In summary

The quality and quantity of evidence can play a key part in a trademark infringement case. This article splits the typical trademark infringement cases in China into three parts. For each part, the article starts from laws and regulations to analysis which factors are mostly considered by the court, and then introduces which key evidence to be collected accordingly and how to collect the evidence efficiently with proper resources and tools.

Discussion points

Factors to be considered in trademark infringement cases
Typical types of evidence in trademark infringement cases
Commonly used methods, channels and tools to collect evidence
How to organise evidence logically and efficiently

Referenced in this article

PRC Trademark Law
Supreme People's Court Provisions on Several Issues Concerning Evidence in Civil Litigation of Intellectual Property Rights
The Interpretation of the Supreme People's Court on Certain Issues Concerning the Application of Law in Civil Dispute Cases Involving the Protection of Well-Known Trademarks
The Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Trademarks

The quality and quantity of evidence can play a key part in a trademark infringement case. In China, evidence collection and organisation are usually the most time-consuming part in litigation work, as the quantity of evidence can be huge, especially in cases involving well-known trademarks.

Generally speaking, a trademark infringement case can be split into three key parts: the plaintiff’s trademark right basis, the defendant’s infringing actions, and the damages awards. So, here below, we will discuss in each part how to collect and organise evidence.

Evidence of right basis of the plaintiff (trademark holder)

In China, trademark right is obtained through registration,^[1] and this is the premise of trademark infringement. Technically speaking, a valid trademark registration should be protected even if it does not have any reputation. So, in some very straightforward cases with very low damages, it happens that the plaintiff simply presents its trademark registration certificate to prove its right basis without any additional reputation evidence.

On the contrary, according to article 64 of Chinese Trademark Law,^[2] if the plaintiff has not used its trademark for three years prior to the lawsuit, the defendant only needs to stop the infringement and does not bear the liability for compensation. This is to say, use and reputation are still critical for the plaintiff in a trademark infringement case and the higher the reputation of the registered trademark, the higher the level of protection it will be afforded.

In China, a well-known trademark enjoys the highest level of reputation and protection, and it is only recognised when necessary and when required by the plaintiff in a case-by-case manner. This is to say, reputation evidence is crucial and we will therefore take a well-known trademark as an example in order to demonstrate what kind of evidence is needed to prove reputation of trademark.

Article 14 of Chinese Trademark Law stipulates the factors to be considered when determining a well-known trademark, including:

the degree of awareness of the trademark among relevant public;
the duration of use of the trademark;
the duration, extent, and geographical scope of any promotional work for the trademark;
records of the trademark being protected as a well-known trademark; and
other factors contributing to the trademark's reputation.

The Interpretation of the Supreme People's Court on Certain Issues Concerning the Application of Law in Civil Dispute Cases Involving the Protection of Well-Known Trademarks requires the following evidence when the plaintiff claims a well-known trademark right:

The market share, sales territory, profits, taxes, etc., of the goods bearing the trademark;
The continuous duration of use of the trademark;
The methods, duration, extent, financial investment, and geographic scope of publicity or promotional activities related to the trademark;
Records showing that the trademark has previously been recognised and protected as a well-known trademark;
The market reputation enjoyed by the trademark;
Other factual evidence demonstrating that the trademark is already well known.

In Provisions on the Determination and Protection of Well-Known Trademarks, the China National Intellectual Property Administration makes more detailed requirements on the content and volume of reputation evidence:^[3]

Materials demonstrating the degree of public awareness of the trademark.
Materials demonstrating the duration of use of the trademark, such as documents showing the history and scope of its use and registration. If the trademark is unregistered, materials must be provided to prove that it has been used continuously for no less than five years. If the trademark is registered, materials must be submitted to prove that it has been registered for no less than three years or has been continuously used for no less than five years.
Materials demonstrating the duration, extent, and geographic scope of any promotional activities related to the trademark, such as methods, geographic coverage, types of media used, and advertising volume in advertising and promotional activities over the past three years.
Materials demonstrating that the trademark has previously been recognised and protected as a well-known trademark in China or in other countries or regions.
Other evidentiary materials proving that the trademark is well known, such as materials regarding the sales revenue, market share, net profit, tax payments, and sales coverage of the main goods associated with the trademark over the past three years.

