News

Imposing Greater Pressure upon IP Infringers through Multiple Legal Actions

by Shuhua Zhang (WAN HUI DA Law Firm & Intellectual Property Agency, China)

Brief Description

After criminal prosecution against a trademark infringer in China, the German Company, STIHL filed a follow-up civil lawsuit against it and its sole shareholder on both trademark counterfeiting and trade dress passing off, claiming confusion of personalities to impose maximum pressure upon the infringer.

Case Summary

In March 2014, ANDREAS STIHL AG & CO. KG (hereinafter “STIHL”) requested the police of Baiyun District, Guangzhou City to raid a factory named “Guangzhou Rui Song Machinery Co., Ltd.” (hereinafter “RUI SONG”). The police seized a lot of fake STIHL chain saws as well as some sales records. The fake saws displayed the STIHL registered trademark logo as well as the characteristic combination of orange and grey color which was the “special trade dress of a reputed product” as provided by the Anti-unfair Competition Law. HUANG Zhurong (hereinafter “HUANG”) was the sole shareholder of RUI SONG. The police arrested HUANG and, after further investigation, the public prosecutor brought the case to Baiyun District Court for the crime of trademark counterfeiting. The court found that HUANG’s production and sale of fake STIHL chain saws constituted the crime of counterfeiting registered trademark, sentenced HUANG to three years imprisonment, imposed a fine of 650,000 RMB (around USD 95,800), and confiscated the seized counterfeit products for destruction. HUANG appealed to the higher court on the ground that not all the chain saws already sold bore the STIHL trademark logo, as the business records did not specifically show that, and there was no supporting evidence to prove that all the chain saws sold by him bore the STIHL trademark. In September 2015, the Guangzhou Intermediate People’s Court lowered the criminal fine to 100,000 RMB (around USD 14,800).

After the criminal prosecution, STIHL filed a civil lawsuit with the Baiyun District Court against both HUANG and his company RUI SONG, on the ground of trademark counterfeiting and trade dress infringement. STIHL requested the court to affirm that the criminal fine which was part of the criminal sentence, should be used in priority to pay for the damages awarded in the civil case, in case the defendant’s assets were proven to be insufficient. The reason is that HUANG received money personally in the illegal transaction in lieu of his company, such act constituted confusion of personalities. The Baiyun District Court ruled in favour of STIHL on both trademark counterfeiting and trade dress infringement, and ordered the defendants to jointly pay RMB300,000 (around USD 44,300) as damages, which shall prevail over the criminal fine. The defendants appealed. In November 2016, Guangzhou Intellectual Property Court maintained the decision of Baiyun District Court.

Wan Hui Da attorneys successfully represented STIHL in all the proceedings of the case.

Comments:

  1. The IP owner may have the court affirm that the damages to be paid to the plaintiff shall prevail over the criminal fine so as to facilitate enforcement of civil judgment.
  1. The IP owner may use the relevant evidence obtained by the police and the facts affirmed by the court in the criminal action to solve dispute of trade dress infringement which was not governed by Criminal Code.
  1. The IP owner may have the infringers bear joint liabilities by proving their “confusion of personalities”.

Legal and Regulatory Background

Article 4 of the Torts Liabilities Law: “Where a tortfeasor bears administrative liability or criminal liability, it shall not prejudice the civil liability that the tortfeasor shall bear for the same conduct. Where the assets of a tortfeasor are not sufficient to cover the civil liability, administrative liability or criminal liability for the same conduct, the tortfeasor shall firstly bear the civil liability.

Article 63 of the Company Law: “If the shareholder of a single-person limited liability company is unable to prove that the property of such a company is independent from his own property, he shall bear joint liabilities for the debts of the company.”