The People vs. Zhang Sheng and Zou Li for counterfeiting registered trademarks, The People vs. Wang Weibo for selling illegally manufactured representations of registered trademarks [Hubei Provincial High People’s Court, (2015) E Zhi Xing Zhong Zi No. 1 Criminal Ruling].

Case Summary

Since 2012, the accused Zhang Sheng and Zou Li have been purchasing counterfeit seasoning packaging bearing the trademarks "NANJIECUN in Chinese characters" (南街村) (10,000 pieces) and  “Lotus in Chinese characters" (莲花) (25,000 pieces). The packagings were supplied to them by the accused Wang Weibao. Zhang Sheng and Zou Li firstly procured MSG and granulated chicken bouillon products of other brands, repacked the products with the counterfeit TOTOLE (太太乐) and Lotus packaging, and then used salt, MSG and other flavouring ingredients in certain formula to make counterfeiting “NANJIECUN” seasonings. The sales amount of the counterfeit products totaled RMB 115,565. On August 14, 2013, the local enforcement officers from the Laohekou PSB of Xiangyang City raided the rented apartment and warehouse of Zhang Sheng and Zou Li and seized substantial amounts of equipment and raw material as well as counterfeit packaging of “NANJIECUN”, “TOTOLE” and “Lotus” products, and counterfeit trademark representations.

The first instance court, Xiangyang Intermediate People’s Court held that:

  • the act of Zhang Sheng and Zou Li constituted the crime of counterfeiting registered trademarks;
  • the acts of Wang Weibo who selling counterfeit packaging and representations of two registered trademarks involved for an amount exceeding 10,000, constituted the crime of selling illegally manufactured representations of registered trademarks.

The court therefore ruled that:

  • the accused Zhang Sheng was sentenced to two-year imprisonment with a fine of RMB 60,000;
  • the accused Zou Li was sentenced to one-year imprisonment with a fine of RMB 50,000; and
  • the accused Wang Weibao was sentenced to one-year imprisonment with a fine of RMB 10,000.

The second instance court Hubei Provincial High People’s Court upheld the first instance ruling by correcting the error made by first instance court on the term of imprisonment of Wang Weibao.

Significance

Both first and second instance of the case were tried by the IPR tribunal of the courts, which is the result of China’s judicial reform in consolidating the trial of IPR civil, administrative and criminal cases under the jurisdiction of the IPR tribunals (3 in 1 practice).

Both tribunals defined the boundary between the “crime of counterfeiting registered trademarks” and the “crime of selling illegally manufactured representations of registered trademarks” and clarified the circumstances where the act of offering assistance to the prime culprit shall be held liable for complicity or constitute an independent crime. The law application issue in this case was exemplary while the court decision balances the judicial philosophy of enhancing the efforts in fighting against the IPR crime and protecting the human rights in the IPR criminal judicial practice, which highlights the advantage of the 3 in 1 practice.

WAN HUI DA Comments:

The 3 in 1 practice has been launched as a pilot project in Pudong District Court of Shanghai for twenty years. The Supreme People’s Court has vowed to implement this practice in the court houses all over the nation in 2015. On July 5, 2016, the SPC made this official by releasing the “Opinion on Promoting the Practice of Consolidating the Trial of IPR Civil, Administrative and Criminal Cases under the Jurisdiction of IPR Tribunals in the Court throughout China”. This practice, which will be implemented except the IP courts in Beijing, Shanghai and Guangzhou, is expected to harmonize the standards for the trial of IPR civil, administrative and criminal cases.