As stipulated by the above laws and regulations, the reputation of a trademark is usually determined by its duration of use, sales volume and promotion scope of products, and protection records. In practice, the above requirements of ‘three years’ or ‘five years’ is not mandatory, such as the ‘TikTok in Chinese’ case. As the internet industry has developed quickly in recent years, the time limit is not as strict as it was. Considering how rapidly a new product or brand can be promoted on the internet, the recognition of a well-known trademark does not need to stick to the ‘three years’ or ‘five years’,^[4] though duration of use is still an important factor to be considered.

Based on our experience, the mostly commonly used and also the most important reputation evidence is an audit report issued by an independent accounting firm. The audit report will state how many products bearing the trademark were sold in the past prescribed years and how much money was earned, how much money was spent on advertising the brand, how many taxes were paid, and so on. These are all key statistics to establish a trademark’s reputation.

With such audit report as a foundation, it is advisable to submit some circumstantial evidence to enhance the evidence chain. For example, to support the sales volume in the audit report, the plaintiff can also submit sales contracts and corresponding invoices; for the advertising part, the plaintiff can submit the contracts with the advertisers, the advertisements (video, pictures, exhibition, etc) and statistics of viewers from a reliable institution; for the taxes part, the certificates of tax payment issued by local tax authorities will be very helpful, especially considering that Chinese courts usually place more trust in official documents.

To prove the degree of public awareness of the trademark, a commonly used method is to submit articles and online posts of the trademark. In respect of this, China National Library provides a search service of newspapers, magazines and periodicals for trademark holders. Trademark holders can set search requirements, such as keywords and time, and the National Library will search accordingly in the designated databases. The search will locate the news, articles and theses that mention the said trademark. Upon reviewing and selecting by the trademark holder, the National Library will issue a report confirming these are real published articles about the trademark. For some famous brands, the number of articles can run into several thousands. As the National Library has strong public credibility, the report has strong probative value.

As we mentioned, trademark reputation can be acquired very quickly through online dissemination. Therefore, there have been many tools helping trademark holders to collect posts, reports, advertisements, etc on different online platforms. These tools are effectively enhanced search engines or ‘web crawlers’ that enable the trademark holder to collect and organise evidence efficiently. Some may even establish a partnership with a notary public and the search results can be directly notarised to enhance the credibility.^[5] These tools can be very useful when the brand is mostly promoted and established through new media such as TikTok and RedNote.

Records of protection are also very important, especially if the trademark has been protected as a well-known trademark before. As we mentioned above, well-known trademark recognition is on a case-by-case basis. This is to say, even though a trademark has been recognised as a well-known trademark in one case, such recognition does not automatically extend to the next case and the plaintiff needs to request well-known trademark recognition again. On the other hand, if a trademark has been protected as a well-known trademark, the burden of proof will be lighter and the chances that it gets well-known trademark protection again will be higher than the trademark that has never been protected as a well-known trademark. Records of protection include official decisions in all kinds of legal proceedings, such as civil lawsuits, administrative lawsuits, trademark authorisation and confirmation proceedings, administrative raid actions, criminal lawsuits, etc. In some provinces in China, there is an official list of key trademarks for protection, and the trademark holder can file an application to join the list.^[6] If approved, this can be strong evidence to prove reputation.

Another important piece of evidence that the above regulations do not specifically mention is awards and ranking. It is better that the awards and ranking are presented by an authoritative institution, such as local government, industry association, Fortune Global 500, or a well-known market research institution (like Nielsen), etc.

As some readers might know, an affidavit is not a legal form of evidence in China. Therefore, in respect of reputation evidence, the court relies more on independent sources and solid statistics other than the plaintiff’s own statement. This requires a lot of work, collecting, categorising and organising evidence. In some well-known trademark cases, the reputation evidence can be thousands of pages.

