Although there has been disagreement in judicial practice as to whether the infringement of certification marks constitutes trademark infringement crimes such as the crime of counterfeiting registered trademark, the crime of selling commodities bearing counterfeit registered trademark, and the crime of manufacturing and selling illegally manufactured sign of registered trademark, there are meanwhile a number of supporting precedents. We hold the view that the infringement of certification marks constitutes trademark infringement crimes such as counterfeiting registered trademark, and that it is of great necessity to list certification marks as the object of the crimes above and explicitly put certification marks under criminal protection. Our reasons are set out as follows:

1. Certification marks are either commodity marks or service marks

In accordance with Section 3, Article 3 of the Trademark Law, “certification marks refer to signs that are controlled by organizations having the capacity for supervision over certain goods or services and which are used by organizations or individuals other than such organizations on goods or services to certify the origin, raw materials, manufacturing method, quality, or other characteristics of such goods or services.”

Certification marks can therefore be either commodity marks or service marks, as per below:

(1) Based on the definition of categories of certification marks by the administration department of trademark registration

As stipulated in Article 2 of the Policy for the Registration and Administration of Collective Marks and Certification Marks (herein referred to as the Policy) promulgated by the State Administration for Industry and Commerce (herein referred to as the State AIC) in 1994, “A certification mark refers to a commodity mark or a service mark which is controlled by an organization with capacity to test and supervise a certain type of goods or services, and used by persons other than the said organization on goods or services, to certify their places of origin, manufacturing methods, quality, accuracy or other traits.” This Section was unchanged when the State AIC amended the Policy in 1998.

The State AIC deleted the definition of certification mark in Article 2 when releasing the new Policy in 2003 since the definition had been clearly set out in Section 3, Article 3 of the Trademark Law in 2001. However, it can still be inferred from the previous two promulgations and amendment of the Policy that the certification mark is clearly categorized as a commodity mark or service mark when defined by the administration department of trademark registration.

(2) Based on the practice of trademark registration

Depending on the different marked objects, trademarks are divided into two categories: commodity marks and service marks. In accordance with the Classification of Similar Goods and Services of CTMO and the Nice Classification, goods are categorized into 34 classes and services into 11 classes. An applicant must choose a class and names of goods or service to be registered from the above 45 classes. In the practice of trademark registration in China, an applicant must state clearly the class and name of the goods or service in the columns of “Class” and “Goods/Service Name” respectively when filling the Application Form for Trademark Registration. A trademark is either a commodity mark or a service mark. These two types of trademark fall within the category of “registered trademark”, and cover all the registered trademarks.

Depending on the special functions of the trademarks, commodity marks and service marks are, as set out in the Interpretation and Definition of the P.R.C. Trademark Law by the Trademark Office of the State AIC (China Industry and Commerce Press, 2003), further divided into normal trademarks, certification marks and collective marks. An applicant also needs to select “Normal Trademark”, “Collective Mark” or “Certification Mark” in the column of “Trademark Category” as well as filling in the class and name of the goods or service when filing the Application Form for Trademark Registration. The three types of trademarks also fall within the category of either commodity mark or service mark.

(3) Based on the interpretation of Section 1, Article 3 of the Trademark Law

Section 1, Article 3 of the Trademark Law amended in 2001 provides that, “Trademarks that are registered upon verification and approval of the Trademark Office are registered trademarks, including commodity marks, service marks, and collective marks, certification marks.” We hold that the law makers didn’t consider the four types of trademarks as parallel concepts. This can be evidenced by the location of the word “and” used in the Section. If the law makers considered the four types of trademarks as parallel concepts, based on the Chinese grammatical habit, the word “and” would be put before the last listed item, which is “certification marks”. This Section simply lists the trademarks categorized with different criteria, among which, “commodity marks” is parallel with “service marks”, while “collective marks” is parallel with “certification marks”.

In conclusion, commodities marks, service marks, collective marks and certification marks are not parallel concepts, but are divided with different criteria. Their implications cross over each other. Whenever the trademarks are divided into commodity marks and service marks, or into normal trademarks, certification marks and collective marks, they can be further divided into the following six categories: (1) normal trademarks registered on goods; (2) normal trademarks registered on services; (3) certification marks registered on goods; (4) certification marks registered on services; (5) collective marks registered on goods; and (6) collective marks registered on services.

Certification marks and collective marks are only a further division of commodities marks or services marks with special function. A trademark, no matter if normal trademark, collective mark or certification mark, registered pursuant to relevant Chinese laws must bear the nature of commodity mark or service mark. A certification mark must be a commodity mark or service mark in the first place, and then show a specific quality of the related commodity or service. A certification mark registered on a commodity is both a certification mark and a commodity mark.

2. Interpretation of Article 213 of the P.R.C. Criminal Law and other stipulations

According to Article 213 of the Criminal Law, “whoever, without permission from the owner of a registered trademark, uses a trademark which is identical with the registered trademark on the same kind of commodities shall constitute the crime of counterfeiting registered trademark.” There are disputes in judicial practice as to the meanings of “registered trademark” and “use” in this Article when involved in the case of counterfeiting certification mark.

