trademark infringement and design patent infringement.

The Intellectual Property Office of Wenzhou City, Zhejiang Province handled the case of repeated infringement of the patent right of “transmission mechanism of three-dimensional packaging machine”

Holding

If the perpetrator infringes the patent rights of others and fails to stop the infringement after the administrative ruling or judicial ruling takes effect, and continues to infringe the same patent right, it may be directly identified as repeated infringement according to local regulations and administrative penalties will be imposed.

Basic case

On December 7, 2017, Ruian Haoyun Machinery Co., Ltd. complained to Wenzhou Intellectual Property Office that Guo had infringed the utility model patent of “three-dimensional packaging machine transmission” (patent number ZL201620913636.X). On November 12, 2018, Wenzhou Intellectual Property Office made an administrative ruling, ordering Guo to stop the production and sale of infringing products, and Guo did not appeal via filing an administrative lawsuit. On July 1, 2019, Ruian Haoyun Machinery Co., Ltd. complained to Wenzhou Intellectual Property Office again that the similar products produced and sold by Guo infringed the same patent right.

On September 4, 2019, Wenzhou Intellectual Property Office made an administrative ruling, ordering Guo to immediately stop the infringement and destroy the infringing products. Guo refused to accept and filed an administrative lawsuit. On March 24, 2020, the Intermediate People’s Court of Ningbo City, Zhejiang Province rejected Guo’s claim. Guo withdrew his appeal to the Supreme People’s Court. On February 26, 2021, Wenzhou Intellectual Property Office opened a case for investigation into Guo’s alleged repeated infringement of the same patent right. According to relevant administrative rulings and judgment documents, it was determined that the infringement committed by Guo constituted repeated infringement.

Penalty

The act of the party, Mr. Guo, repeatedly infringing the patent right of the “transmission device of a three-dimensional packaging machine” (patent number ZL201620913636.X) owned by Ruian Haoyun Machinery Co., Ltd. constitutes the repeated infringement per Article 51 of the “Zhejiang Province Patent Regulations.” According to Article 46 of the Regulations, Wenzhou Market Supervision and Administration Bureau ordered it to stop the infringement and imposed an administrative penalty decision on the party concerned.

Guiding significance

This case is the application of the relevant provisions on repeated patent infringement. The current “Patent Law” and “Regulations for the Implementation of the Patent Law” do not provide for repeated patent infringement. Article 20 of the “Measures for Administrative Law Enforcement of Patents” stipulates that for repeated infringements, the patent management department may directly make a decision to order the immediate cessation of the infringement upon request. At present, Beijing, Tianjin, Hebei, Zhejiang, Fujian, Henan, Hubei, Guangdong, Chongqing, Sichuan, Guizhou, Xinjiang and other provinces (autonomous regions and municipalities) clearly stipulate in their local regulations that administrative penalties can be imposed for repeated patent infringement. Where, after an administrative ruling or judicial ruling, the respondent fails to stop its infringement and continuously or repeatedly infringes on the same patent right after it has come into force, the circumstance of repeated patent infringement may be regulated by applying the provisions on repeated patent infringement. In other words, after a patent administrative department makes an administrative ruling on the party’s repeated infringement of the same patent right, the patent law enforcement department may impose administrative penalties on the repeated patent infringement in accordance with local regulations.  

Guiding Case No. 7

Shandong Weihai Market Supervision and Administration Bureau investigated and dealt with the use of recycled beer bottles to infringe the exclusive right to the registered trademark of “Tsingtao Beer”

Holding

Recycling old beer bottles for reuse, filling the bottles with the same or similar products sold by the trademark owner and putting them back into the market for sale, but failing to effectively block the embossed characters of other people’s registered trademarks on the beer bottles, which may easily lead to confusion, constitutes trademark infringement causing others damages and violates the exclusive right of the others to use the trademark.

Basic Case

In March 2020, Tsingtao Brewery (Rongcheng) Co., Ltd. complained to the Weihai Market Supervision and Administration Bureau, reflecting that a company in Weihai  infringed the exclusive right to the registered trademark of “青岛啤酒TSINGTAO”. After investigation, it was determined that Tsingtao Brewery Co., Ltd. has registered No. 1304176 “Tsingtao Beer” (in Chinese) and and No. 1351701 “TSINGTAO” (in English) in class 32 for “beer” and other commodities. There are embossed words Tsingtao in English and Chinese on the neck of beer bottles produced by Tsingtao Brewery Co., Ltd. In accordance with industry practice, the parties used recycled old beer bottles as their own beer bottles for a long time. Among them, the 600ml old beer bottles included Tsingtao beer bottles with the embossed text “青岛啤酒TSINGTAO” on the neck, but they affixed their own trademarks and the beer was sold without effectively blocking the embossed text of “青岛啤酒TSINGTAO” on the bottle neck.

