Will Selling Certified Products Constitute Trademark Infringements?

It is common that many sellers would mark their shops, no matter online ones or offline ones, with “Exclusive Right to Sell XX”, “XX Brand Discount Shop” and etc.. When a seller is selling counterfeit products, it is an obvious trademark infringement behavior. What if a seller sells certified products, whether it shall be deemed as a trademark infringement behavior?

It is possible. Then what is the reason?

In order to clarify the reason, we shall discuss the fair use of a trademark firstly. Generally, the fair use of a trademark includes the descriptive use and nominative use. Article 59 of the “Trademark Law” only defines the descriptive use, which allows anyone to properly use the generic name, graphics or models of a commodity, or information directly indicating the quality, main raw materials, functions, purposes, weight, quantity or other features of the commodity, or the names of geographical locations as contained in the registered trademark. In addition, the “Notice of the State Administration for Industry and Commerce on Prohibiting the Unauthorized Use of the Registered Trademark of the Auto Parts Sales Shop and the Vehicle Repair Site” (1995), and the “Notice of the State Administration for Industry and Commerce on Prohibiting the Use of the Registered Trademarks as a Special Store (Special Store) Company Name and Business Signs” (1996) (both have been expired, only for reference), have prescribed the nominative use, which anyone couldn’t use a trademark as trade name of the store, franchise stores, repair shop or business signs without the licensing of the registrant of the registered trademark; when merchandise sales outlets and sites that provide a service need to specify the business scope of the goods and services provided by the shop, they could use descriptive words that “repairing × × products in the shop”, “selling × × suit in the shop” and the front should be same, and the trademark shall not be highlighted. In the judicial practice, many judgments have tried to analyze the criteria on defining the nominative use.

Although there is no statutory criterion, and the practical criteria are flexible. The basic criteria could be summarized based on the previous cases. There are 2 aspects could be taken into consideration:

1.The possibility of likelihood of confusion. The notices released by the State Administration for Industry and Commerce hereinabove are demonstrated from this perspective. In practice, if a party highlights other parties’ registered trademarks in its store signboard or any conspicuous position in its shop, then such behavior normally will be deemed as a trademark infringement behavior. (Be noted that sometimes, such behavior will be deemed as unfair competition, because it shares similar factors, but different basis of right of claim) Furthermore, while identifying a likelihood of confusion, the public’s reaction to the usage of the claimed trademark is the key, and the real usage of the claimed trademark would be taken into consideration comprehensively, such as the size, the position, the eye-catching degree and background of the claimed trademark. For example, if an online store uses the other party’s registered trademark, “以纯 Menswear” or “以纯 TAOBAO Discount Online Store”, without any other words, although this online store sells certified products, such behavior would be deemed as a trademark infringement behavior, because the court decided that such usage of the trademark will misleading the consumers to connect this store with the claimed trademark for specific relationships. (For more details, please find (2014) Zhe Tai Zhi Min Chu Zi No.108 and (2013) Hang Yu Zhi Chu Zi No.117).

2.The possibility of reducing the value of the registered trademark. In addition to the function on distinguishing commodity source, a registered trademark would also be a symbol of quality guarantee, reputation bearing and etc. To repack with the trademark, add label to the trademark, or renovate the old products with the trademark and etc, such behaviors might change the impression of the relevant public on the reputation of the products or quality related to the trademark, which will finally result in the infringement to the interests of the registered trademark. In the “不二家 Candy” case, the court deems that the defendant sub-packed the candies with other party’s registered trademark; the defendant did not explain such products were sub-packed; the defendant did not state the information of the party which sub-packed the candies; and products did not meet the quality standard. So such behavior has damaged the function of a registered trademark on quality guarantee, which is a trademark infringement behavior. Such behavior is not indicative and shall not be protected by the principle of exhausted of right. In general, the key points on identify such behavior are: (a) to guarantee the quality of the products which have been changed; (b) to specify the different subjects, especially those subjects which shall be responsible for the change.

However, using others’ trademarks in the way which is similar to the online product classification, product name, searching keywords and product brochures to illustrate that the goods or service on sale are derived from the trademark, usually do not constitute a trademark infringement.