The issue of sufficiency of evidence in trademark cases in China poses a number of issues for brand owners
The issue of sufficiency of evidence in trademark cases in China can come as an unexpected challenge to many rights holders, especially those from countries with different legal systems and examination criteria. In practice, the following types of evidence can prove use, either alone or in combination:
- a sales contract, purchase order or invoice showing that the goods or services provided under the trademark were sold within mainland China during the period at issue. Electronic documents will be considered to have evidential effect only if they are executed by both parties, which rarely happens. Paper documents should be stamped with the official seal of the rights holder’s Chinese counterpart, which should include the company’s complete Chinese name and should be identical to the seal recorded at the administration for industry and commerce office. As the name of the Chinese company shown in the contract, purchase order or invoice is usually in English, it is advisable to obtain a copy of its business licence too. Supporting evidence, such as proof of payment from a bank or a bill of lading, is also advisable where there is any doubt that the sales contract was actually performed;
- a Customs declaration form stamped with the official customs seal and showing that goods bearing the mark were imported into mainland China;
- an audit report showing the amount of goods or services bearing the mark in question that were sold in mainland China. While some companies have general audit reports, these are useful only if they state explicitly which numbers relate to a specific trademark;
- a shop or office lease agreement showing the venue at which goods or services were sold under the mark in question;
- a company brochure, product catalogue or other promotional material. While this is usually considered to be self-made with little evidential effect, it can be used in combination with other evidence to give a clearer impression of how the trademark is actually used. In particular, it can be useful to print the year on the front or back cover to indicate when the brochure or catalogue was used. However, if it is in English, it may be considered irrelevant because businesses in China normally carry out promotions in Chinese languages;
- an advertisement or exhibition record and related contract, or an invoice showing that goods or services bearing the trademark were advertised or exhibited in mainland China;
- an audit report showing the advertising expenses for goods or services sold under the trademark in mainland China. Similar to the sales audit report, this should list the amounts of goods or services sold under specific marks, rather than merely offering a general audit report of the company; and
- a notarised affidavit by a Chinese distributor. If the rights holder did not sign the sales contract or this does not meet the necessary formality requirements, it can ask its Chinese distributor to issue and notarise an affidavit stating that they have a business relationship and that the distributor has distributed goods or services bearing the mark in question during a certain period. Although this is weaker than a formal and properly executed contract, it can still be useful – especially if it also carries a copy of the distributor’s business licence – and can be used in combination with other evidence.
A frequent question is whether original equipment manufacturing (OEM) qualifies as trademark use. In Muji in 2012, the Supreme People’s Court held that evidence of OEM in China was insufficient to establish the claimed “prior use and reputation” of Muji’s trademark in China. In Pretul in 2015, the Supreme People’s Court held that the defendant’s OEM activity did not constitute trademark infringement because the goods bearing the trademark were all exported to Mexico without being distributed in China. Both decisions indicate that OEM does not qualify as trademark use. However, in non-use cancellation cases, OEM evidence is still acceptable as evidence of use to overcome a cancellation.
People often confuse trademark reputation with trademark use and provide the wrong type of evidence. ‘Trademark use’ can be understood as certain actions taken by the rights holder, while ‘reputation’ is the result or reaction from the relevant public. The following types of evidence can prove reputation, either alone or in combination:
- a search report from the China National Library, which is a formal report and includes photocopies of newspapers, magazines, books and online publications that mention the mark in question. The report is stamped with the official seal of the China National Library and thus is usually considered to be strong evidence;
- a notarised webpage, such as a search page from Baidu featuring the trademark as a search term, along with news items which mention the mark. The possible flaw in this is that the date of printing and notarisation is usually later than the period concerned (ie, the filing date of the opposed mark). In addition, this type of evidence is often viewed with suspicion, given how easily online content can be edited;
- awards and prizes relating to the trademark in mainland China, whether issued by the government, an industry association or the media – although it is unusual for foreign brand owners to receive awards and honours in China; and
- a survey report issued by a professional investigation company, showing that the relevant public in China is familiar with the trademark. However, the validity of such reports is questionable due to the limited number of samples, the method of asking questions, the geographical area covered and the credibility of the investigation company.
