(By Luo Yanjie) Abstract: Market-managers should fulfill their duty to exercise reasonable care to cease trademark infringement. “Intentionally facilitating an infringement by another person or party of an exclusive right to use a registered trademark including through acts such as storage, transportation, postage, concealment and similar” shall be deemed as an infringement of the exclusive right to use a registered trademark.
Our website once introduced a post that the Name on the American Notorious List Could Also be the Well-known Trademark in China. Actually, Silk Street is not a company that sells fake goods, buta market consisting of many small shops. It is undeniable that the market of Silk Street was once listed alongside the Pirate Bay in the notorious market by USTR because it has sold too many fake products. Considering there are many fake products in Silk Street, the market manager shall be found liable. In today’s post, we would like to introduce and discuss a case where the market manager was found liable for its shops’ selling fake goods.
The point of this case is that, for trademark infringement in Silk Street market, the market manager did not make any attempt to stop the stores selling fake goods. For such trademark infringement involved, the court decided that, the market manager shall assume the liability of infringement. In today’s post, we would like to introduce a typical case (note: our website once introduced a similar post Trademark Infringement Liability of Real Estate Lessors in China Law ).
Introduction to the Case:
Plaintiff: LOUIS VUITTON MALLETIER
Defendant: Beijing Silk Street Market Co., Ltd
Defendant: Beijing Silk Street Market Real Estate Development Co., Ltd
Court of first instance: Beijing No.2 Intermediate People’s Court No.: （2012）二中民初字第02866号
Court of second instance: Beijing Higher People’s Court No.: （2013）高民终字第49号
LOUIS VUITTON MALLETIER registered a series of “LV” trademarks under Class 18 for leather board and wallets in China. LOUIS VUITTON MALLETIER found out that 15 shops in Silk Street under the management of Beijing Silk Street Market Co., Ltd infringed the exclusive right to use its registered trademark through selling fake goods and then brought the two defendants to the court.
Beijing No.2 Intermediate People’s Court and Beijing Higher People’s Court respectively heard the case and held that:
- Even though Beijing Silk Street Market Co., Ltd ruled out some regulations to protect the right-holder of the registered trademark and took some safeguarding measures such as monitored cameras, considering it failed to undertake measures to cease infringement, Beijing Silk Street Market Co., Ltd shall assume liability for such infringement.
- Even though Beijing Silk Street Market Real Estate Development Co., Ltd holds the housing ownership of the Silk Street, many shops in Silk Street signed rental agreements with Beijing Silk Street Market Co., Ltd and moreover the daily management of Silk Street are in the name of Beijing Silk Street Market Co., ltd. Considering LOUIS VUITTON MALLETIER cannot prove Beijing Silk Street Market Real Estate Development Co., Ltd to be participated in the operation and management of Silk Street, therefore, Beijing Silk Street Real Estate Development is ordered not to bear liabilities.
Lawyers’ Comment:
1. Market manager shall fulfill its duty to exercise reasonable case to stop from trademark infringement.
According to the Law on Protection of Consumer Rights and Interests, market managers shall, generally, assume complementary liability in consumer disputes. Only under the circumstance that the immediate seller cannot undertake its liability, shall the market managerbear liability to consumers (Article 38 the Law on Protection of Consumer Rights and Interests). This differentiates itself from many consumer disputes under the protection of the Law on Protection of Consumer Rights and Interests; the intellectual property infringements are an ongoing and obvious infringement. So, the market manager shall take the initiative to undertake its duty of reasonable care. For infringing acts, the market manager shall take measures to cease the infringement. Otherwise, the market manager shall assume joint liabilities with the infringing party.
For example, in this case, the court held that, considering there once were many infringements of the exclusive right to use the registered trademark owned by LOUIS VUITTON MALLETIER over recent years, the plaintiff once again purchased infringing products from Silk Street, particularly after the plaintiff had already informed the defendants of the actual conditions in that market in relation to the ongoing trademark infringement. Therefore, the court decided that Beijing Silk Street Market Co., Ltd, acting as a market manager, shall be found liable of infringement.
2. The undertaken liability of market manager
In this case, even though the market manager, i.e, Beijing Silk Street Market Co., Ltd, was ordered to undertake liability of infringement, Beijing Silk Street Market Real Estate Development Co., Ltd, the housing ownership of Silk Street, was ordered not to take liability for such infringement. As for this judgment, we discuss our opinions further below..
Article 50 of the Implementing Regulations of the Trademark Law regulates intentionally facilitating an infringement by another person or party of an exclusive right to use a registered trademark including through acts such as storage, transportation, postage, concealment and similar” shall be deemed as an infringement of the exclusive right to use a registered trademark. In this case, Beijing Silk Street Market Real Estate Development Co., Ltd objectively providing a place for the infringing party conformed to “internationally facilitating conditions”. Beijing Silk Street Market Real Estate Development Co., Ltd could argue that there was no initial intention to facilitate infringement. However, the market-manager wasinformed of the infringement, Beijing Silk Street Market Real Estate Development Co., Ltd’s knowledge that the aforementioned acts would entail harmful consequences to LOUIS VUITTON MALLETIER, but who then allowed such consequences to occur eschews an indirect intention. The court decided to exempt its liability by virtue of it not being a market-manager, thus are likely lack of legal basis.
Lawyer Contacts
You Yunting：86-21-52134918 youyunting@debund.com/yytbest@gmail.com
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