[Data Source: China Intellectual Property News]

"西湖龍井 Xihu Longjing" of Hangzhou, mainland China is not only a geographical indication, but also a registered certificate trademark designated for use on goods of tea under Class 30. A so-called "superimposed" trademark infringement will be deemed as occurred when packages bearing the devices of the "西湖龍井" geographical indication and certificate trademark are used, without consent from the trademark right holder, to package and sell tea. That is, this is an act that concurrently infringes both a geographical indication and a trademark right.

Ruling Case No.: (2015) Yue-IPL-TM-Civil-F-2

Gist of Ruling

In the terminal market of commodities, the nature of act of a distributor who uses a package with a geographical indication and a trademark device for packaging and selling goods without authorization from the trademark registrant shall be deemed as a "Superimposed Trademark Infringement", i.e., the double infringement of manufacturing the infringing products added by selling the infringing products, which is not applicable for the argument that the seller shall be exempted from the liability of compensation.

Abstract of Facts

Plaintiff: Hangzhou Xihu Longjing Tea Industry Association (hereafter, the "LTIA")

Defendant: Guangzhou Zhongcharen Trading Co., Ltd. (hereafter, the "Zhongcharen company")

Certificate Trademark: Registration No. 9129815, "西湖龍井 Xihu Longjing", designated for use on goods of tea in Class 30

Facts: The Defendant used an identification marked with the words "西湖龍井" on the package boxes of goods of tea sold by it without authorization of the Plaintiff.

Ruling of the Court in the 1st Instance:

  1. Infringement of the products to the certificate trademark: The Defendant failed to adduce evidences to prove the alleged infringing products originated from the region within the scope designated in the rules governing the use of the trademark No. 9129815. The alleged infringing products involved belong to goods that infringed the Plaintiff's right for exclusive use of said trademark.
  2. Infringement of the act of selling to the certificate trademark: The Defendant failed to adduce evidences to prove the tea it sold came from a legitimate origin, and thus it shall cease the infringement and be liable for compensation.
  3. Judgment of the Court: The Defendant shall immediately cease selling the tea involved which infringed the rights of the Plaintiff's registered trademark No. 9129815 "西湖龍井", and compensate RMB 40,000 to the Plaintiff for its economic losses.

The Defendant then, in dissatisfaction with the ruling in the first instance, appealed to the Guangzhou Intellectual Property Court, which held that:

  1. The nature of the Defendant's act: The Defendant used, without prior consent of the Plaintiff, the identification of "西湖龍井" for packaging its unpackaged loose tea in bulk. In Trademark Law, this belongs to an act of manufacturing an infringing product. That is, the specific aspects of the act of infringement committed by the Defendant include a "manufacturing" of the infringing products added by a "selling" of the infringing products.
  2. The Defendant used a trademark that is similar to the Plaintiff's geographic indication/certificate trademark "西湖龍井" on the packages of alleged infringing products manufactured by itself, and infringed the Plaintiff's right for exclusive use of its trademark.
  3. The Defendant claimed that the tea of the alleged infringing products sold by itself came from the production region of Xihu Longjing Tea. However, even if it is true about the origin of these tea, the Defendant has no right to use a certificate trademark that is identical or similar to "西湖龍井" (Xihu Longjing) without prior consent of the Owner, and it shall still file an application to the Plaintiff and complete all formalities and procedures as set forth in the Rules governing the use and administration of said certificate trademark (hereafter, the "Rules"). Otherwise, this will constitute an infringement to the right for exclusive use of a registered trademark.
  4. As a ruling, the court in the second instance rejected the appeal and affirmed the original judgment.

[Judge's Comments]

The present case is about a dispute concerning an infringement to a geographical indication/certificate trademark. The issue is focused on: Will the origin of the loose tea leaves in the alleged infringing products have any impact to the holdings about infringement in the present case? What's the nature of the distributor's acts of packaging loose tea leaves and subsequent selling thereof?