Evidence of infringement of the defendant (infringer)

Once the plaintiff’s trademark right is established, the next step is to prove there are infringing actions conducted by the defendant. For a trademark infringement case, this part is often straightforward as the plaintiff must have discovered infringing products in the market or infringing promotional content on the internet before considering initiating a lawsuit.

The usual way to preserve evidence of infringing actions is to test a purchase with notarisation: the plaintiff or the plaintiff’s agent purchases the infringing products from the infringer or through an online e-commerce platform with a notary public to witness the purchase. The notary public will oversee the whole process, review the products, take pictures and then seal the products as evidence. For the online infringing content, the notary public can also make clippings of the website to preserve evidence.

In recent years, a new method of preserving online infringing content, called ‘block chain’, or ‘time tamp’ notarisation, has gained popularity.^[7] This method uses block chain technology to preserve the webpage and generate a certificate with specific verification information. Block chain notarisation is much cheaper than traditional notarisation and is just as effective.^[8] It is no surprise, then, that block chain notarisation is being used more and more frequently.

Technically speaking, the establishment of trademark infringement does not require the infringer to have bad faith as an element. Even if the infringing actions are conducted unknowingly, the infringer can still be held accountable. On the other hand, bad faith is a critical factor in influencing the judge’s discretion and should be seriously considered when calculating damages. Therefore, it is recommended to collect evidence to prove the infringer’s bad faith. Typical evidence of bad faith includes:

Trademark applications of the infringer showing it has plagiarised many brands other than the plaintiff’s trademark. Even though the infringer may not plagiarise the plaintiff’s trademark application, this kind of trademark pirate behaviour will be taken into consideration.
Official decisions that recognise the infringer’s bad faith. For instance, the infringer has fallen foul of the Administration for Market Regulations for trademark infringement, or the infringer has been found to have operated in bad faith in trademark administrative proceedings, etc.
Capitalising on the plaintiff’s reputation by other means in actual business. Other than copying the plaintiff’s trademark, the infringer may imitate the plaintiff’s trade dress, specific colour combination, advertising slogan, or imply it is associated with the plaintiff in the market. Such behaviour is strong evidence of bad faith.
The infringer has a connection with the plaintiff and knows about the plaintiff’s trademark, for example, the infringer was at one time the plaintiff’s distributor or partner, their business locations are near, they share the same labour, etc. This kind of connection proves the infringer has knowledge of the plaintiff’s trademark.

All things considered, the evidence of infringement usually does not require much desk work, but relies more on fieldwork like search, investigation, talking skills, etc. to prove the infringer’s bad faith. The plaintiff and the attorney need to work closely with the investigator and the notary public, and preserve different kinds of evidence, including webpage clippings, actual products, advertising materials, pictures, videos, conversation recordings, etc.

Evidence of damages calculation

Article 63 of the PRC Trademark Law stipulates the following ways to calculate damages:

the actual losses suffered by the plaintiff;
the benefits obtained by the infringer due to the infringement; and
a reasonable multiple of the trademark licensing fee.

The above calculation methods should be applied in order and are subject to five times the punitive damages at most if the infringement is severe and in bad faith.

If these methods are unable to determine the damages, the court shall award discretionary compensation in the range of 5 million yuan (approximately £500, 000) or under (statutory damages). The damages awards should also cover the expenses spent by the plaintiff to defend its trademark right.

When calculating the damages, the most commonly applicable method is calculating the benefits obtained by the infringers. Although it is not possible for the plaintiff to make an accurate calculation, there are several methods that are commonly used. Firstly, as e-commerce is very popular in China and most products can be bought from online e-commerce platforms, the plaintiff can know the price and sales volume of the infringing products on the platforms. Or, if the number is not public, the plaintiff can apply for an investigation order with the court and order the platforms to provide sales record of the infringing products. With this number, the sales and profits obtained by the infringer can be calculated. Secondly, the plaintiff or the plaintiff’s agent may talk to the infringer or the infringer’s distributor anonymously and try to glean information from them. Recording the conversation is legal in China and such recording can be used as evidence.^[9] Thirdly, the infringer may have some advertising materials that admit the business scope, number of franchisees, yearly profits, etc. This self-admission is also useful evidence.