In cases where the rights holder contends that the other party is acting in bad faith, it must submit solid evidence to prove this, instead of claiming obvious bad faith based on the fact that the trademarks are identical. The following evidence may be considered useful in supporting a claim of bad faith:
- records showing that the other party also copied many other famous marks – although there are no clear criteria as to how many or how famous the marks at issue must be; and
- notarised documents showing that the other party has tried to mislead consumers about the origin of the goods or services, such as a brochure untruly stating that its company is a subsidiary or distributor of the genuine brand owner.
Sometimes, opposing parties do admit that they have intentionally imitated a foreign brand during the course of an investigation. However, such oral confessions – whether in the form of investigation report or a voice recording – are seldom sufficient to prove bad faith, as the identity of the speaker is so difficult to prove.
The threshold of evidence required to prove an “agent or representative” relationship (Article 15(1)) between a rights holder and an opposing party is higher than that required to prove a “contract, business or other relationship” (Article 15(2)).
Contracts between the rights holder and the opposing party can be useful for proving such relationships. The contracts should have been entered into before the filing date of the opposed trademark and must feature the name of the opposing party. If the company name in the contract is in English, it will also be necessary to prove that this pertains to the same company.
Correspondence between the rights holder and the opposing party can also serve as useful evidence to demonstrate that the two parties had contact with one another before the filing date of the opposed trademark, and the opposing party was aware that the mark was owned by the rights holder before it applied to register it in China. If such correspondence is in email form, it should be notarised (and then legalised if the notarisation took place outside China). Whether the sender or recipient of the email is the same as the opposing party is often doubtful – especially if private rather than company email addresses are used.
While it would be ideal to have both types of evidence to prove a direct relationship, in reality such relationships are seldom direct. For example, the opposing party might be a company established by the ex-employee of the rights holder’s Chinese distributor. In such cases, a complete evidence chain should be built to prove each relationship (ie, a distribution contract between the rights holder and the Chinese distributor, an employment contract between the Chinese distributor and the ex-employee, and a business licence or company registration record to show that the ex-employee founded the opposing party).
When arguing that two trademarks are similar, proof that the opposing party has intentionally made its mark easy to confuse with the mark at issue or that actual confusion has taken place (eg, a complaint letter from a consumer) can be crucial.
When arguing the similarity of the goods or services in respect of their function, characteristics, sales channels and targeted consumers, the following types of evidence can be helpful, especially when such goods or services do not fall into the same sub-class:
- pictures showing that the goods are being sold from the same or a nearby counter, or have been sold together in a set;
- evidence demonstrating that the goods have been used in combination or as part of one another; and
- precedents showing that such goods or services have been ruled to be similar in previous cases.
When claiming prior copyright over the opposing party’s trademark, the following three facts need to be supported by evidence.
First, according to Article 7 of the Supreme People’s Court Interpretation on Issues of Applicable Laws for Copyright Civil Dispute Cases: “Documents concerning copyright, such as manuscript, original copy, legitimate publication, copyright recordation certificate, certification issued by certifying organisation or contract of ownership, can serve as evidence of copyright.” In practice, a copyright recordal certificate and self-declaration are insufficient to establish copyright ownership.
Second, the opposing party’s trademark must be identical or substantially similar to the copyright. The examination criteria for similarity with respect to copyright are quite different from these for trademarks, due to differences between the two types of protection.
Third, the opposing party must have had access to the copyrighted material before filing to register its trademark, which is usually proved by evidence of publication.
Gloria Q Wu
This article first appeared in World Trademark Review. For further information please visit www.worldtrademarkreview.com.