Featuring three essential Q&As on the evidentiary attributes of the verification opinion, and the recognition of “refurbished goods” and “false brushing orders”.
Counterfeiting registered trademarks remains one of the most heinous forms of trademark infringement, often resulting not just in administrative penalties but also in criminal liability. This chapter focuses on the legal framework surrounding criminal liability for trademark counterfeiting, exploring topics such as types of conduct, key thresholds, criteria for “identical goods” and “identical trademarks”, and the evidentiary attributes of the verification opinion. It also highlights practical issues like the legal treatment of “refurbished goods” and “false brushing orders.” The aim is to provide practical guidance for rights holders.
Accordingly, we have selected three essential Q&As from Chapter 9: Practical Considerations Regarding the Crime of Counterfeiting Registered Trademarks of the Practical Q&A Guide to Cutting-Edge Intellectual Property Issues, co-authored by Wolters Kluwer, Lusheng Law Firm, and its strategic partner Rouse, to share.
Selected Practical Q&As
【Evidentiary Attributes of Verification Opinion】What are the evidentiary attributes of the verification opinion issued by the trademark owner?
The verification opinion regarding the authenticity of goods, issued by the trademark owner, serves as key evidence in criminal cases of trademark infringement. Although it is referred to as “expert opinion”, it is typically regarded as a “victim's statement” under the statutory category of evidence. The verification opinion is considered presumptively valid unless sufficient evidence to the contrary is presented.
In the Criminal Trial Reference published by the Supreme People’s Court, No. 860 introduces the case of Gu Juan and Zhang Lifeng Involving the Crime of Selling Goods with Counterfeit Registered Trademarks. It states that the trademark owner holds the position of a victim in criminal trademark infringement cases, and their identification of counterfeit goods or trademarks should be regarded as a “victim's statement” rather than an “expert opinion”. Therefore, no appraisal qualifications are required. Furthermore, when determining the authenticity of the goods involved, a verification opinion issued by the trademark owner is presumptively valid unless disproven by contrary evidence. The content of such an opinion should be assessed comprehensively alongside other evidence, considering its consistency with the case as a whole. It is also essential to review any rebuttal evidence provided by the defence.
【Nature of the Act of Refurbishment of Second-hand Goods】Does “refurbishment of second-hand goods” constitute the Crime of Counterfeiting Registered Trademarks?
According to relevant provisions and judicial practice, determining whether an act of refurbishment constitutes the Crime of Counterfeiting Registered Trademarks mostly depends on whether the infringer’s “use of the registered trademark” impairs the registered trademark’s function of indicating the source of the goods.
Generally, some simple cleaning of old products – such as dusting or polishing them – will not result in a Crime of Counterfeiting Registered Trademarks, provided if it does not impair the involved trademark’s indication function or cause consumer confusion. Conversely, if a “substantial transformation” is made to the products through refurbishment activities – such as dismantling, reassembling, replacing key components, or modifying the product’s performance parameters – resulting in brand-new products completely different from those from the rights holder, it will very likely constitute a trademark infringement that could be subject to criminal prosecution.
【Review of the Defence of Brushing Orders】How should the defence of “brushing orders” be approached?
“False brushing orders” refers to the practice of artificially inflating product sales, reviews and other data through fictitious transactions to deceive consumers and e-commerce platforms. It is commonly seen on online platforms and can directly impact the prosecution and sentencing of trademark related crimes.
Firstly, when calculating the defendant’s total sales amount, any sales data generated by false orders should be deducted, as it does not reflect actual sales. Secondly, the defendant bears the burden of proof when raising the defence of false brushing orders. This defence cannot be raised verbally but must be supported by firm evidence, such as chat records and transaction receipts. Finally, judicial authorities must conduct a thorough and objective review of the evidence, carefully identifying and excluding any amounts related to fraudulent transactions.
In the 16th batch of Guiding Cases released by the Supreme People’s Court in 2017, the No. 87 Case, involving Guo Mingsheng and Guo Mingfeng concerned the Crime of Counterfeiting Registered Trademarks. The decision affirmed key points regarding the determination of the illegal business amount and illegal gains in such cases. It stated that these should be established based on a broad range of evidence, including the defendant’s confession, witness testimony, victim statements, data from online platforms, the defendants bank account records, delivery notes, computer records from delivery companies, and account books kept by the defendants. If the defendant claims that false transactions are present in the online sales records but fails to provide supporting evidence, the defence will not stand.
Other Notable Q&As from This Chapter
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Chapter Contributors
Alice Hou, Head of Guangzhou Litigation Team, Lusheng Law Firm, ahou@lushenglawyers.com
Ciara Huang, Associate, Lusheng Law Firm, chuang@lushenglawyers.com