Another productive way for the plaintiff to claim damages is to require the infringer to provide financial statistics. Chinese Trademark Law stipulates that:

In order to determine the amount of damages, when the right holders have made every effort to provide evidence, and the account books and materials related to the infringement are mainly in the possession of the infringers, the court may order the infringers to provide such account books and materials related to the infringement; if the infringers do not provide the same or provide false accounts and materials, the court may refer to the rights holders’ claims and provided evidence to determine the amount of damages.[10]

Furthermore, the Supreme People's Court Provisions on Several Issues Concerning Evidence in Civil Litigation of Intellectual Property Rights stipulates that:

The court, in accordance with the law, requires the parties to submit relevant evidence. If a party refuses to submit without justifiable reasons, submits false evidence, destroys evidence, or engages in other acts that render the evidence unusable, the court may presume that the claims of the other party concerning the matters to be proved by such evidence are established.[11]

The above laws and regulations basically form the system of proof impairment in China and are very helpful for the plaintiff in reducing their liability of proof. With the above support, the plaintiff firstly collects some basic evidence of the infringer’s profits, such as sales data displayed on e-commerce platforms, the infringer’s self-admission in some events or advertising materials (especially TikTok videos and RedNote posts), or the average rate profit in the industry. Based on such evidence, the plaintiff further files a request with the court for account books and materials related to the infringement from the infringer. If the infringer does not cooperate with the court’s order, it shall bear the negative consequences, and the plaintiff’s evidence and calculation will be very likely to be admitted by the court.

In practice, statutory damages are mostly applied because it has always been a challenge for the right holder to collect sufficient evidence to accurately calculate the infringer’s benefits, and the court usually inclines to decide the damages awards by discretion, which is easier without much calculation work. According to Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Trademarks, when determining statutory damages, the court should comprehensively consider the nature of the infringing act, the duration of the infringement, the consequences of the infringement, the degree of the infringer's subjective fault, the reputation of the trademark, and the reasonable expenses for preventing the infringing act.^[12]

Punitive damages have been increasingly applied by the Chinese courts since 2019. It is predicated on the plaintiff's request, and the court shall not apply punitive damages on its own initiative. Punitive damages must be claimed before the conclusion of the court debate in the first instance. Applying punitive damages requires two preconditions: the infringement is severe and out of bad faith (intentional). The Supreme People's Court Interpretation on the Application of Punitive Damages in Civil Cases of Intellectual Property Infringement (‘the judicial interpretation on punitive damages’) makes detailed explanation on the application of punitive damages.

For ‘severe’, the judicial interpretation on punitive damages lists the following conditions:

committing the same or similar infringement again after being administratively penalised or adjudicated by the court for infringement, the infringer again commits the same or a similar infringement;
engaging in the infringement of intellectual property rights as a business;
fabricating, destroying or concealing evidence of the infringement;
refusing to comply with the preservation rulings;
the profits obtained from the infringement or losses suffered by the right holder are substantial;
the infringement may endanger national security, public interest or personal health; and
other circumstances that can be determined as severe.^[13]

For ‘bad faith’ and ‘intentional’, the judicial interpretation on punitive damages lists the following conditions:

the infringer continues to commit the infringement after being notified or warned by the right holder or an interested party;
the infringer or its legal representative, administrator is the legal representative, administrator or actual controller of the right holder or an interested party;
there exists a labour, service, cooperation, licensing, distribution, agency, representation or other such relationships between the infringer and the right holder or an interested party, and the infringer has had access to the infringed intellectual property;
there has been business dealings or negotiations for the purpose of reaching a contract between the infringer and the right holder or an interested party, and the infringer has had access to the infringed intellectual property;
the infringer engages in piracy or counterfeiting registered trademarks; and
other circumstances that can be deemed as bad faith/intentional.^[14]