Penalty

In the process of beer production and sales, the party used the recycled beer bottle with the embossed text “青岛啤酒TSINGTAO” as its beer bottle, and after removing the original paper label of the Tsingtao beer bottle, affixed its own trademark. However, the embossed text of “青岛啤酒TSINGTAO” on the bottle neck was not effectively blocked, which is easy to cause the relevant public to misunderstand the source of the product or whether there is a specific connection between the party and Tsingtao Brewery Co., Ltd. It has caused damage to the exclusive right to the registered trademark of Tsingtao (in English and Chinese), which constitutes an infringement of the exclusive right to the registered trademark stipulated in Article 57(7) of the Trademark Law. The case-handling authority ordered the parties concerned to immediately stop the infringement and imposed administrative penalties.

Guiding significance

This case involves the protection of the exclusive right to use registered trademarks in the field of recycling containers bearing the registered trademarks of others for reuse. According to the national resource recycling policy and industry practice, glass containers are allowed to be recycled and reused, but they should also be used in accordance with the law. Refilling and selling by recycling other people’s containers is often the same or similar to the right holder’s products if the embossed characters and other signs that are difficult to remove on the container are not effectively blocked, they will be put into the market again, which will easily confuse relevant public  about the products.  As to whether there is a specific connection between the source or the producer of the commodity and the holder of the registered trademark on the container leads to misidentification, thereby infringing on the legitimate rights and interests of the holder of the registered trademark, which should be stopped and corrected.

This case clearly identified the use of recycled old beer bottles and cans to sell beer without effectively covering the original trademark logo as trademark infringement, which solved the problem of difficult identification of similar cases and ambiguity.

Guiding Case No. 8

The Shanghai Intellectual Property Office reached a mediation agreement in handling design patent infringement disputes and was confirmed by the judiciary

Holding

In the process of handling patent infringement disputes, the patent management department presided over the mediation and facilitated both parties to reach a mediation agreement, and obtained enforcement power through judicial confirmation, which strengthened the organic connection between administrative protection and judicial protection.

Basic Case

Markor International Household Products Co., Ltd. found that a number of products that a company in Shanghai promised to sell were suspected of infringing on multiple design patents owned by it, and filed an administrative adjudication request on patent infringement with Shanghai Intellectual Property Office on May 25, 2020.  On June 1, the Shanghai Intellectual Property Office accepted the above-mentioned series of cases and presided over the mediation according to the mediation wishes of both parties. On September 29, both parties signed an administrative mediation agreement for patent infringement disputes.

On October 20, both parties applied to the Shanghai Intellectual Property Court for judicial confirmation of the agreement. The Shanghai Intellectual Property Court reviewed the application materials submitted by the parties, the form and content of the mediation agreement, and issued a civil ruling on the same day after the review. It is confirmed that the mediation agreement reached by both parties is valid, and if one party refuses to perform or fails to perform in full, the other party may directly apply to the people’s court for compulsory execution.

Guiding significance

The patent management department has credibility as a government entity and a high level of professionalism, and it is a third party in presiding over administrative mediation work, which is conducive to facilitating both parties to reach a settlement and sign a mediation agreement. However, the mediation agreement is a civil contract in nature and has no enforceability. If the parties subsequently refuse to implement the agreement, it will greatly waste administrative resources, damage the credibility of the government entity, and increase the cost of rights protection for the rights holder. After the judicial confirmation procedure, the mediation agreement is endowed with enforceability, which solves the problem of difficulty in the implementation of the mediation agreement. In addition, the judicial confirmation of the mediation agreement is effectively the conclusion of a first instance trial, which improves the protection efficiency and strengthens the organic connection between administrative protection and judicial protection.

General Secretary Xi Jinping delivered an important speech when presiding over the 25th collective study of the Political Bureau of the CPC Central Committee, clearly emphasizing the need to improve the connection mechanism between administrative enforcement of intellectual property rights and the judiciary, and to promote the unification of administrative law enforcement standards and judicial adjudication standards. At present, Beijing, Shanghai, Fujian, Hunan, Sichuan, Shaanxi and other places have clearly established a judicial confirmation system for tort dispute mediation agreements through local regulations; the Supreme People’s Court has encouraged judicial confirmation in a number of judicial policy documents, such as the one issued in 2016. The judicial policy “Opinions on Further Deepening the Reform of the Diversified Dispute Resolution Mechanism of the People’s Courts” clearly stipulates that the parties may apply to the basic people’s court or the people’s court where the mediation organization is located to confirm the validity of an agreement of the nature of a civil contract reached through mediation by an administrative agency. 

The full text of the Notice if available here (Chinese only).

 

Author: Aaron Wininger

Aaron Wininger is a Senior Attorney and Director of China Intellectual Property at Schwegman Lundberg & Woessner.

Author: Aaron Wininger

Aaron Wininger is a Senior Attorney and Director of China Intellectual Property at Schwegman Lundberg & Woessner.