  1. Features of the Legal System of Geographical Indications/Certificate Trademarks:
  1. Geographical Indications: Indications that identify a particular goods as originated from a region where the specific quality, reputation or other characteristics of the goods are essentially attributable to its natural or human factors. (Article 16 of the Trademark Law of the People's Republic of China)
  2. Certificate Trademarks: refers to a mark which is controlled by an organization capable of supervising a particular type of goods or service and is used on such goods or service by other organizations or individuals who do not belong to the said organization, so as to certify the place of origin, raw materials, method of manufacture, quality or other specific characteristics of said goods or service. (Paragraph 3, Article 3 of the Trademark Law of the P.R.C.)
  3. As geographical indications and certificate trademarks show special characters, in their stages such as formation of rights and use of the trademark, etc., which are different from ordinary trademarks, features that are distinct from ordinary trademarks are also shown during the trial of such cases:
    1. Registration of a geographical indication can be granted only if it complies with the form prescribed by the law; The specific quality, reputation or other characteristics of the goods marked by a geographical indication must be connected to the natural and human factors of the region indicated by said geographical indication.
    2. Certificate trademarks have their special rules for exercising the rights: The registrant of a certificate trademark shall not use said certificate trademark on the goods supplied by itself, but is responsible for the management and supervision of the use of said trademark. It is not within the discretion of the registrant of a certificate trademark to decide whether to allow another person to use said trademark or not. It is the duty of the holder of a certificate trademark to agree to allow anyone who is qualified to use it. On the other hand, if the conditions are not satisfied, the trademark right holder has no right to allow such person to use the certificate trademark.
    3. For the type of usage, the use of a geographic indication/certificate trademark can not be exclusive or monopolistic at all. In addition, the user of a geographical indication/certificate trademark must declare that it complies with the specific conditions as set forth in the Rules for the use and administration of a certificate trademark, file an application with the registrant of said certificate trademark, and complete all formalities and procedures stipulated by such Rules.
  4. This case arose from a dispute caused by the use of a geographical indication/certificate trademark. The key lies in how to accurately determine the nature of the acts involved. The court in the second instance held that even if the place of origin of the tea is truly as claimed by the Defendant, it has no right to use a certificate trademark that is identical or similar to "西湖龍井" without prior consent of the trademark registrant. The Defendant still must file an application with the Plaintiff and complete all related formalities and procedures as set forth in the Rules; otherwise, this will constitute an infringement to the right of exclusive use of the registered trademark. As for whether the tea involved came from the region within the scope specified in the Rules for trademark "西湖龍井", this is just a matter of facts, and will not affect the holdings on the infringement to trademark rights in the present case, no matter it is true or false.

 

  1. A Jurisprudential Analysis on the Seller's Superimposed Trademark Infringement in the Present Case

The court in the second instance conducted an in-depth analysis into the nature of the acts of the Defendant's packaging loose tea with the mark "西湖龍井" and selling thereof without prior consent of the Plaintiff. According to the analysis, these acts contain two aspects - "manufacturing" and "selling" the infringing products, which belong to a seller's "superimposed" trademark infringement, and shall be subject to "a more stringent punishment". That is, the specification of liabilities for a manufacturer's infringement (instead of a seller's infringement) shall be applicable to it.

Individually, both packages with a well-known trademark and loose tea in bulk constitute no infringement when they are separate. But when being combined by the seller, they will constitute an infringing product.Therefore, the key is the infringer's act of "packaging", which creates the infringing products and makes them appear in the market (so a manufacturer's infringement shall be deemed as occurred). The infringer's performing the aforesaid act without prior consent of the trademark registrant, on purpose or by negligence, will both be sufficient to create the likelihood of causing confusion to the general consumers, and thus causing damages to the justified interests of the trademark registrant and the consumers. During evaluation, the "manufacturing" aspect of the act involved, which is the first key point, could be easily ignored in the present case.

Secondly, illegally printing and selling package boxes/bags bearing the identification of a registered trademark of another person is the source of an infringement. Actually, there are clear administration specifications in both the Trademark Law and the Measures Governing the Print of Trademarks, wherein, it is set forth that: Any of the following acts shall be an infringement of the exclusive right of another person to use a registered trademark: ... counterfeiting, or making, without authorization, representations of a registered trademark of another person, or selling such representations of a registered trademark of another person as counterfeited, or made without authorization. The judicial authorities has suggested and requested the industrial and commercial administration departments to prohibit such acts from the origin, and received positive responses.