As is evident, the considerations that the court decides the amount of statutory damages are similar to the factors of considering punitive damages. Therefore, the required evidence for claiming statutory damages and punitive damages is also similar. This is mainly because that when the court decides the number of statutory damages within the 5 million yuan limit, it should have considered the factors of the reputation of the right holder, the severity of the infringement, the bad faith of the infringer, etc, which already include the factors of punitive damages. Usually, statutory damages and punitive damages should not be adopted simultaneously.^[15]

As for the expenses spent by the plaintiff to defend its trademark right, they usually include attorney fees, notarisation fees, translation fees, transportation fees for the case, etc. The plaintiff should submit valid and authentic invoices for all these fees. Among them, the plaintiff’s attorney fees are the most important. The court requires agency contract between the plaintiff and the attorneys, and corresponding invoices as evidence. But the number cannot be too high, otherwise, the court will exercise its discretion to determine the specific amount that should be borne by the infringer.

In the future, with the advancement of technology, many new tools will emerge and evolve, including the Artificial Intelligence and Large Language Model. These tools may facilitate the trademark attorneys’ work and reshape the process of litigation. When collecting and organising evidence, we expect these tools to reduce the trademark attorneys’ work load and improve their work efficiency, and we will keep an open attitude toward future developments.

Endnotes

[1] Under some circumstances, unregistered trademarks can be protected in China as well, but very rarely. Under Chinese Trademark Law, unregistered well-known trademarks can be protected in both civil lawsuits and administrative lawsuits; unregistered trademarks with certain influence can only be protected in administrative lawsuits. Under Chinese Anti-Unfair Competition Law, unregistered trademarks with certain influence can be protected in civil lawsuits.

[2] Article 64 of Chinese Trademark Law: Where the holder of the registered trademark claims compensation, and the alleged infringer defends on the ground that the holder has not used the registered trademark, the people's court may require the holder to provide evidence of the actual use of the registered trademark within the previous three years. If the holder of the registered trademark fails to prove that the registered trademark has been actually used within the previous three years, nor can it prove that it has suffered other losses due to the infringement, the alleged infringer shall not bear the liability for compensation.

[3] Article 9 of Provisions on the Determination and Protection of Well-Known Trademarks. Although the Provisions are made by the CNIPA, in practice, they can also be referenced by the court.

[4] (2022) Jing Xing Zhong No. 2944 (one of the Top 10 trademark administrative lawsuits in 2022).

[5] As the content on the internet may be changed or deleted at any time and the Chinese Court highly relies on notarisation, the contents from the internet usually need notarisation to be admitted in court.

[6] For instance, see the guidelines on joining the list in Beijing https://www.bjta.com.cn/html/report/25060138-1.htm.

[7] This is one of the most often used block chain notarisation tools https://www.tsa.cn/.

[8] Chinese authorities, including courts and CNIPA, all accept evidence with block chain notarisation.

[9] The recording should usually be notarised to make sure it has probative force.

[10] Article 63 of the Chinese Trademark Law.

[11] Article 25 of The Supreme People's Court Provisions on Several Issues Concerning Evidence in Civil Litigation of Intellectual Property Rights.

[12] Article 16.2 of The Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Trademarks.

[13] Article 4 of the Judicial Interpretation on Punitive Damages.

[14] Article 3 of the Judicial Interpretation on Punitive Damages.

[15] In the past few years, there have been some cases that adopt punitive damages and statutory damages at the same time. For the damages that can be calculated and ascertained (with evidence such as sales data), the court calculates the same and rules punitive damages accordingly; for the damages which cannot be accurately calculated (without sufficient evidence), the court decides the amount by discretion. The final damages awards will be the sum of the above two parts. This is a new and meaningful exploration.