(1) “Registered trademark”

We hold that the crime object in this Article is “registered trademark” and the specific type of registered trademark is not set out, meaning that use of a “registered trademark” on an identical commodity may constitute crime. The same reading also applies to “registered trademark” and “sign of a registered trademark” as stipulated respectively in Article 214 and Article 215.
Someone views that “… use … on the same kind of commodities …” set out herein specifies that the “registered trademark” should be commodity mark other than certification mark.

We hold that certification marks registered on commodities are also commodity marks as already ascertained in the above. Therefore, even if the “registered trademark” here is limited to commodities marks, infringement of certification marks registered on commodities shall constitute the crime of counterfeiting a registered trademark.

Given that the Criminal Law was promulgated in 1997 when the currently effective Trademark Law not promulgated yet until 2001 and the 1993 Trademark Law effective at that time did not explicitly set out certification marks, it is argued that the “registered trademark” in the crime of counterfeiting registered trademark, the crime of selling commodities bearing counterfeit registered trademark, and the crime of manufacturing and selling illegally manufactured sign of registered trademark as provided in the current Criminal Law does not include certification marks. In fact, certification marks have been mentioned earlier in related trademark laws and practices. As stated above, the State AIC promulgated the Policy for the Registration and Administration of Collective Marks and Certification Marks as early as 1994, and Article 6 of the Regulation for Implementation of the P.R.C. Trademark Law promulgated in 1995 explicitly stipulated that collective marks and certification marks verified and approved for registration by the Trademark Office shall be legally protected in accordance with provision of Article 3 of the Trademark Law.

(2) “Use”

It is argued that the function of a certification mark is not in identifying the origin of commodities, thus the act to apply a certification mark to commodities is not the “use in trademark context”.

As stipulated however in Article 8 of the Interpretation on Certain Issues Concerning the Application of Law in Handling Criminal Cases Involving Infringement of Intellectual Property Rights, and Article 3 of the Regulation for Implementation of the Trademark Law, “use refers to using registered trademarks or counterfeit registered trademarks in commodities, commodity packaging or containers and product manuals, commodity trading instruments, or other acts such as using registered trademarks or counterfeit registered trademarks in advertising and publicity, exhibition and other business activities.” Therefore, trademark use is established as long as the infringement of certification marks satisfies the requirements above.
In addition, as stipulated by Article 3 of the Trademark Law, certification mark certifies the origin, raw material, manufacturing method, quality, or other characteristics of the goods or services. Those elements certified by the mark, as well as the mark itself, have the function to distinguish the source of goods or services (i.e. whether the goods or services have such characteristics). So using certification mark obviously can be deemed ‘trademark use’.

3. The necessity of prosecuting counterfeiters of certification marks on the charge of trademark infringement

We believe that it’s of concrete necessity to prosecute counterfeiters of certification marks on the charge of trademark infringement.

(1) The harm of infringement of certification marks

Counterfeiting a certification mark causes damage to society as well as violating the national trademark management system and the exclusive rights of trademark owners, compared with counterfeiting a normal trademark. In addition, the results of counterfeiting certification marks are highlighted in the following respects:

i. Counterfeiting certification marks impacts consumer trust. Certification marks, especially those to prove the standard of goods or services, indicate that pertaining goods or services have a higher than normal standard. Consumers tend to trust goods or services with certification marks. For example, UL, a certification mark that is highly recognized around the world, is a guarantee of product safety and a special guarantee for consumer confidence. In certain product industries, such as electrical appliances, pressure vessels, inflammable and explosive products, foods, household decorations and such, safety certification marks play an important role in consumers’ minds when selecting goods or services. A less famous trademark bearing a certification mark will remarkably improve consumer’s confidence in the quality of the product and subsequently increase the purchase rate. A product below the safety standard bearing a counterfeit safety certification mark may create tremendous potential risks to life and public property. Counterfeiting a renowned certification mark is not less harmful to society than counterfeiting a famous normal trademark, and even sometimes more harmful.

ii. Counterfeiting certification marks facilitates circulation of counterfeit products overseas. Internationally recognized certification marks greatly help increase the market share of a product in European and American countries. Some manufacturers illegally affix certification marks on their products to promote export via overseas orders, hence escalating the depth and scope of trademark infringement.

iii. Counterfeiting certification marks does tremendous harm to the interests of certification marks owners. China has special and strict policies for the supervision, licensing and use of certification marks. In accordance with the provisions, certification marks owners must possess the related inspection and supervision ability, and be responsible for the quality of authorized goods or services. Hence the threshold for certification marks to be approved is much higher than normal trademarks, and the time for reviewing is also longer. Certification marks owners have to go through a stricter procedure and endure higher costs to acquire the exclusive rights to certification marks and to establish the guarantee and certification power of the mark. Accordingly, their loss in reputation and finance is huge when their rights are infringed.

