Changes in Trademark Crime Related Provisions of (Eleventh) Made by the Amendment to Criminal Law

(By Ye Sushuo)Comparison between trademark crime related provisions

Changes of trademark crime related provisions in Articles 213 to 215 of Section 7, Chapter 3 of Criminal Law
Crime Current Criminal Law (Eleventh) Amendment 2020
Article 213 Crime of falsifying a registered trademark A person who uses a mark that is the same as other’s registered trademark on the same type of products without permission of the registered trademark owner in serious circumstances should be sentenced to less than three years in prison or detainment and/or payment of a fine; and more than three and less than seven years in prison and payment of a fine in very serious circumstances. A person who uses a mark that is the same as other’s registered trademark on the same type of products or services without permission of the registered trademark owner in serious circumstances should be sentenced to less than three years in prison and/or payment of a fine; and more than three and less than ten years in prison and payment of a fine in very serious circumstances.
Article 214 Crime of selling products with a falsified registered trademark A person who sells products in a large amount of sales which they know contain a falsified registered trademark should be sentenced to less than three years in prison or detainment and/or payment of a fine in case of a large amount of sales; and more than three years and less than seven years in prison and payment of a fine in case of a very large amount of sales. A person who sells products which they know contains a falsified registered trademark should be sentenced to less than three years in prison and/or payment of a fine in case of a large amount of illegal profits or serious circumstances; and more than three years and less than ten years in prison and payment of a fine in case of a very large amount of illegal profits or very serious circumstances.
Article 215 Crime of illegally manufacturing or selling illegally manufactured registered trademarks A person who falsifies or manufactures other’s registered trademark without permission or sells a registered trademark falsified or manufactured without permission in serious circumstances should be sentenced to less than three years in prison, detainment or surveillance, and/or payment of a fine; and more than three years and less than seven years in prison and payment of a fine in very serious circumstances. A person who falsifies or manufactures other’s registered trademark without permission or sells a registered trademark falsified or manufactured without permission in serious circumstances should be sentenced to less than three years in prison, and/or payment of a fine; and more than three years and less than seven years in prison and payment of a fine in very serious circumstances.

 

Change A: An additional type of trademarks – service marks

One of major changes in trademark related crimes is that acts of seriously infringing service marks are treated as the crime of falsifying a registered trademark. Whether provisions relating to the crime of falsifying a registered trademark apply to service marks was always a question discussed in academic and practical worlds. Because of the large-scale development of the Chinese service industry, there is an urgent need to strengthen criminal law protection of service marks.

Service and product marks should be given equal criminal law protection for two reasons below. First, although products and services are consumed and used in different ways, product and service marks have the same functions of identifying product or service sources. Second, the Trademark Law gives equal protection to different types of trademarks and includes no special or exceptional provisions relating to service marks and so should criminal law do.

As new emerging service industries develop such as courier, food delivery and communication services, it is still uncertain whether criteria for deciding “the same type of services” in the new law are similar to criteria for deciding “the same type of products” in the Instructions of the Supreme People’s Court, Supreme People’s Procuratorate and Ministry of Public Security on Several Issues Concerning Application of Law to Dealing with Criminal Cases of Intellectual Property Right Infringement.

Change B: Levels of punishment – a number of years in prison at the lowest level and ten years in prison at the highest level

To impose more severe punishment the amendment increases levels of punishment for five intellectual property crimes. Surveillance and detainment will no longer be used as a major punishment for these crimes except the crime of falsifying a patent. The lowest level of punishment for trademark related crimes is imprisonment and the highest level is increased from seven to ten years. The new law imposes tougher criminal punishment for trademark related crimes.

Change C: Factors that should be considered when deciding which punishment to be given – “illegal profits”, not “sales”

Criteria for deciding criminal punishment for the crime of selling products with a falsified registered trademark are changed from “sales” to “illegal profits”. In most cases “illegal profits” are less than “sales”. Believing that current cases should be decided by considering “illegal profits”, some lawyers argue for giving a lower level of punishment for crimes in large sales but fairly small illegal profits and having no guilt of activities involving very small sales that are smaller than minimum illegal profits required for an intellectual property crime. In my opinion, “illegal profits” and “sales” should be calculated one after another to decide whether application of the new law is more advantageous to the defendant by following the “choice of law” principle in criminal law.

Before applicable legal interpretation on “illegal profits” in Article 214 is promulgated, provisions relating to “illegal profits” in the crime of infringing trade secrets in Articles 4 and 5 of the Interpretation (III) of Several Issues Concerning Application of Law to Dealing with Criminal Cases of Intellectual Property Infringement (Effective from 14 September 2020) promulgated by the two supreme legal authorities may apply. Article 10 thereof mentions fines, providing that intellectual property infringement criminals should be sentenced to payment of fines considering illegal amounts obtained and sold, losses of the infringed person, the number of counterfeits and damaging effect on the society. Criteria for deciding “illegal profits” in the crime of selling products with a false registered trademark are to be noted in further legal interpretation and practices.

Finally, changes in provisions against trademark related crimes made by the criminal law amendment are intended to make tougher attacks on trademark related crimes. Further studies and new legal interpretations are awaited to clarify the “same type of services” in the crime of falsifying a registered trademark and “illegal profits” in the crime of products with a falsified registered trademark.

 

Lawyer Contacts

You Yunting

86-21-52134918  

youyunting@debund.com

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