Case Summary Significance Comment

This case is one of the Top 10 IP Cases of the Year (2015) selected and summarised by the Supreme People's Court. This update provides an edited translation of the court's case summary and significance, as well as brief commentary as appropriate.

The IP Rights Tribunal recently upheld its first-instance ruling in a decision over the manufacture and sale of counterfeit packaging for food seasoning.

Case summary

In 2012 Sheng Zhang and Li Zou began purchasing counterfeit seasoning packaging bearing the trademarks NANJIECUN in Chinese characters (???) and LOTUS in Chinese characters (??). The packaging, comprising approximately 10,000 NANJIECUN pieces and 25,000 LOTUS pieces, was supplied by Weibao Wang.

The defendants obtained monosodium glutamate (MSG) and granulated chicken bouillon products, repackaged them in counterfeit TOTOLE (???) and LOTUS packaging, and added a formula of salt, MSG and other flavourings to create counterfeit NANJIECUN seasoning. The counterfeit products generated sales totalling Rmb115,565.

On August 14 2013 local enforcement officers from the Laohekou Public Security Bureau of Xiangyang City raided Zhang and Zou's rented apartment and warehouse, and seized substantial amounts of equipment and raw materials, including the counterfeit NANJIECUN, TOTOLE and LOTUS packaging.

At first instance, the Xiangyang Intermediate People's Court held that:

  • Zhang and Zou's manufacturing activities constituted counterfeiting; and
  • Wang's sale of over 10,000 pieces of counterfeit packaging constituted the sale of illegally manufactured representations of registered trademarks.

The court therefore sentenced:

  • Zhang to two years' imprisonment and a fine of Rmb60,000;
  • Zou to one year's imprisonment and a fine of Rmb50,000; and
  • Wang to one year's imprisonment and a fine of Rmb10,000.

At second instance, the Hubei Provincial High People's Court upheld the first-instance ruling,(1) but corrected the error made by the first-instance court on the term of Wang's imprisonment.(2)

Significance

Both instances of the case were tried by the IP Rights Tribunal, as a result of China's judicial reform which has consolidated civil, administrative and criminal IP cases into a three-in-one practice under the jurisdiction of the IP Rights Tribunal.

Both instances defined the boundary between the crimes of 'counterfeiting registered trademarks' and 'selling illegally manufactured representations of registered trademarks', and clarified the circumstances in which assisting the defendant constitutes either complicity or an independent crime. The issue of law application in this case was exemplary and the decision balanced the judicial philosophies of enhancing the efforts to combat IP crime and protecting human rights in IP criminal judicial practice – highlighting the advantages of the three-in-one practice.

Comment

Launched as a pilot project, the practice has been in effect in the Pudong District Court of Shanghai for 20 years. In 2015 the Supreme People's Court vowed to implement the practice across China and on July 5 2016 it released 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". Excluding the IP courts in Beijing, Shanghai and Guangzhou, the new practice should harmonise the trial standards in civil, administrative and criminal IP cases.

For further information on this topic please contact Hui Huang, Paul Ranjard, Huimin Qin or Nan Jiang at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000) or email (huanghui@wanhuida.com, ranjard@wanhuida.com, qinhuimin@wanhuida.com or jiangnan@wanhuida.com). The Wan Hui Da Law Firm & Intellectual Property Agency website can be accessed at www.wanhuida.com.

Endnotes

(1) The People v Sheng Zhang, High People's Court (2015) E Zhi Xing Zhong Zi 1 criminal ruling.

(2) The People v Weibao Wang, High People's Court (2015) E Zhi Xing Zhong Zi 1 criminal ruling.

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