With regards to the registration practice of certification marks in China, most of those registered are famous marks. If certification marks are excluded from the criminal protection of trademark rights, acts to counterfeit certification marks will significantly soar, which will strongly disrupt the purpose of a quality guarantee and reputation of the marks. Rights owners will not pursue authorization of certification marks and subsequently, the system of certification marks in our country will be overwhelmingly disrupted.

(2) It is more convenient to prosecute counterfeiters of certification marks on the charge of trademark infringement

i. Legislation has been mature, and the police have improved its capacity in handling cases of IP crime
Several relevant legal interpretations have been enacted and the legislation on handling criminal cases of trademark infringement has been remarkably enhanced. The police have notably upgraded its capacity to deal with IP criminal cases given that criminal cases involving trademark infringement have been increasing for years. To prosecute counterfeiters of certification marks on the charge of trademark infringement will help guarantee the hit rate and efficiency of cases, and will also facilitate the prosecution of counterfeiters.

ii. Compared with other charges, the charge of trademark infringement is more applicable There is a view that counterfeiters of certification marks can be prosecuted on the charge of manufacturing or selling fake and substandard products or the charge of manufacturing or selling products not qualified for safety standards. However, there have been numerous obstacles in judicial practice to charge the act of counterfeiting certification marks with the crimes such as manufacturing or selling fake and substandard products.

First of all, the thresholds of these crimes are higher than that of trademark infringement crimes. According to Article 140 of the Criminal Law and Article 2 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Certain Issues Concerning the Application of Law in Handling Criminal Cases Involving Manufacturing or Selling Fake and Substandard Commodities (herein referred to as “the Interpretation”), the criminal threshold of the charge of manufacturing or selling fake and substandard products is that the sales volume of the infringing products reaches RMB 50,000 or the value of unsold infringing products reaches RMB 150,000. This is much higher than the threshold of the charge of counterfeiting registered trademark, which is that the volume of illegal operation reaches RMB 50,000 (in the case of infringing two or more trademarks, the threshold is RMB 30,000). In accordance with Article 22 of the Provision on the Threshold of Criminal Cases within the Competence of Police issued by the Supreme People’s Procuratorate and the Ministry of Public Security, the threshold of the charge of manufacturing or selling products not qualified for safety standards further requires that the behavior causes injury or direct economic loss of more than RMB 100,000.

It is also unclear with regards to the identification of incompliance of relevant quality standards. Legal departments have discrepancy in how to identify the incompliance of “national laws, regulations or quality requirements explicitly specified in related quality standards of the goods” and “requirements of quality standards specified on the products or the packages” provided in Article 1 of the Interpretation. The police usually need to entrust quality inspection institutes to assess whether the products satisfy the quality standards, which slows down the process of cases and also adds weight to the trademark owners’ burden. There is also great dispute as to whether the related quality standards cover the safety standards accredited by foreign certification agencies.

Moreover, under certain conditions, infringers cannot be charged. In such cases that counterfeiters manufacture or sell goods bearing fake certification marks which also do not comply with relevant quality standards, it’s possible to prosecute them on the charge of manufacturing or selling fake and substandard products. However, in more common cases, the goods bearing fake certification marks meet the quality standards. If the “registered trademarks” in Article 213 and 214 of the Criminal Law excludes certification marks, in such case, the infringers will not be charged. In addition, if the “registered trademarks” in Article 215 of the Criminal Law excludes certification marks, the behavior of manufacturing and selling illegally manufactured sign of certification marks will be out of criminal prosecution.

4. Relevant criminal judgments of infringement on certification marks

Among the cases publicized on the official website of the US Department of Justice on July 15, 2013, a company pleaded guilty before the US Federal Court in July 2013 for the crime of trafficking goods with counterfeit marks for its act of certification mark infringement in the US. There have been quite a lot of relevant criminal judgments in China as well. There are statistics that from 2011 to October 2013, Shanghai, Zhejiang and Guangdong judicial departments have dealt with a series of criminal cases of counterfeiting UL certification marks held by the Underwriters Laboratories Inc., all of which are adjudged to be guilty of constituting the crime of counterfeiting registered trademark and other trademark infringement crimes. Among the cases, 24 were transferred for prosecution review by procuratorates involving 42 defendants (all charged of trademark infringement crimes like the crime of counterfeiting registered trademark); judgments of 19 cases involving 32 defendants have already been rendered after the trial of first instance, among which the judgments of 14 cases involving 24 defendants are effective in first trial, and the orders of 4 cases involving 7 defendants are effective in second trial (all the judgments and orders hold that the defendants are guilty of trademark infringement crimes like the crime of counterfeiting a registered trademark).

5. Conclusion

So far, judicial authorities in some regions have different understandings on whether certification mark is included in “registered trademark” as stipulated in Article 213, 214 and 215 of the Criminal Law. We suggest the legislation authorities amend or issue relevant judicial interpretations on the above Articles so as to include certification marks as crime objects in trademark infringement crimes such as the crime of counterfeiting registered trademark and explicitly put certification marks under the protection of the Criminal Law.

http://ipr.chinadaily.com.cn/2013-10/25/content_17057380.htm