In an effort to protect the intellectual property of foreign companies operating in the country, the Chinese government has been acting against infringement. Last October, a court in Shanghai sentenced a defendant to 4.5 years in jail, in addition to a multimillion fine, for counterfeiting "Anchor" and "Fonterra" registered trademarks.
A co-defendant received a suspended sentence after confessing and surrendering his illegal income of RMB 13,000 (US$ 1,800), according to Judge Li Jing’s verdict.
Owned by Fonterra, the brand of dairy products Anchor is one of the leading imported brands in China and is mainly sold online, through e-commerce platforms.
In October 2020, local authorities seized a large number of counterfeit Anchor dairy products, worth more than RMB 30,000 (US$ 4,200). According to the investigation, the defendant and his accomplices had sold around RMB 8 million (US$ 1.1 million) of counterfeit dairy products under the Anchor brand through online platforms.
The court established that the defendants had used the trademark registered by others without the owner’s permission. Through this illegal activity, they collected large amounts of money, which constitutes the crime of counterfeiting registered trademarks and infringement upon others’ IP rights.
This case reflects China’s efforts to provide diversified legal remedies for trademark infringement, which harms trademark owners, confuses consumers, and disrupts the market order, said the judge on the Fonterra case.
Counterfeiting of registered trademarks can lead to civil, administrative, and even criminal liabilities. The legal provisions, such as Articles 57, 60, and 63 of the Trademark Law and Articles 213, 214, and 215 of the Criminal Law, serve to protect trademark owners and consumers as well as ensure a fair competition environment in the market.
At the same time, consumers should ensure that they purchase products through authorized channels, especially since online platforms can be difficult to verify. Consumers are advised to choose regular or authorized merchants and platforms to confirm the authenticity of their purchases.
The severity of the sentence sends a strong message and is also a warning to other potential criminals in China, that authorities will enact the law to further protect the interest of consumers and maintain a fare market environment.
Earlier this year, a report by the office of US Trade Representative Katherine Tai said China led the world in counterfeit and pirated products. It identified WeChat, China's most popular app, as one of the largest platforms for counterfeit goods, Reuters reported.
Remedies for trademark infringement
Trademark infringement damages the legitimate rights and interests of the trademark owner, reduces the competitiveness of its goods or services, and impairs its commercial reputation.
At the same time, trademark infringement causes confusion among consumers about the source of goods or services, disrupts the market economic order, and harms public interests. The infringer shall bear administrative liability, and serious counterfeiting will also bear criminal liability.
Articles 57, 60, and 63 of the Trademark Law stipulate seven types of situations that infringe the exclusive right to register a trademark, the punitive measures that the industrial and commercial administrative department can take for infringement, and the method for determining the amount of compensation.
Articles 213, 214 and 215 of the “Criminal Law” stipulate the crime of “counterfeiting registered trademarks”, “the crime of selling goods with counterfeit registered trademarks” and “illegal manufacturing and selling of illegally manufactured registered trademarks”. Through diversified accountability methods, it is conducive to protecting the civil rights of trademark owners, safeguarding the legitimate rights and interests of consumers, deterring potential criminal acts, and promoting the normal operation of the market economic order.
Three elements must be met to constitute the crime of counterfeiting:
The perpetrator uses someone else’s registered trademark without the permission of the registered trademark owner. This is a prerequisite for the crime of counterfeiting a registered trademark. If the perpetrator has obtained the permission of the owner of the registered trademark but fails to complete relevant procedures in accordance with legal procedures, it cannot be considered to constitute a crime.
The perpetrator objectively carried out the act of using the same trademark as someone else’s registered trademark on the same kind of goods or services. “The same kind of goods and services” refers to the goods and services that are the same as the goods and services approved for use by the registered trademark. “The same trademark” means that the trademark used by the illegal perpetrator is highly consistent with the registered trademark of the right holder.
The above-mentioned behavior of the perpetrator only constitutes a crime if the circumstances are serious. This is the line that separates a crime from a non-criminal act. Article 1 of the “Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Intellectual Property Infringement” stipulates the circumstances of “serious circumstances” and “particularly serious circumstances”.
The behavior of the two defendants in the Fonterra case fully complied with the above conditions, constituted the crime of counterfeiting registered trademarks, and should be punished in accordance with the law.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
Woodburn Accountants & Advisors is one of China’s most trusted business setup advisory firms.
Woodburn Accountants & Advisors is specialized in inbound investment to China and Hong Kong. We focus on eliminating the complexities of corporate services and compliance administration. We help clients with services ranging from trademark registration and company incorporation to the full outsourcing solution for accounting, tax, and human resource services. Our advisory services can be tailor-made based on the companies’ objectives, goals and needs which vary depending on the stage they are at on their journey.
Talk to an expert
Schedule a 30-mins complimentary, no-obligation call to see how Woodburn can help you. Book a call with our Head of Business Advisory - Kristina Koehler-Coluccia.
Topics we can advise on include:
Company Registration
Cloud Accounting & Financial Reporting
Cloud Payroll Services
Tax & Audit Services
Recruitment
Employer-of-Record
Visa Application
Trademark Registration
Switch to Woodburn
Partner with Woodburn (cross referral)
Our calls are automatically scheduled via Zoom - or via Teams, WeChat or WhatsApp upon direct request.
Our advisory calls are available from Monday-Friday from 8am to 5pm CEST and Wednesday until 9pm CEST.